Morton Moore RE5 Mock Exam: Paper Two

1. Which of the following is not a financial service as defined in the FAIS Act?

FAIS Act

Furnishing advice on a financial productRendering an intermediary serviceDelivering a printed policy document by courierAdvising a client to replace an existing policy

2. Who must ensure that Representatives comply with the FAIS Act within a Provider?

Key Individuals

The Representatives themselves onlyThe Key Individual and the ProviderThe product supplierThe client

3. What is the purpose of professional indemnity cover for a Provider?

Fit and Proper

To pay the annual levyTo protect against liability arising from professional negligenceTo fund staff bonusesTo replace the licence fee

4. A client wants to replace an existing long term policy with a new one. What must the Representative do?

Advice

Complete the replacement without commentFully disclose the actual and potential consequences of the replacementRefer the client to the OmbudCancel the old policy first and then advise

5. Which of the following amounts to an unacceptable financial interest under the conflict of interest rules?

Conflict of interest

Commission permitted by the Long Term Insurance ActA cash payment offered to place business with one supplierA fee agreed in writing with the clientA discount granted to a client on a premium

6. Within what period must a Provider resolve or respond to a complaint under its complaints framework?

Complaints

Within a reasonable period as set out in the frameworkWithin twenty four hoursWithin three yearsOnly after the Ombud instructs it

7. What is the effect of debarment on a Representative?

Debarment

The person may continue working under supervisionThe person may no longer render financial servicesThe person must pay a fine and continue tradingThe person is only restricted for thirty days

8. Which of the following best describes an intermediary service?

FAIS Act

Any act performed for a client in relation to a financial product other than furnishing adviceOnly the collection of premiumsOnly the marketing of productsAny advice given by a Key Individual

9. Which type of qualification satisfies the competence requirement for a Representative?

Competence

Any tertiary qualificationA qualification listed on the Financial Sector Conduct Authority list of recognised qualificationsA matric certificate on its ownAn internal company course

10. What must be included in the record of a telephone conversation in which advice was furnished?

Record keeping

Nothing, telephone calls are exemptA recording or written record reflecting the substance of the discussionOnly the client name and dateA summary sent to the regulator

11. Class of Business training is required for which reason?

Class of Business

To provide knowledge of the products and risks in a specific class before rendering servicesTo replace the RE5 examinationTo register a new ProviderTo earn CPD hours only

12. Which statement about fees charged to a client is correct?

General Code of Conduct

Fees may be deducted without noticeFees must be agreed with the client in writing and may be withdrawn by the clientFees are set by the regulatorFees may never be charged in addition to commission

13. How must client premiums received by a Provider be handled?

Client money

Deposited into the business current accountHeld in a separate bank account for client moneyHeld in cash on the premisesPaid directly to the Representative

14. What must a Provider do when it becomes aware that a Representative no longer meets the Fit and Proper requirements?

Debarment

Take immediate steps, which may include debarment, and update the registerWait until the next annual reviewNotify the client onlyReduce the Representative commission

15. Which of the following is a requirement when advertising a financial product?

Advertising

The advertisement may exclude risk informationThe advertisement must be factually correct and not misleadingOnly the price must be shownApproval by the Ombud is required

16. What is the main purpose of the Financial Sector Regulation Act in relation to the FAIS Act?

Regulators

It repeals the FAIS Act entirelyIt creates the Twin Peaks regulators that supervise conduct and prudential mattersIt sets commission ratesIt governs employment contracts

17. A Representative under supervision may do which of the following?

Supervision

Sign off advice independentlyRender services subject to review by the supervisor within the required timeframesSupervise another RepresentativeAct as a Key Individual

18. Which of the following must be disclosed to a client about commission?

Disclosure

Nothing, commission is confidentialThe nature, extent and frequency of any commission or fee payableOnly the total premiumOnly the product supplier name

19. What is the purpose of a compliance officer at a Provider?

Compliance

To sell products to key clientsTo monitor compliance with the FAIS Act and report to the AuthorityTo audit the annual financial statementsTo manage staff payroll

20. Which principle underpins the Treating Customers Fairly outcomes?

Treating Customers Fairly

Fair treatment must be built into the culture and processes of the ProviderFair treatment applies only to complaintsFair treatment is voluntaryFair treatment applies only to new clients

Morton Moore RE5 Mock Exam: Paper Two

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