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.

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.

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 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.

Market manipulation is when a person creates a false rumour for their own financial gain. Insider dealing is when a person knows the truth and uses that information for their own financial gain. Both are considered criminal offences and will invoke an FCA investigation.

A Fixed rate deposit gives a fixed rate of return for the duration of the deposit. As rates are fixed, the customer is at risk of general interest rates rising on other accounts which will mean they will not benefit. Fixed rate accounts will have a penalty that will mean loss of interest if the account is closed during the term.

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.

Fiscal policy involves the actions taken by the government to either stimulate or calm the economy using a combination of taxation, spending and borrowing. When the government implements an inflationary budget they are trying to expand (inflate) the economy with lower taxes, borrowing and spending.

The Senior Managers and Certification Regime was Implemented due to the lack of redress for those in charge when things go wrong, highlighted as a result of the credit crisis.  The new framework will help identify individual accountability if things go wrong and will regulate individual conduct and standards in the financial services industry. Senior managers in Enhanced firms will have a Responsibilities Map that identifies which manager is responsible for each area. This will assist the regulators in identifying who is responsible if problems arise.

A Discretionary trust is a flexible trust that allows the settlor to select a class of beneficiaries; without having to identify a specific person. The trustees have discretion to pay income and capital to any of the beneficiaries that fall within that class. If income from the assets is below £500 there is no tax. If income is above £500 it is taxed at 45% on interest and 39.35% on dividends. Any disposal subject to CGT is taxed at 24% after the CGT allowance of £1,500 (half the standard £3,000 allowance).