FSRE – Free Mock

A Fact find is a detailed questionnaire that is used to establish KYC (Know your customer) in order to provide suitable advice. The questionnaire will include all personal and financial details of the client.

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.

Life cover is essential if there are dependents. Life cover is designed to protect those left behind in the event of premature death. A young family is particularly vulnerable as they are very often reliant on one income or may have very expensive child care costs if the primary carer were to die.

As she is a BRT payer her tax rate is 20%. The income from the unit trust is taxed as interest after the £1,000 personal savings allowance. This leaves £1,000 taxed at 20% = £200.

Within the training and competence rules within the FCA handbook, records of training must be kept for 3 years for investment advisers from when they leave the firm for non MIFID firms, 5 years for MIFID firms and indefinitely for a pension transfer specialist. 

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.

An unvested personal pension is a pension that has not yet been crystallised. If a person dies before 75 years of age the pension can be paid to any selected beneficiary as either a lump sum or an income based on the nomination of wishes tax free subject to the Lump sum and death benefit allowance (LSDBA) of £1,073,100. Any lump sum payment over the LSDBA is subject to an income tax charge at the beneficiary's marginal income tax rate.

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.

Mortgage payment protection insurance (MPPI) is a short term income replacement insurance policy designed to cover the monthly mortgage payments in the event that the borrower cannot work due to accident, sickness or unemployment (the self-employed are excluded from the unemployment element). It is a pure protection policy with no surrender value and can be obtained relatively cheap as there is no medical underwriting.

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.