FRE1 LO1: Financial Services
Not publishedof exam
FRE1 LO2: Retail Consumer
Not publishedof exam
FRE1 LO3: Legal Concepts
Not publishedof exam
FRE1 LO4: Regulatory Development
Not publishedof exam
FRE1 LO5: FCA and PRA
Not publishedof exam
FRE2 LO6: Advice Skills
Not publishedof exam
FRE2 LO7: Client Regulation
Not publishedof exam
FRE2 LO8: Ethics
Not publishedof exam
Quick Facts
- Module
- FSRE, not retired UKFR
- Units
- FRE1 plus FRE2
- Module share
- 40 marks each; 50% each
- Each unit
- 40 marks; 60 minutes
- Question mix
- 25 standalone; 3×5 case-linked
- Pass
- 70% each; 28/40
- Study time
- 50 hours per unit
- Registration
- £330; first unit sittings included
- Resit
- £120 per unit
Eight Learning Outcomes
Markets, consumer, law, history, regulators; advice, rules, ethics
FRE1: LO1–LO5FRE2: LO6–LO8
FRE1 vs FRE2
FRE1
- LO1–LO5
- Industry, law, regulators
FRE2
- LO6–LO8
- Advice, client rules, ethics
Pass both units separately
Markets
- Primary market
- New securities issued
- Secondary market
- Existing securities traded
- Money market
- Short-term funding instruments
- Capital market
- Long-term debt and equity
- Intermediation
- Channels savings into lending
- Maturity transformation
- Short deposits fund longer loans
- Bank Rate
- Monetary-policy benchmark
- Financial crime
- Fraud, laundering, market abuse
Asset Classes
- Cash
- Liquid; inflation erosion risk
- Bond
- Debt claim; rate sensitivity
- Equity
- Ownership; variable returns
- Property
- Physical asset; lower liquidity
- Commodity
- Physical raw-material exposure
- Diversification
- Spread distinct risk exposures
Consumer Needs
- Protection
- Transfer financial-loss risk
- Emergency cash
- Buffer unexpected expenses
- Savings
- Shorter-term capital access
- Investment
- Longer-term return objective
- Retirement income
- Fund later-life spending
- Mortgage
- Finance property purchase
- Estate planning
- Arrange asset transfer
- Product function
- Meet specific financial need
Joint Tenants vs Tenants in Common
Joint tenants
- Survivorship applies
- Undivided joint interest
Tenants in common
- Distinct shares
- Share passes through estate
Survivorship versus separate shares
Legal Concepts
- Sole trader
- Owner bears business liabilities
- Limited company
- Separate legal person
- Agent
- Acts within principal's authority
- Contract (England/Wales)
- Offer, acceptance, consideration, intention
- Joint tenants
- Survivorship applies
- Tenants in common
- Distinct shares; will can direct
- Trustee
- Holds legal title
- Beneficiary
- Holds beneficial interest
- Power of attorney
- Authority to act for donor
Regulatory Timeline
- 1986 Act
- Self-regulation framework
- FSMA 2000
- Core financial regulation statute
- FSA
- Former single regulator
- 2013 split
- FCA and PRA replace FSA
- SMCR
- Senior managers, certification, conduct rules
- FPC
- Monitors systemic financial risk
FCA vs PRA
FCA
- Conduct oversight
- Some prudential supervision
PRA
- Designated firm prudential oversight
- Bank of England body
FCA also has prudential responsibilities
Regulator and Remedy Picker
- Question concerns market conduct→FCA(Consumer and market outcomes)
- Question concerns bank soundness→PRA(Designated firm prudential supervision)
- Question concerns investment conduct→COBS(Check applicable business)
- Question concerns mortgage conduct→MCOB(Mortgage-specific rules)
- Eligible client disputes firm→FOS(After complaint route)
- Authorised firm has failed→FSCS(Check claim eligibility)
Regulator Roles
- FCA
- Conduct; some firm prudential oversight
- PRA
- Prudential supervision of designated firms
- Bank of England
- Monetary and financial stability
- HM Treasury
- Government financial policy
- FOS
- Ombudsman; not a regulator
- FSCS
- Compensation scheme; not a regulator
- FCA Register
- Check permissions and firm status
FCA Handbook
- PRIN
- High-level firm principles
- SYSC
- Governance and control systems
- COBS
- Investment business conduct rules
- MCOB
- Mortgage conduct rules
- CASS
- Client money and custody
- DISP
- Complaints and redress rules
- FIT
- Fitness and propriety
- COCON
- Individual conduct rules
Advice Flow
Discover → assess → recommend → explain → review
Fact-FindRisk plus capacitySuitable choiceWritten rationale
Risk Tolerance vs Capacity
Attitude to risk
- Willingness to accept uncertainty
- Psychological preference
Capacity for loss
- Ability to bear loss
- Financial constraint
Both inform suitability
Advice Process Picker
- Client states product preference→Clarify underlying objective(Need before product)
- Personal recommendation planned→Complete Fact-Find(Record circumstances)
- Client accepts volatility→Check capacity for loss(Separate from willingness)
- Client cannot absorb loss→Reassess recommendation(Capacity constrains suitability)
- Product has conflicting incentive→Manage conflict(Protect client outcome)
- Client rejects recommendation→Document insistent-client position(Check firm policy)
Advice Process
- Fact-Find
- Record client circumstances and goals
- Attitude to risk
- Willingness to accept losses
- Capacity for loss
- Ability to absorb losses
- Time horizon
- When funds are needed
- Suitability
- Recommendation fits client circumstances
- Suitability report
- Explains personal recommendation
- Insistent client
- Seeks transaction against advice
- Active listening
- Clarify stated and underlying needs
Advice vs Execution Only
Personal recommendation
- Tailored to client
- Suitability duty applies
Execution only
- No personal recommendation
- Other conduct duties remain
Product transaction does not imply advice
Consumer Duty Four
Product, value, understanding, support
Target marketFair priceClear messageUseful help
FOS vs FSCS
FOS
- Adjudicates eligible complaints
- Money cap depends on dates
- Separate interest/costs awards outside cap
FSCS
- Protects eligible failed-firm claims
- Deposit limit per authorisation
Complaint remedy versus firm failure
Protection and Complaint Picker
- Complaint reaches firm→Apply DISP process(Investigate and respond)
- Final response disputed→Check FOS eligibility(Referral rules apply)
- Deposit firm fails→Check FSCS deposits(£120k eligible limit)
- Other financial firm fails→Check FSCS category(Different limits may apply)
- Act occurred before Apr2019→Check older-act money cap(Referral date also matters)
- Act occurred Apr2019 onward→Check newer-act money cap(Referral date also matters)
Consumer Duty
- Consumer Principle
- Deliver good retail outcomes
- Good faith
- First cross-cutting rule
- Foreseeable harm
- Identify and avoid
- Financial objectives
- Enable and support pursuit
- Products/services
- Meet target-market needs
- Price/value
- Benefits justify total price
- Understanding
- Clear timely communications
- Support
- Effective help throughout relationship
AML Stages
Placement → layering → integration
Enter systemObscure trailAppear legitimate
Consumer Duty vs TCF
Consumer Duty
- Deliver good retail outcomes
- Four outcome areas
TCF
- Treat customers fairly
- Six fairness outcomes
Duty adds outcome-focused obligations
AML and Data
- Placement
- Introduce criminal proceeds
- Layering
- Obscure source through transactions
- Integration
- Reintroduce apparently legitimate funds
- CDD
- Identify and verify customer
- EDD
- Additional checks for higher risk
- UK GDPR
- Lawful personal-data processing
- Data minimisation
- Collect only necessary data
Complaints and Protection
- Firm complaint
- Investigate under DISP
- FOS referral
- After final response or deadline
- FOS newer-act money cap
- £455k; 2026/27 referrals, Apr2019+ acts
- FOS older-act money cap
- £205k; 2026/27 referrals, pre-Apr2019 acts
- FSCS deposit
- £120k per person/authorised firm
- Deposit effective
- 1 December 2025
- FSCS purpose
- Protect eligible failed-firm customers
- FOS referral year
- 1 Apr2026–31 Mar2027 for these caps
- Money cap exclusions
- Award interest; costs plus their interest
Ethics
- Integrity
- Honest and principled conduct
- Objectivity
- Resist biased judgement
- Confidentiality
- Protect client information
- Competence
- Work within skill limits
- Conflict
- Identify, manage, disclose appropriately
- Whistleblowing
- Report qualifying wrongdoing
- Professionalism
- Ethics beyond rule compliance
Common Traps
Retired assessment
Current: FSRE FRE1/FRE2 ≠ Old: UKFR ITFS/UKFS
One-unit pass
FRE1 needs 28/40 ≠ FRE2 separately needs 28/40
Pass mark vs pass rate
70% is candidate threshold ≠ Public pass rate unpublished
Regulator shorthand
PRA: designated firm prudential ≠ FCA: conduct plus prudential
Deposit vs ombudsman
FSCS deposit: £120k ≠ FOS money cap: date-specific
Shared bank authorisation
Deposit cap per authorised firm ≠ Multiple brands may share authorisation
Risk dimensions
Willingness is attitude ≠ Affordability is capacity
Execution only
No personal recommendation ≠ Conduct obligations still apply
Last Minute
- 1.FSRE replaced retired UKFR
- 2.FRE1 LO1–5; FRE2 LO6–8
- 3.Each: 40 marks, 60 minutes
- 4.Each: 25 standalone plus 15 linked
- 5.Each unit passes at 28/40
- 6.FCA: conduct plus some prudential
- 7.PRA: designated firm prudential
- 8.COBS: investment; MCOB: mortgage
- 9.Risk willingness differs from loss capacity
- 10.Duty: product, value, understanding, support
- 11.FOS handles eligible complaints
- 12.FSCS protects eligible failed-firm customers
- 13.Deposits: £120k/person/authorisation since Dec2025
- 14.Apr2019+ acts: £455k (2026/27 referrals)
- 15.Before Apr2019: £205k (2026/27 referrals)
Same family resources
Explore More LIBF Financial Qualifications
Continue into nearby exams from the same family. Each card keeps practice questions, study guides, flashcards, videos, and articles in one place.