Free Chartered Banker Institute Foundations of Responsible Banking Practice Questions

Sample Practice Questions

Try these 10 sample questions from the Chartered Banker Institute Foundations of Responsible Banking practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1Which combination describes the core services of a high street bank?

   1. A.Accepting deposits, making loans and facilitating paymentsCorrect answer: A
   2. B.Issuing banknotes, setting Bank Rate and targeting inflation
   3. C.Underwriting shares, arranging flotations and trading securities
   4. D.Setting capital rules, licensing lenders and imposing sanctions

   Explanation: The Bank of England describes banks as helping customers "look after it, lend it and help you pay for things". These are safekeeping, lending and payments. Issuing banknotes and setting Bank Rate belong to central banking; underwriting securities is investment banking; setting capital rules is regulation.

   Reference: What do banks do? — Bank of England — Introduction

2. 2A bank wants to understand concerns about staff training and career development. Which stakeholder group is directly affected in its employment relationship?

   1. A.Suppliers
   2. B.EmployeesCorrect answer: B
   3. C.Shareholders
   4. D.Depositors

   Explanation: The source states: "Employee training". Training and development concern the employment relationship. Suppliers provide inputs, shareholders invest capital and depositors use accounts, even though one person can occupy more than one role.

   Reference: HSBC Holdings plc Strategic Report 2024 — p.16, Engaging with our stakeholders

3. 3A sole trader wants a clearer view of business income and expenses without mixing them with household spending. Which banking arrangement directly meets that need?

   1. A.Using the household current account for business receipts
   2. B.Using a separate business account for trading activityCorrect answer: B
   3. C.Holding business receipts in a joint family spending account
   4. D.Combining household bills and business costs in one balance

   Explanation: The source states: "Keeping business and personal finances separate". A separate business account separates trading activity from household finances. The other arrangements continue the mixing. This is a practical benefit for a sole trader, not a claim that a separate account is universally required by law.

   Reference: Do I need a business bank account? — HSBC UK Business — Sole trader discussion

4. 4When assessing a customer's experience of a bank, which period should the bank consider?

   1. A.Only the moment the customer buys a product
   2. B.Only contacts resulting in a formal complaint
   3. C.The relationship throughout the product's lifecycleCorrect answer: C
   4. D.The period immediately before the first sale

   Explanation: The source states: "throughout their relationship". The experience extends through the relationship, including use and support. A sale-only or complaint-only view misses substantive interactions.

   Reference: Consumer support outcome: good practices and areas for improvement — FCA — Summary

5. 5A regulator assesses excessive credit growth that could threaten the financial system as a whole. Which type of oversight does this illustrate?

   1. A.Microprudential supervision of one bank
   2. B.Macroprudential oversight of systemic riskCorrect answer: B
   3. C.Conduct supervision of one sales conversation
   4. D.Individual customer complaint adjudication

   Explanation: The source states: "the UK financial system as a whole.". The focus is system-wide resilience, including unsustainable credit growth. The alternatives focus on one institution, a customer interaction or a dispute.

   Reference: Financial Policy Committee — Bank of England — What does the FPC do?

6. 6Which consideration is the specific focus of the Consumer Duty's products and services outcome?

   1. A.Comparing the price paid with the benefits customers receive
   2. B.Designing products to meet the target market's needs and objectivesCorrect answer: B
   3. C.Checking whether customers understand the information presented
   4. D.Providing effective help when customers use or leave a product

   Explanation: The source states: "needs, characteristics and objectives.". The products and services outcome focuses on product fit for the target market. Price versus benefits, comprehension and help during use or exit correspond to the other three outcomes. All are relevant to the Duty, but the question asks for the specific products-and-services focus.

   Reference: About the Consumer Duty — FCA — Outcome 1 — Products and services

7. 7Which activity is characteristic of the services provided by investment banks?

   1. A.Setting the national policy interest rate
   2. B.Trading securities and currencies for clientsCorrect answer: B
   3. C.Taking household deposits for everyday spending
   4. D.Supervising banks' regulatory capital compliance

   Explanation: The source states: "trade shares, foreign currencies and commodities". Client market trading is an investment-banking activity. Monetary policy, retail deposit-taking and prudential supervision describe different functions.

   Reference: What do banks do? — Bank of England — What else?

8. 8Why is an annual general meeting a relevant engagement channel for a bank's shareholders?

   1. A.It lets account holders authorise routine transfers
   2. B.It lets supervisors inspect individual loan files
   3. C.It lets owners raise questions about the company's directionCorrect answer: C
   4. D.It lets vendors negotiate prices for outsourced services

   Explanation: The source states: "through our AGMs". The AGM provides investor engagement on the business. Payment instructions, supervisory inspections and supplier price negotiations concern different stakeholder relationships.

   Reference: HSBC Holdings plc Strategic Report 2024 — p.16, How we engage — Investors

9. 9Two adults want both account holders to access money for shared household bills. Which account arrangement is designed for that shared-finance need?

   1. A.A sole-name account accessible only to its owner
   2. B.An account held only in their employer's name
   3. C.A joint account held by the two adultsCorrect answer: C
   4. D.A savings account held only in their child's name

   Explanation: The source states: "with another person to manage shared finances.". A joint account supports shared access. The sole-name, employer and child arrangements do not give both adults the stated account-holder relationship.

   Reference: Joint bank accounts — HSBC UK — FAQ — What's a joint bank account?

10. 10Customers report repeatedly abandoning a bank's account-closure process because several steps are confusing. What is the purpose of mapping that customer journey?

    1. A.Assess the process solely by the number of customers retained
    2. B.Trace the customer's steps to locate and address service barriersCorrect answer: B
    3. C.Assume that removing every verification step will improve the journey
    4. D.Compare channels only by the sales revenue they generate

    Explanation: The source states: "identify potential pain points". Journey mapping examines the customer's steps and pain points. Retention or sales alone does not show an accessible closure process. Removing every verification step confuses unreasonable barriers with appropriate protective friction.

    Reference: Consumer support outcome: good practices and areas for improvement — FCA — Access to support — Customer profiles and journey mapping