Financial Conduct Authority (FCA) UK Regulation Sample Exam

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Prepare for the Financial Conduct Authority (FCA) UK Regulation Exam with multiple choice questions and insightful explanations. Enhance your understanding and ensure success!

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What is a requirement for a firm requesting authorisation to carry out investment business under the FSMA 2000?

It must have a global presence
It must have adequate resources
It must have a history of profitability
It must provide low fees for clients

The correct answer is: It must have adequate resources

A firm requesting authorization to carry out investment business under the Financial Services and Markets Act 2000 (FSMA) must demonstrate that it has adequate resources. This requirement is essential to ensure that the firm is suitably capitalized and has sufficient financial backing to operate effectively in the market. Adequate resources can include having sufficient financial reserves, appropriate staffing levels, and the necessary systems and controls in place to manage the business. This focus on resources helps protect consumers by ensuring that the firm can withstand financial pressures and continue to operate reliably. It also signifies that the firm is capable of meeting regulatory standards and obligations, which is crucial for maintaining market integrity and consumer confidence in the financial system. This requirement aligns with the FCA's overarching objectives of protecting consumers and promoting competition, ensuring that only well-resourced firms are authorized to conduct investment business.