FSRE – Free Mock

As a building society is a mutual organisation it is legally constrained from raising any more that 50% of it's liabilities from the wholesale money markets.

A primary market allows the issuer (the borrower) to issue (sell) a security for the purpose of borrowing. A primary market is where the security cannot be sold on. Short term within financial markets is considered borrowing for less than 1 year. A REPO is a sales and repurchase agreement that allows a borrower to borrow cash cheaply as they offer collateral in return. It is a form of secured lending and makes it less risky for the lender. A REPO is the financial equivalent to pawnbroking.

Values can be defined as standards of behaviour and what a person considers important in life and what motivates them. They are the beliefs that guide a person’s actions and the type of person they are. There are personal and cultural values that apply and may differ from each person.

Within FCA minimum record keeping requirements for money laundering purposes ID must be kept for 5 years after the relationship with the client ended.

The FCA "Fit and Proper" test is designed to set minimum standards in relation to those working in a controlled function. It covers honesty and integrity, competence and capability and financial soundness. Adverse credit will be detrimental in respect to meeting these standards.

Self-employed people include sole traders and partners. The self-employed must submit their tax return once a year and pay Class 4 National Insurance as well as their income tax on their net profits. They are then required to pay their tax and NIC’s in two equal instalments.

All retired people are expected to have a total income of a specified amount. Pension credit is paid to individuals who reach State Pension Age (SPA) and receive less than the Appropriate Amount. Pension credit comes in two parts: Guaranteed credit and Savings credit.

Guaranteed credit: Brings all income (not just state pension) from all sources to an appropriate level. The appropriate amount for singles is £227.10 p/w and £346.60 p/w if a couple.

Guaranteed credit is Means tested to £10,000. The first £10,000 of savings is ignored, savings above is deemed to generate £1 of income for every £500 (or part of) over £10,000. This reduces the pension credit by £1 for every £500 over £10,000.

This means Simon will be able to claim £67.10 in guaranteed credit. Calculated as follows:

£227.10 (pension credit) less £150.00 earnings less £10 reduction (£14,900 savings less £10,000 exemption = £4,900 (every £500 or part of generates £1 of income) = £10.

When a person dies intestate (without a Will) the laws of intestacy state that the first £322,000 of the deceased’s estate passes to the spouse and any amount above is split in two. Half goes to the spouse and the rest is divided equally amongst the children. This means the spouse receives £347,000 (£322,000 plus 50% of £50,000) and £25,000 goes to the children.

Deposit based investments are considered low risk as the capital remains secure. Any asset backed investment is considered more risky as the investor may get back less than what they invested.

Within the FCA Handbook the customer has cancellation rights in respect to most financial products, although there are some exemptions. For most investments and general insurance the statutory cancellation notice (cooling off period) is 14 days from when the contract begins or from when the terms are received. This allows the customer to change their mind without penalty. For long term life assurance, pensions and annuities the cancellation notice period is 30 days.