LIBF CertFS Unit 1 Topic 8 Consumer Protection

What is the role of the Financial Conduct Authority (FCA)?

• To ensure that financial markets function well and consumers get a fair deal

• To provide emergency financial support to banks

• To compensate consumers if their financial services provider fails

• To handle customer complaints about providers

What does the Prudential Regulation Authority (PRA) focus on?

• Providing a free service to consumers to make informed financial decisions

• Micro-prudential regulation of individual financial providers

• Handling customer complaints

• Promoting effective competition in the interests of consumers

What is the maximum amount the Financial Services Compensation Scheme (FSCS) protects for deposits if a provider cannot repay?

• £75,000

• £100,000

• £85,000

• £50,000

What event triggered the first 'run' on a British bank in over a century?

• The nationalisation of Bradford and Bingley

• Media reports about Northern Rock

• The bailout of large banking groups

• The bankruptcy of Lehman Brothers

What is the main aim of the Financial Ombudsman Service (FOS)?

• To supervise the actions of financial services providers

• To ensure that banks have enough capital to absorb losses

• To regulate financial markets

• To sort out complaints between financial businesses and their customers

What was one of the key recommendations of the Independent Commission on Banking?

• Eliminate the Financial Services Compensation Scheme

• Separate retail banking from investment banking

• Reduce the number of banks in the UK

• Increase consumer borrowing

What does ring-fencing in the UK banking sector mean?

• Limiting the amount of money banks can lend

• Protecting banks from foreign competition

• Separating everyday banking activities from more risky investment bank activities

• Ensuring all banks have a physical presence

What was the purpose of the Financial Services Act passed on 19 December 2012?

• To focus on consumer credit regulation

• To deregulate the financial services market

• To abolish the Financial Conduct Authority

• To focus on regulation and establish a new system of financial regulation

What is the role of the Financial Policy Committee (FPC)?

• To compensate consumers if their provider fails

• To handle customer complaints about financial services

• To promote the safety and soundness of individual financial providers

• To monitor and respond to risks posed to the whole financial services market

What was a consequence of banks using money from their retail business to cover investment losses?

• An increase in the number of banks

• A significant rise in the stock market

• Providers did not have enough money to repay depositors

• Increased consumer confidence in the banking sector