Free ICA Certificate in Compliance Practice Questions

Sample Practice Questions

Try these 10 sample questions from the ICA Certificate in Compliance practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1How is the UK's Financial Conduct Authority funded?

   1. A.By fees charged to regulated firmsCorrect answer: A
   2. B.By a levy paid only by complainants
   3. C.By fines as its sole operating income
   4. D.By membership subscriptions from consumers

   Explanation: The source states: "We're an independent public body funded entirely by the fees we charge regulated firms." The FCA's operating funding comes from regulated-firm fees. Complaint fees, sole dependence on fines and consumer membership confuse other possible funding arrangements with this regulator's stated model.

   Reference: FCA — Our role — How we operate

2. 2Which organisation's conduct-regulation responsibilities passed to the FCA when the FCA was established in April 2013?

   1. A.Financial Reporting Council
   2. B.Financial Ombudsman Service
   3. C.Financial Services Compensation Scheme
   4. D.Financial Services AuthorityCorrect answer: D

   Explanation: The source states: "We were established on 1 April 2013, taking over conduct and relevant prudential regulation from the Financial Services Authority (FSA)." This identifies the FSA as the predecessor for those functions. The alternatives are distinct bodies with different responsibilities.

   Reference: FCA — Our role — Our role

3. 3Which event exemplifies compliance risk under the Basel Committee's definition?

   1. A.A foreign-exchange loss caused solely by currency movements
   2. B.A credit loss caused solely by a borrower's business failure
   3. C.An investment loss caused solely by a fall in market prices
   4. D.A regulatory sanction resulting from breaching an applicable ruleCorrect answer: D

   Explanation: The source states: "risk of legal or regulatory sanctions, material financial loss, or loss to reputation a bank may suffer as a result of its failure to comply with laws, regulations, rules" The definition links these consequences to a failure to comply. Pure market or credit losses without that failure do not establish compliance risk.

   Reference: Basel Committee — Compliance and the compliance function in banks — Introduction, paragraph 3

4. 4For a common platform firm under SYSC 6.1.3-BR, what should determine the priorities of its compliance monitoring programme?

   1. A.The sales revenue ranking alone
   2. B.Equal time per activity regardless of risk
   3. C.The assessed compliance-risk prioritiesCorrect answer: C
   4. D.The order in which review requests arrive

   Explanation: The source states: "The monitoring programme must establish priorities determined by the compliance risk assessment" Priorities follow assessed compliance risk while preserving comprehensive coverage, rather than queue order, revenue alone or mechanically equal testing.

   Reference: FCA Handbook — SYSC 6.1 Compliance — SYSC 6.1.3-BR

5. 5What does a financial regulator's regulatory perimeter describe?

   1. A.The boundaries of the regulator's activities and remitCorrect answer: A
   2. B.The financial buffers required of every regulated firm
   3. C.The order in which supervised firms are reviewed
   4. D.The distribution of duties inside a regulated business

   Explanation: The FCA states that its "perimeter report sets out what we do and don’t regulate." The perimeter concerns coverage. Capital buffers, supervisory priorities and internal responsibilities are different regulatory concepts.

   Reference: FCA — Our role — How we operate

6. 6Which event is identified by the Bank of England as the background to the creation of the PRA?

   1. A.The adoption of the UK Bribery Act in 2010
   2. B.The creation of the Bank of England in 1694
   3. C.The financial crisis of 2008Correct answer: C
   4. D.The introduction of the euro in 1999

   Explanation: The source states: "The PRA was established as part of a new wave of regulation after the financial crisis of 2008." The PRA reflects post-crisis regulatory reform. Other genuine historical events do not identify the stated trigger.

   Reference: Bank of England — What is the PRA? — Introduction

7. 7In Basel guidance, who is responsible for the effective management of a bank's compliance risk?

   1. A.The banking supervisor alone
   2. B.The customer complaints team alone
   3. C.Senior managementCorrect answer: C
   4. D.The external auditor alone

   Explanation: The source states: "The bank’s senior management is responsible for the effective management of the bank’s compliance risk." Compliance staff assist management; they do not transfer management's responsibility to auditors, supervisors or one specialist team.

   Reference: Basel Committee — Compliance and the compliance function in banks — Principle 2

8. 8Under SYSC 6.1.3-BR, what scope must a common platform firm's risk-based monitoring programme consider?

   1. A.Only customer-facing transactions selected by the sales team
   2. B.All designated investment business and relevant ancillary activityCorrect answer: B
   3. C.Only activities where a regulator has already imposed a penalty
   4. D.Only business lines producing the highest current revenue

   Explanation: The source states: "takes into consideration all areas of the firm'sdesignated investment business" The rule includes relevant ancillary services and activities as well. Risk-based priorities do not justify excluding whole areas merely because they are unpenalised, lower-revenue or not sales-selected.

   Reference: FCA Handbook — SYSC 6.1 Compliance — SYSC 6.1.3-BR

9. 9A consumer checks a firm's regulatory authorisation before buying a financial service. Why must the consumer also check its permissions?

   1. A.Every authorised firm may carry on every regulated activity
   2. B.Permissions confirm protection against all investment losses
   3. C.Authorisation does not establish permission for every serviceCorrect answer: C
   4. D.Permissions confirm regulatory approval of all product returns

   Explanation: The source states: "The tool helps consumers find out if a firm is authorised and has the correct permissions to provide services." Authorisation and permission for a particular service must both be checked; neither guarantees returns or protection from every loss.

   Reference: FCA — Protecting consumers — Understanding risks

10. 10What change to FCA social-media guidance occurred when FG24/1 was issued?

    1. A.It changed the FCA's statutory competition objective
    2. B.It replaced the previous FG15/4 guidanceCorrect answer: B
    3. C.It introduced new legal obligations solely by issuing guidance
    4. D.It ended the application of existing rules to social media

    Explanation: The FCA states: "We are replacing our previous Guidance (FG15/4) with this Guidance". The update superseded prior guidance; it did not change the statutory objective, create new obligations or end the existing rules' application.

    Reference: FCA — FG24/1 Financial promotions on social media — Background