Financial Conduct Authority (FCA) UK Regulation Sample Exam

Under the FCA's COBS Financial Promotion rules, what must a firm ensure regarding an individual making a non-written financial promotion on its behalf?

1. They must always inform the clients of potential risks

2. They must identify themselves and the firm they represent

3. They can remain anonymous as long as the promotion is effective

4. They must avoid using complex financial terms

The correct answer is: They must identify themselves and the firm they represent

Under the FCA's COBS Financial Promotion rules, it is essential for an individual making a non-written financial promotion on behalf of a firm to identify themselves and the firm they represent. This requirement is crucial for maintaining transparency and accountability within financial promotions. Properly identifying the individual and the firm builds trust with clients and helps them understand who is providing the information, allowing clients to make better-informed decisions. This identification is a fundamental aspect of the regulations, as it ensures that clients know who to approach for clarity or further questions regarding the financial promotion. While informing clients of potential risks, avoiding complex financial terms, or remaining anonymous may be relevant considerations in different contexts, they do not fulfill the fundamental requirement of representation and identification set forth in the FCA regulations. The emphasis on identification directly supports the overall objectives of consumer protection and market integrity, which are central to the FCA's mission.