FRE1 — Industry, Regulation & Key Parties
Studying from older material? FRE1 is part of what used to be called CeMAP 1 — now split into FRE1 and FRE2.
The scene-setter: who regulates UK financial services, how firms get permission to operate, and who does what in a mortgage transaction. It rewards precise recall — regulator objectives, statutory definitions and compensation limits — and its case studies walk you through processes such as a complaint or a suspicious client.
What FRE1 covers
- •The FCA, PRA and Bank of England — objectives and who regulates what
- •FSMA 2000: the general prohibition, authorisation and appointed representatives
- •What makes a loan a regulated mortgage contract (MCOB scope)
- •Key parties: lenders, intermediaries, conveyancers, valuers
- •The Financial Ombudsman Service and FSCS — routes, limits and time limits
- •Money laundering: the three stages, CDD and the reporting chain
- •How lenders fund mortgages: retail deposits, wholesale markets, securitisation
- •The economic environment: Bank Rate, inflation and the housing market
3 free FRE1 practice questions
Straight from Mock Paper 1, in the real exam style — no sign-up, no paywall.
Q1.Which of the following correctly states the FCA's single strategic objective?
- ATo protect and enhance the stability of the UK financial system
- BTo ensure that relevant markets function well
- CTo secure an appropriate degree of protection for consumers
- DTo promote effective competition in the interests of consumers
Reveal the answer
B is correct. The FCA's strategic objective is ensuring relevant markets function well. Consumer protection, market integrity and competition are its three operational objectives — a favourite trap is presenting an operational objective as the strategic one. (Financial stability is the Bank of England's territory.)
Q2.The Prudential Regulation Authority (PRA) is best described as responsible for:
- AThe conduct of business of all authorised firms
- BThe prudential safety and soundness of banks, building societies, credit unions, insurers and major investment firms
- CSetting Bank Rate eight times a year
- DMacroprudential tools such as loan-to-income limits
Reveal the answer
B is correct. The PRA (part of the Bank of England) prudentially regulates deposit-takers, insurers and the largest investment firms. Conduct across all firms is the FCA's job; Bank Rate is the MPC; macroprudential tools such as the LTI flow limit belong to the FPC.
Q3.A recommendation to limit the proportion of new mortgage lending at high loan-to-income multiples would come from which body?
- AThe Monetary Policy Committee
- BThe Financial Policy Committee
- CThe Prudential Regulation Committee
- DHM Treasury's Debt Management Office
Reveal the answer
B is correct. The FPC is the Bank of England's macroprudential committee, charged with identifying and reducing systemic risk — its tools include the LTI flow limit and the countercyclical capital buffer. The MPC sets monetary policy, not lending limits.
How to pass FRE1
- ✓Learn the FCA's strategic vs operational objectives word-perfectly — swapping them is the classic trap.
- ✓Know the complaint journey cold: firm first, eight weeks, then FOS within six months.
- ✓AML questions are about process — report to the MLRO, never tip off the customer.
FRE1 exam — common questions
What does the FRE1 exam cover?
FRE1 covers the fca, pra and bank of england, fsma 2000, what makes a loan a regulated mortgage contract (mcob scope), key parties and more. In full: The FCA, PRA and Bank of England — objectives and who regulates what; FSMA 2000: the general prohibition, authorisation and appointed representatives; What makes a loan a regulated mortgage contract (MCOB scope); Key parties: lenders, intermediaries, conveyancers, valuers; The Financial Ombudsman Service and FSCS — routes, limits and time limits; Money laundering: the three stages, CDD and the reporting chain; How lenders fund mortgages: retail deposits, wholesale markets, securitisation; The economic environment: Bank Rate, inflation and the housing market.
How long is the FRE1 exam?
60 minutes. Our FRE1 mock papers run to the same clock, so you practise at exam pace rather than at your own.
What is the pass mark for FRE1?
70% — 28 out of 40 marks. Every CeMAP unit uses the same 70% threshold, and there is no compensation between units: you have to clear 70% in each one.
How many questions are in the FRE1 exam?
40 questions — 25 standalone questions + 3 case studies × 5 linked questions, worth 40 marks in total.
Is FRE1 the same as CeMAP 1?
If your employer, study provider or an older textbook refers to CeMAP 1, they mean FRE1 and FRE2 together. CeMAP 1 was split in the September 2025 restructure into FRE1 and FRE2, which are sat as separate exams.
Practise FRE1 properly
5 timed mocks in the real exam format, running easier → harder, with an explanation on every question. Unlock just this unit for £9.99 or everything for £29.99.