Monthly Archives:August 2017

CII exam results

R01 exam – 3 key technical areas you should know

A student’s perspective:

I’m Sam, I passed all of my R0 exams (including the R01 exam) within the last year and this is my view as a student.  Please bear in mind that I am writing this from the perspective of a 23 year old. I had little previous knowledge of the financial services industry prior to completing my diploma exams.

Here are three key technical areas that everyone sitting the R01 exam should know. These are three areas of the R01 exam that I, and others I have spoken to, found either technically difficult or confusing.

R01 exam: monetary vs fiscal policy – know the difference!

I found that questions on monetary and fiscal policies can be confusing when asked under the pressure in an exam. The government can influence how quickly the economy grows by using monetary policy, fiscal policy, or a combination of both. Here are the main differences between monetary and fiscal policy:

Monetary policy

  • This is concerned with the management of interest rates and the supply of money.
  • The increase of interest rates will generally reduce an individual’s ability to spend because if they have borrowing, this will cost more. A reduction in interest rates will do the opposite.
  • The government can also increase the supply of money through quantitative easing as a method to increase spending.
  • If the government were to reduce interest rates and increase money supply, these will incentivise individuals and businesses to borrow and spend more money. As a result, the economy will grow.

Fiscal policy

  • This is about the level of tax and spending.
  • The government can increase or reduce tax levels, to increase or decrease growth in the economy.
  • Government spending also has a big impact on the economy. Building a new railway, for example, uses concrete and steel. It also means more people are employed who then have money to spend which increases economic growth.
  • If the government wanted to increase economic growth using fiscal policies, it could reduce taxes and/or increase government spending.
  • The government usually has to borrow to fund this extra spending which it does by issuing gilts.

Tip: In the R01 exam, read the question closely to see whether it refers to monetary or fiscal policy.

R01 exam: COBS, ICOBS and MCOB

COBS, ICOBS and MCOB are found within the Business Standards part of the FCA handbook. These requirements govern most of the day-to-day (or conduct) rules that you will have come across in a regulated firm.

COBS (Regulatory rules for investment advice)

  • Apply to firms that deal in regulated life, pensions and investment actions, as well as deposit-taking businesses.
  • It places obligations on firms, such as a the disclosure requirements, suitability reports and on inducements and indirect benefits.

ICOBS (Regulatory rules for non-investment insurance advice)

  • ICOBS apply to firms conducting protection and general insurance business.
  • Before offering advice, the client must be supplied with various documents such as the Initial Disclosure Document (IDD) and Demands and Needs Statement, and clients must also be made aware of the cancellation periods, which is 14 days for general insurance and 30 days for pure protection contacts and PPI.

MCOB (Regulatory rules for home finance advice, i.e. mortgages)

  • MCOB apply to firms conducting mortgage lending and advising, home reversion plans and sale and rent back agreements.
  • How individual firms operate will have an effect on how MCOB rules affect them, with the 3 different compliance levels being Direct Authorisation, Appointed Representative and Introducer Status.
  • The difference between information and advice is also covered within MCOB, with information being accurate and neutral facts, whilst advice involves giving an opinion on the merits of a particular product.

Tip 1: the rules that apply to each of the three regimes are broadly similar, but the detail is different, reflecting the fact that investment business is more of a risk than the other two regulatory regimes. For example, investment advisers use a suitability report to confirm the advice they give. This is more detailed than the suitability letter that a mortgage adviser would give. This, in turn, more detailed than the demands and needs statement provided by a general insurance adviser. Each is intended to explain what the advice is and why it is suitable, but vary in terms of depth.

Tip 2: in the R01 exam, don’t try and remember which ‘block’ of the FCA handbook a rule can be found in or, for example, what ICOBS 5 is. The exam questions tend to test the use of the information, not if you can remember where to find it.

R01 exam: MiFID client categorisation – retail clients, professional clients and eligible counterparty

  • Any individual who receives advice must be classified by the firm into one of these three categories:

Retail client

  • A retail client could be classed as anyone who does not fit the criteria of being labelled a professional client or an eligible counterparty.
  • This will probably be 99%+ of the clients you deal with.
  • Retail clients get the most consumer protection, e.g. FSCS

Professional client

  • A professional client could be more experienced and knowledgeable by way of qualifications and/or their experience.
  • A professional client could be either ‘per se’ or ‘elective’.
  • A per se professional client is by virtue of their characteristics. For example, they would be a public authority, a company, national government or bank.
  • An elective professional client is therefore any client who is not one of the above per se clients, and is also not a retail client.  They must sign documentation acknowledging that they understand that they qualify for lower levels of investor protection.

 Eligible counterparty

  • A typical investment adviser is unlikely to ever come across this category. Whether someone is an elective or per se counterparty depends largely on the nature of the business transaction (not the experience or otherwise of the investor).
  • For example, arranging a deal at the request of the client would make that client an eligible counterparty.
  • You can also have a per se eligible counterparty, which would be a national bank, government or other financial institutions.

If you would like to study for your R01 exam whilst on the go, click here for details of a talking book

I hope that you find the focus on these three areas useful.

Sam Patterson


Five top tips for R0 exam success – part 2

Some notes from a student who passed his CII R0 exams

In my last blog, I started looking at my 5 key tips on how to achieve R0 exam success. These are lessons that I learned the hard way and I share with you so you might not do the same! I covered three of the top tips in my previous blog:

One – Make a plan
Two – Get your work/life balance right
Three – Mix up revision techniques

If you want to read these tips first, click here

So here I go with my final two tips that will help you on your journey to R0 exam success…

Tip Four – Broad Ideas

• Most people are looking to do as little revision as they feel they can get away with. Get used to picking up the broad ideas.
• Examiners don’t usually ask you a question where the answer is a single line on page 187 in the book, for example.
• As you well know, the amount of content within each R0 study text is vast. This means that the exam will often test your knowledge of general ideas. So concentrate on understanding the concepts within each chapter as much as the specific detail.
• This is not to say you should skim over parts of the book. Relying, for example, on just a summary of the key conetent of each chapter in a study text is unlikely to be enough. It might be if you have a few years of experience, but it wasn’t enough for me.

Tip Five – Revision Questions

• I have touched upon this in both Tip One and Three, but I really can’t emphasis enough the importance of doing practice questions.  The CII RevisionMate questions – the one’s that you get online when you purchase the CII study text, were a good test. Most people do these at the end of their study. I was encouraged to use them at the start (or perhaps after I had skim read a chapter) and this really worked. It reinforced what I did know and identified what I didn’t. I then used the CII study text as a reference tool rather than reading it from cover to cover.
• What I found useful was to do a past paper, mark it myself, and then go through the paper again, making notes on every question I got wrong.
• I would always aim to have 5 or 6 practice exams, and do each 2 or 3 times; repetition is key, as it not only forces knowledge to stick in your memory, but also use it as a way to identify areas which require more work.  The CII RevisionMate questions were very useful but perhaps a little harder than those in the actual exam.

I hope that these help you to pass your exam first time.

Sam Patterson


Five top tips for R0 exam success – part 1

Notes from a student who passed his CII R0 exams

Before I begin sharing some tips that helped me pass my R0 exams, I thought it’s only fair if I briefly introduce myself. Well to start, I’m 23 years old, studied Geography at university and I took a job at a wealth management firm two months after graduating. I really had no prior knowledge of financial services and had to complete my R0 Exam studies whilst holding down a full time job working as a para-planner. I have five main tips that helped me to get through my R0 exams and I’ll cover the first three here, and the remaining two in the next blog.

If you want to know the current pass rates for each R0 exam, click here and scroll down the page it takes you to.

Tip One – Make a plan

• This is the most obvious tip for any exam, but despite this it is a tip I’ve usual ignored throughout my education.
• It is essential when studying, particularly whilst working full-time. Make a plan and stick to it!
• Only you will know what the correct plan is, as only you will know how much work you can do a day without switching off. Only you will know what works for you, and what doesn’t. Success is as much about how effective your study as it is how much you do.
• Create a plan that allows you to work at your own pace, and get your exam booked as soon as you have created your revision plan. Once you have an exam date booked, it’s a real motivator to get you revising!

Tip Two – Work/life balance

• Drawing from personal experience, I felt I could do more revision than I actually could. This resulted in me feeling stressed outside of work, made me more stressed at work and ultimately led to me failing a couple of exams.
• My advice would be give yourself Friday nights off and make sure you continue with any sports and hobbies.
• Revising is important and necessary, but it should not become your life. If you are filled with dread and anxiety every time you open up that revision book, you are fighting an uphill battle. In most cases, it will mean you won’t pass.

Tip Three – Mix up revision techniques

• This is a good way of not becoming bored whilst revising.
• Conventional methods of revising include highlighting, note taking, creating spider diagrams, using flip cards, and doing past questions.
• Two slightly different revision techniques I found useful was listening to Audio revision material, which helped me learn in a more informal setting whilst driving to work. Click here if you are interested in more details
• The other revision technique I found incredibly helpful was when people asked me questions, just going through the textbook and finding something to test me on.
• A colleague, a friend or anyone could do this, but this really helped me. Quite simply I don’t like to get things wrong. So if I get things wrong I remember it, and that’s what revision is all about. Make as many mistakes as you can before the actual R0 exam!

In the next blog, I’ll cover the remaining two tips.

Click here for part 2

Sam Patterson


R0 exam results

Ro exam results – which are the easier exams?

Each R0 exam his it’s own individual challenges and I’ll explore these in this article. The R0 exam results will be of interest to anyone who is looking to sit these exams so it is worth while going into this with your eyes open.

We provide MP3 audio talking books for seven of the eight R0 exam subjects so we’ll stick to looking at just these subjects.

Are all the R0 exams the same style/format?

You could be forgiven for thinking that this should be a straightforward question. It isn’t. Only Ro5 (Financial Protection) and R08 (Pensions Update) use only the standard format multiple choice question. This means that you will be given a question followed by four options and only one of these will be correct.  Ro6 (Financial Planning Practice) is a written paper – and not a multiple choice question to be seen anywhere.

The other subjects – R01, R02 R03 and R04 all use the standard format multiple choice questions, and the much harder variant – the multiple response question. So how does this format of question differ? Instead of four options, you will get usually 5 or 6 options and more than one answer will be correct. To get a mark, you have to identify all the correct answers.

What are the Ro exam results?

Exam 2016 2015 2014
R01 57.01% 58.71% 59.41%
R02 57.92% 54.00% 55.99%
R03 50.46% 50.90% 54.55%
R04 54.07% 49.53% 54.09%
R05 72.11% 71.25% 68.73%
R06 73.23% 71.27% 67.56%
R08 83.75% 92.51% N/A

Source: CII website

What conclusions can we draw from this?

R01 – Financial Services, Regulation and Ethics.

In terms of R0 exam results, this is the third hardest R0 exam. This is partly because the regulations side of things – particularly to people new to the profession – is quite wide ranging. Many students find the content a little dull.  The exam has 100 questions and 13 of these are those pesky multiple response questions.

R02 – Investment Principles and Risk.

This is the fourth hardest exam statistically although there will be many people who would say it is harder than this. Again, the syllabus is huge and you will need to get your head around it. This exam is also 100 questions but 28 of these are multiple response. Many people regard a 50% success rate with this type of questions as being good going. So you can start to see why it is a difficult exam.

R03 – Personal Taxation.

Statistically, this is the most challenging subject. There are 50 questions and 11 of these are multiple response questions.  You’ll find with R03, you won’t be leaving the exam early. There is a lot to do in an exam that lasts only one hour.

R04 – Pensions and Retirement Planning.

In terms of R0 exam results, this is the second most difficult exam.  Like R03, it’s a one hour exam, there are 50 questions and 11 of these are multiple response questions.  The challenge with R04 is the subject matter – pensions is a subject that causes confusion for many new and more experienced people.

R05 – Financial Protection.

For exam sitters, this is one of the easier subjects. There’s still a broad syllabus but protection products such as critical illness and income protection are relatively straightforward. And, of course, there are no multiple response questions.

R06 – Financial Planning Practice.

The statistics say that this is one of the more straightforwards R0 exams. It is but only if you get your head around the technique that you will need. This is a written exam that is based on two case studies that are issued 2 weeks before the exam. I’ve met few people who walked out of the exam thinking they’d failed this exam yet 27% do.  Be prepared to put some hard yards in within two weeks before the exam.

R08 – Pensions Update.

The easiest exam, but it isn’t one of the exams you will need to pass to get the Diploma in Regulated Financial  Planning. This exam is focused just on the Pension Freedoms that were introduced in April 2015. This exam lasts an hour and consists of 45 questions.

If you want our thoughts on what is the best order to sit your R0 exams, click here

If you want to know more about our R0 exam audio books, click here

Until the next time.

The Diploma Doctor