Financial Conduct Authority (FCA) UK Regulation Sample Exam

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Which of the following constitutes a regulated activity under the FSMA 2000?

Acting as a financial adviser
Providing unregulated mortgage advice
Acting as a manager of an authorised unit trust
Offering investment advice to friends

The correct answer is: Acting as a manager of an authorised unit trust

The choice of acting as a manager of an authorised unit trust qualifies as a regulated activity under the Financial Services and Markets Act 2000 (FSMA 2000). This legislation outlines specific activities that require authorization by the Financial Conduct Authority (FCA) to ensure investor protection and the integrity of the financial market. Managing an authorised unit trust involves overseeing pooled investments on behalf of clients, which necessitates compliance with strict regulatory standards and supervisory oversight. Regulated activities under FSMA include functions that involve dealing with investments, managing funds, or providing financial advice that directly impacts clients’ investment decisions. In the case of an authorised unit trust, the manager is responsible for investment decisions, the safeguarding of investors’ capital, and adherence to regulatory frameworks, making it a core function governed by FCA legislation. Other options relate to activities that either fall outside the regulatory framework or may not require FCA authorization due to the nature of the service provided.