R01 Cheat Sheet 2025/2026 — Free

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Question 1 of 10

LO1UK financial services industry in its European & global context6 standard Qs

Markets & participants

Money markets

Short-term borrowing/lending (under 1 year). Instruments: Treasury bills, CDs, commercial paper.

Capital markets

Primary = new issues.
Secondary = existing securities traded (e.g. LSE).

Gilt market

New gilts issued by Debt Management Office (DMO). Subsequent trading on the London Stock Exchange.

Portfolio management

A bank with its own portfolio management team provides a discretionary management service.

Economic policy

Monetary policy — Bank of England

Sets Bank Rate (base rate)
Controls money supply & inflation
Tools: interest rates, quantitative easing
Financial Policy Committee (FPC) = macroprudential stability

Fiscal policy — HM Treasury / Government

Controls taxation & government spending
Budget = annual statement
Bank Rate change = monetary; Income Tax change = fiscal

Balance of payments surplus = more goods/services exported than imported.

Public companies raise long-term capital by issuing bonds AND shares.

UK Financial Capability Strategy — schools programme embeds financial understanding in young people.

LO2How the retail consumer is served by the financial services industry12 standard Qs

Priority order of financial needs

1. Manage debt→ 2. Budget & borrow→ 3. Protection→ 4. Save & invest→ 5. Retirement→ 6. Estate & tax planning

Key product knowledge — exam favourites

Scenario	Correct product / answer	Key reason
Income if unable to work	Income protection insurance	Max benefit ~65% of pre-incapacity earnings. Upper limit = moral hazard.
Reducing life cover need tailing off by age 40	Family income benefit	Pays a regular income stream, better matching the reducing need.
Critical illness — prohibitively expensive premium	Reviewable premium basis	Immediately reduces premium while maintaining the same cover level.
Pension commencement lump sum despite cash deposits	Tax efficient to do so	PCLS is tax-free.
Loan consolidation may NOT help	Consistent history of overspending	Consolidation doesn't fix the underlying behavioural cause.
Adviser won't advise if client won't disclose income	Record on fact-find that client refused	Record refusal and continue — do NOT refuse all advice.

ISA rules — exam-tested figures

ISA limits 2025/26

Adult ISA limit: £20,000
Junior ISA: £9,000
Can transfer between cash and stocks & shares ISA
Child aged 16–17 can open adult cash ISA AND JISA

ISA family calculation

2 adults × £20,000 = £40,000
+ child aged 18 × £20,000 = £20,000
+ child aged 16 × £9,000 JISA only
Total = £69,000

State benefits

Statutory Paternity Pay: up to 2 weeks
Maternity Allowance (self-employed): max 39 weeks
SMP cannot be transferred to partner — Shared Parental Leave exists

Exam trap: Family of 4 (2 adults, children aged 16 & 18), stocks & shares ISAs only. 16-yr-old cannot open S&S ISA — JISA only. 18-yr-old counts as adult. So: 3 × £20,000 = £60,000.

LO3Legal concepts and considerations relevant to financial advice9 standard Qs

Law of contract — essential elements

Offer→Acceptance→Consideration→Capacity→Legality→Binding contract

Counter offer: Insurer changes terms (e.g. increased premium) = counter offer. Original offer rejected, new one made. Applicant submitting a direct debit satisfies acceptance.

Minors (under 18): Do NOT have legal capacity to contract.

Non-disclosure: Claim can be rejected even for inadvertent non-disclosure — does not have to be deliberate.

Business structures & liability

Structure	Personally liable?	Key point
Sole trader / self-employed	Yes — unlimited liability	All personal assets at risk
Partnership (general)	Yes — joint & several liability	Partners personally liable
Limited Liability Partnership (LLP)	No — limited to investment	Must be registered at Companies House
Limited company (Ltd / PLC)	No — separate legal entity	Shareholders' liability limited to share value

Tom personally liable = self-employed. Bobby not = company director.

Liquidation vs administration: Both apply to companies. Individuals go bankrupt. IVA = individuals only.

Insolvency — order of priority

Order of priority in bankruptcy

1. Secured creditors
2. Preferential creditors (employees)
3. Ordinary unsecured — pro rata
4. Shareholders (last)

Unsecured creditors — pro rata

Paid proportionally. E.g. owed £1,000 and £2,000, pot = £2,400 → paid £800 and £1,600.

Intestacy — England & Wales

Spouse survives → entire estate if no children
Children exist → statutory legacy to spouse, remainder split

Trusts

Trust type	Beneficiaries known?	Trustee discretion?	Key feature
Absolute (bare) trust	Yes — fixed & named	No	Beneficiary can demand assets at 18
Discretionary trust	Not necessarily	Yes — full discretion	Used when beneficiaries not yet certain
Interest in possession trust	Yes	Limited	Beneficiary entitled to income; capital goes elsewhere

George doesn't know beneficiaries → discretionary trust. William knows exactly → absolute trust.

Fiduciary duty exists between trustee and beneficiary — NOT between trustee and beneficiary's spouse.

LO4Regulation of financial services6 standard Qs

Regulatory architecture

FCA — Financial Conduct Authority

Conduct regulation of ALL financial services firms
Consumer protection, market integrity, competition
Directly accountable to HM Treasury

PRA — Prudential Regulation Authority

Part of Bank of England
Prudential regulation of banks, insurers, large investment firms
Promotes safety & soundness

Bank of England / FPC

Financial Policy Committee = macroprudential stability
Systemic risk oversight
Monetary Policy Committee = Bank Rate

Other regulatory bodies

Body	Role
Competition and Markets Authority (CMA)	Competition & markets investigation. Reports go to HM Treasury.
The Pensions Regulator (TPR)	Regulates workplace pension schemes
Information Commissioner's Office (ICO)	Data protection enforcement
Payment Systems Regulator (PSR)	Regulates payment systems

Key legislation

Financial Services and Markets Act 2000 (FSMA)

Regulates advice to all individuals
Establishes the regulatory framework
Sets up Regulatory Decisions Committee

Financial Services Act 2012

Created FCA and PRA (replacing FSA)
Established FPC at Bank of England
MiFID II: markets in financial instruments

LO5Financial regulators' responsibilities and approach to regulation29 standard Qs — largest section!

FCA structure & internal bodies

Body	Role
Regulatory Decisions Committee (RDC)	Keeps investigation and recommendation functions separate from decisions/statutory notices. Set up by FSMA 2000.
Upper Tribunal	Independent — appeals against FCA enforcement go here.
Practitioner Panel	Represents industry. FCA must consider recommendations but has NO obligation to amend rules.
Consumer Panel	Represents consumer interests.

Authorisation & appointed representatives

Authorised firm

Directly authorised by the FCA
Cannot delegate regulatory responsibilities — remains responsible

Appointed representative (AR)

Not directly authorised
Acts under responsibility of a principal (authorised firm)

Senior Managers & Certification Regime (SM&CR)

Senior management functions — FCA pre-approval required

Compliance manager
Money Laundering Reporting Officer (MLRO)
Chief Executive, Finance Director
NOT: financial adviser, IT manager, HR manager

Senior manager obligations

Subject to ongoing Fit & Proper test
Broader duty of skill, care & diligence vs ordinary adviser

Fit & Proper — conviction

FCA considers conviction only if relates to ability to carry out the role
Bankruptcy → firm must notify FCA immediately

Record keeping requirements

Business type	Retention period
Pension transfer records	Indefinitely
Most investment records	5 years
MiFID business	5 years
Life assurance/pension (non-transfer)	Duration of policy + 3 years

2014 pension transfer file found when moving offices → must retain indefinitely.

Market abuse & penalties

Criminal offence penalties

Market abuse / insider dealing: unlimited fine OR up to 10 years imprisonment
Max prison = 10 years (increased from 7 years on 1 November 2021 — Financial Services Act 2021)

Civil penalties

FCA civil fines = unlimited
Market abuse fine → may affect future employment but does NOT automatically prohibit

Investigations

FCA must notify of change of scope only if absence may prejudice the adviser

Consumer Duty

Under Consumer Duty, the Consumer Principle = firm must act to deliver good outcomes for retail clients (NOT all clients, NOT eligible counterparties).

Manufacturer vs distributor

Firm that designs AND distributes its own discretionary model portfolio service = co-manufacturer AND distributor.

Principle 6 breach

Firm discovers breach of FCA Principles → compliance officer must notify FCA immediately. No grace period.

Client money: annual client money audit AND annual report required. Must be paid in promptly.

LO6Apply the principles and rules as set out in the regulatory framework4 standard + 5 multiple response Qs

Client categorisation

Category	Who qualifies?	Key rules
Retail clients	All clients who are neither professional nor eligible counterparties	Highest protection. Consumer Duty applies fully.
Professional clients (per se)	Banks, investment firms, insurers, large corporates	Reduced protections. Can elect to be retail.
Eligible counterparties (per se)	EU/UK governments, central banks, credit institutions, investment firms	Minimal protection. UK pension fund = NOT per se ECP.
Elective professional	Client opts up from retail	Must pass quantitative test + qualitative assessment

Complaint handling — key timings

Complaint timelines

Acknowledge within 5 business days
Hold response within 4 weeks
Final response: within 8 weeks of receipt
Clock starts when complaint received

Worked example

Received: 4 March
8 weeks from 4 March = 29 April

After final response

Client can refer to Financial Ombudsman Service
Must be told of this right in final response

Maximum FOS award: £430,000 for complaints referred before 1 April 2026. From 1 April 2026 this increases to £455,000 — but the CII will not examine this higher figure until 1 July 2026. Until then, the correct exam answer is £430,000.

Financial Services Compensation Scheme (FSCS)

Product type	FSCS limit per person per firm	Note
Deposits (savings/cash) — from 1 Dec 2025	£120,000	Increased from £85,000. CII examines this from 27 Feb 2026.
Joint deposit accounts	£120,000 each (£240,000 jointly)	Each holder protected separately
Investments (S&S ISA, investment bonds)	£85,000	Investment limit unchanged
Insurance policies	90% of claim (no upper limit on long-term)	—
Pension advice	£85,000	—
Temporary high balances (e.g. property sale)	£1,400,000 for up to 6 months	Increased from £1,000,000 on 1 Dec 2025

Key distinction: Deposit protection = £120,000. Investment protection = £85,000. These are separate limits — always identify which type of holding the question is about.

Marketing opt-out breach = data protection legislation (NOT Conduct of Business rules). Data protection = ICO / GDPR.

LO7Apply the regulatory advice framework to ensure fair outcomes for the consumer5 standard + 8 multiple response Qs

Types of advice

Independent financial adviser (IFA)

Considers ALL products from ALL providers
Unbiased, unrestricted whole-of-market advice

Restricted adviser

Limited to specific providers or products
Must disclose restriction clearly

Execution-only client

Client initiates, no advice given
No suitability assessment required

Appropriate referral:
✓ Restricted adviser without suitable product → refers to IFA
✓ IFA not competent in pension transfers → refers to suitably qualified IFA
✗ NOT appropriate: Restricted → restricted at another firm; referring just because cheaper.

Suitability reports — when required?

Situation	Suitability report required?
Recommended products (unit trust, investment bond)	Yes — must include disadvantages
Execution-only personal pension	No — disadvantages NOT required
Pension transfers	Yes, always — must include disadvantages
Regulated mortgage contract	Not required
Friendly society policy	Always required

Cancellation rights

Product	Cancellation period
Life assurance / Personal pension plan	30 days
Cash ISA / Stocks & shares ISA / unit trust / OEIC	14 days
Enterprise Investment Scheme / Junior ISA	No statutory right

Worked example: Arranged 1 June, check 25 June (24 days later). Cash ISA (14 days) = expired. Term assurance (30 days) = still in period. EIS = no right. PPP (30 days) = still in period. Answer: term assurance and PPP.

When both divorce clients are firm clients: adviser must seek to maintain strict neutrality.

LO8Range of skills required when advising clients4 standard Qs

Open-ended questions

Primary purpose: to obtain the client's views and opinions. NOT to quantify assets, secure trust, or create commitment.

Diversification

Socially responsible investment approach = more limited diversification opportunities — restricts the investment universe.

Reduction in yield

Helps client understand impact of charges on the fund. NOT financial strength of provider, inflation, or volatility.

Suitability should be the consequence of proper adherence to the know your customer rule. The fact-find drives suitability.

LO9Financial regulators' use of principles and outcomes-based regulation7 standard Qs

FCA's Principles for Businesses

#	Principle	Exam relevance
1	Integrity	Act with integrity
2	Skill, care and diligence	Competence requirement
3	Management and control	Systems & controls
4	Financial prudence	Have adequate financial resources — NOT about client debt or excessive risk marketing
5	Market conduct	Proper standards of market conduct
6	Customers' interests	Act in best interests of customers
7	Communications with clients	Fair, clear, not misleading
8	Conflicts of interest	Manage conflicts fairly
9	Customers: relationships of trust	Take reasonable care to ensure suitability
10	Clients' assets	Adequate protection of client assets
11	Relations with regulators	Deal openly with regulators
12	Consumer Duty	Act to deliver good outcomes for retail clients

Adherence to Principles is MANDATORY. Firms must adhere but have discretion as to HOW they comply.

Financial prudence (P4) = firm must have adequate financial resources. NOT about clients' debt levels.

Senior manager = broader duty of skill, care & diligence. Both senior managers and ordinary advisers can be fined and imprisoned.

LO10Apply the Code of Ethics and professional standards2 standard Qs

Income protection — earnings reduced

Emily's earnings fell to £25,000 but policy covers £30,000. Considering only FCA Statements of Principle:

✓ Inform Emily she may be paying for cover on which she cannot claim.
✗ Do NOT cancel/replace. Do NOT refer to provider.

Pension contributions — no earnings

Harriet (homemaker) paying £500/month, no earnings for 3 years. Considering only ethical requirements:

✓ Recommend she reduces contributions (only £2,880/yr relief available with no earnings).
✗ Do NOT report to HMRC.

Ethical theories

Consequentialism / Utilitarianism

Right action = best outcomes for the greatest number.

Deontology (Kant)

Duty-based ethics. Some actions are inherently right or wrong regardless of outcome.

Virtue ethics

Focuses on character of the person — honesty, courage, fairness.

LO11Critically evaluate outcomes: ethical vs compliance-driven behaviours3 standard Qs

Ethical behaviour indicators

High persistency levels = ethical
Client referrals increasing
Low complaint rates
Acting with integrity, not just following rules

Unethical / compliance-only indicators

Churning: High cancellation rates after commission period ends
Over-committing clients' budgets
Creating unrealistic expectations

Pure protection policies cancelled immediately after commission period = unethical churning.

High persistency levels = clients keeping policies = good outcomes = sign of ethical behaviour.

FIGURESKey figures & tax tables 2025/2026Provided in exam

Income tax

£12,570

Personal Allowance

20%

Basic rate (£0–£37,700)

40%

Higher rate (£37,701–£125,140)

45%

Additional rate (£125,141+)

£100,000

PA taper starts

£1,260

Marriage Allowance

Savings & dividends

£1,000

PSA — basic rate

£500

PSA — higher rate

nil

PSA — additional rate

£500

Dividend Allowance

8.75%

Dividend tax — basic rate

33.75%

Dividend tax — higher rate

National Insurance 2025/2026

Class	Rate	Threshold
Class 1 Employee	8% (£242–£967/wk), 2% above UEL	Primary threshold: £242/wk (£12,570/yr)
Class 1 Employer	15% above £96/wk	Secondary threshold: £96/wk (£5,000/yr)
Class 2 (self-employed)	£3.50/wk voluntary flat rate	Small profits threshold: £6,845/yr
Class 4 (self-employed)	6% on £12,570–£50,270 / 2% above	—

Pensions 2025/2026

£60,000

Annual Allowance

£10,000

Money Purchase Annual Allowance

£268,275

Lump Sum Allowance (LSA)

£1,073,100

Lump Sum & Death Benefit Allowance

£260,000

Adjusted income taper threshold

£10,000

Minimum tapered AA

Capital Gains Tax 2025/2026

Rate	Who / what
18%	Individuals — basic rate (non-residential property)
24%	Individuals — higher rate / residential property all rates
14%	Business Asset Disposal Relief (from April 2025)
£3,000	Annual exempt amount — individuals
£1,500	Annual exempt amount — trusts
£1,000,000	BADR lifetime limit

Inheritance Tax 2025/2026

Item	Amount / rate
Nil rate band (NRB)	£325,000
Residence nil rate band (RNRB)	£175,000 (estates up to £2m)
Death rate	40% (36% with qualifying charitable gifts)
Lifetime chargeable transfer to trust	20%
Spouse/civil partner exemption	Unlimited
Annual exemption per donor	£3,000
Small gifts per donee	£250
Wedding gift — parent / grandparent / other	£5,000 / £2,500 / £1,000

IHT taper relief

Years before death	0–3	3–4	4–5	5–6	6–7
% of full charge payable	100%	80%	60%	40%	20%

State benefits (per week) 2025/2026

Benefit	Rate
New State Pension (full)	£230.25
Basic State Pension Category A (full)	£176.45
Pension Credit — single	£227.10
Pension Credit — couple	£346.60
Child Benefit — first child	£26.05
Child Benefit — subsequent children	£17.25

SDLT (residential, England & Northern Ireland)

Band	Rate
Up to £125,000	0%
£125,001 – £250,000	2%
£250,001 – £925,000	5%
£925,001 – £1,500,000	10%
£1,500,001+	12%
Additional residential property surcharge	+5%
First-time buyer relief	0% up to £300,000; 5% on £300,001–£500,000

FSCS & FOS limits

£120,000

FSCS deposit limit (from 1 Dec 2025)

£85,000

FSCS investment limit (unchanged)

£1,400,000

Temporary high balance (from 1 Dec 2025)

£430,000

Max FOS award (exam figure until 1 Jul 2026)

ISA limits & other key allowances

£20,000

Adult ISA (all types)

£9,000

Junior ISA

£4,000

Lifetime ISA limit

£7,500

Rent-a-room tax-free

£6,000

CGT chattels exemption

Corporation tax & VAT

Corporation tax 2025/2026

Small profits rate (below £50,000): 19%
Main rate (above £250,000): 25%
Marginal relief for £50,001–£250,000

VAT 2025/2026

Standard rate: 20%
Registration threshold: £90,000
Deregistration threshold: £88,000

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R01 Cheat Sheet

Financial Services, Regulation & Ethics — Diploma in Regulated Financial Planning