CeMAP 1 Practice Test

CeMAP 1 How UK Regulation Developed Practice Questions

How UK Regulation Developed makes up 3 of every 40 questions on a Tigertest CeMAP 1 practice test. Here are 10 of the 15 questions on it, each with the answer and the reason.

Updated 2026-11-10 by the Tigertest team. Based on LIBF's FSRE (CeMAP Module 1) syllabus for FRE1 and FRE2. Original questions; case studies written as single questions. Not affiliated with LIBF or Walbrook Institute London.

1. 1. The Financial Services Act 1986 introduced a system of regulation in which the industry was largely:

   • A.Regulated by the European Union
   • B.Self-regulated under a statutory body
   • C.Run directly by HM Treasury officials
   • D.Supervised by the Bank of England alone

   Answer: B. The 1986 Act set up the Securities and Investments Board, which recognised self-regulating organisations such as FIMBRA and LAUTRO. Critics said this left firms policing themselves.

2. 2. Which Act created the Financial Services Authority as a single regulator for financial services?

   • A.The Financial Services Act 2012
   • B.The Financial Services and Markets Act 2023
   • C.The Financial Services Act 1986
   • D.The Financial Services and Markets Act 2000

   Answer: D. FSMA 2000 gave the FSA its powers from 1 December 2001, replacing the self-regulating organisations. FSMA is still the main framework Act today.

3. 3. Regulation of first-charge residential mortgage advice and lending began in:

   • A.October 2004
   • B.April 2014
   • C.April 1988
   • D.December 2001

   Answer: A. Mortgage regulation, known as M-Day, started on 31 October 2004 under the FSA's MCOB rules. Before that, mortgage advice was covered only by a voluntary code.

4. 4. The Financial Services Act 2012 replaced the FSA from April 2013 with:

   • A.The OFT and the FCA
   • B.The FPC and the FOS
   • C.The FCA and the PRA
   • D.The SIB and the SROs

   Answer: C. The 2012 Act split the FSA's work between the Financial Conduct Authority and the Prudential Regulation Authority, a model often called twin peaks.

5. 5. The 'twin peaks' model of UK regulation means:

   • A.A regulator for each UK nation
   • B.Joint control by the Bank and the Treasury
   • C.Separate conduct and prudential regulators
   • D.Two separate ombudsman services for complaints

   Answer: C. The FCA regulates how firms conduct business, while the PRA supervises the safety and soundness of banks, building societies, insurers and major investment firms.

6. 6. Responsibility for regulating consumer credit moved to the FCA in April 2014 from:

   • A.The Office of Fair Trading
   • B.The Bank of England
   • C.The Pensions Regulator
   • D.The Prudential Regulation Authority

   Answer: A. The Office of Fair Trading licensed consumer credit firms until 1 April 2014, when the FCA took over and brought in its CONC sourcebook.

7. 7. The Retail Distribution Review, in force from the end of 2012, banned:

   • A.The title of independent adviser
   • B.All mortgage procuration fees
   • C.Fees for any type of advice
   • D.Commission on investment advice

   Answer: D. The RDR required investment advisers to agree an adviser charge with the client instead of taking product commission. It also raised qualification standards.

8. 8. Implementing the EU Mortgage Credit Directive in March 2016 brought which loans under the FCA's MCOB rules?

   • A.Credit card debt
   • B.Second charge mortgages
   • C.Commercial property loans
   • D.Government student loans

   Answer: B. From 21 March 2016 regulated second charge mortgages moved from consumer credit rules into MCOB, and a consumer buy-to-let regime was created.

9. 9. The Senior Managers and Certification Regime was extended to almost all FCA solo-regulated firms in:

   • A.September 2017
   • B.December 2019
   • C.October 2004
   • D.April 2013

   Answer: B. SM&CR started with banks in 2016, reached insurers in December 2018 and was applied to solo-regulated firms, including mortgage brokers, on 9 December 2019.

10. 10. Which body is the regulator of workplace pension schemes?

    • A.The Money and Pensions Service
    • B.The Payment Systems Regulator
    • C.The Prudential Regulation Authority
    • D.The Pensions Regulator

    Answer: D. The Pensions Regulator oversees workplace schemes and automatic enrolment. The Money and Pensions Service gives free guidance and does not regulate.