FRE2 exam guide: Skills, Principles and Ethical Behaviours

FRE2, "FSRE: Skills, Principles and Ethical Behaviours", is the second unit of CeMAP® Module 1, Financial Services, Regulation and Ethics (FSRE). Where FRE1 explains the system, FRE2 asks how an adviser should behave inside it: how to gather information and recommend, which regulatory rules protect customers, and how to act ethically when rules run out. This guide explains the exam format, how to approach the case studies and how FRE2 relates to the old UKFR units.

Where FRE2 sits

FRE2 is one of five mandatory CeMAP units and one half of FSRE, which is also a mandatory module of the DipFA. Walbrook's suggested order is FRE1, MRT1, FRE2, MRT2 and the synoptic unit last, but you may study in any order. FRE2 makes most sense once you have done FRE1, because it assumes you know who the FCA is and what the Handbook contains.

FRE2's learning outcomes are numbered LO6 to LO8, continuing from FRE1.

The exam format

Feature	FRE2
Part 1	25 standalone multiple-choice questions
Part 2	3 case studies, each with 5 linked multiple-choice questions
Total	40 questions, 40 marks (1 mark each)
Question type	Select 1 answer from 4
Time	1 hour
Pass	28/40 (70%)
Merit	80% (32/40)
Distinction	90% (36/40)

Delivery and resits

On demand on Brightspace, with remote invigilation. No booking is needed.
A 360-degree room scan before you start; no toilet breaks.
Same-day results are stated for FSRE exams.
Your first attempt is included in the registration fee; each resit is £120.
For a failed unit: at most three attempts a week and ten in any 12-month period.
Registration lasts 18 months for full CeMAP, or 12 months for a module registered alone.

Timing

Worked example: pacing the hour

Section	Marks	Suggested time
25 standalone questions	25	about 28 minutes
3 case studies × 5	15	about 26 minutes
Review	-	about 6 minutes

FRE2 case studies tend to need more reading than FRE1's, because they describe conversations between an adviser and a client. That is why this plan gives the case studies slightly more time than the FRE1 plan does.

Worked example: the pass line

40 questions × 70% = 28 marks to pass.
Merit: 40 × 80% = 32. Distinction: 40 × 90% = 36.
If you are confident of 22 of the 25 standalone answers, you need at least 6 of the 15 case-study marks to pass.

Approaching FRE2 case studies

The skills and ethics outcomes (LO6 and LO8) and the advice framework (AC7.3) suit scenarios. Expect stories such as:

an adviser running a fact-find and missing important information;
a client who wants to go against the adviser's recommendation (an insistent client);
a client showing signs of vulnerability, such as a recent bereavement;
a complaint and the deadlines that follow;
a colleague behaving in a way that raises an ethical or whistleblowing issue;
a suspicion of money laundering, and what the adviser must and must not say.

A method that works well:

Read the five questions first to see which topics are being tested.
Identify the roles. Who is the adviser, who is the client, which firm is involved and what type of service (advised, execution-only)?
Look for trigger facts: a recent life event, a request to "just do it", a large cash payment, a deadline date, a mention of commission.
Apply the rule, then the ethics. Many FRE2 questions have one answer that is merely compliant and one that is compliant and in the customer's best interests. Where both are lawful, the better-outcome answer is usually right.
Never pick the answer that tips off a suspect or that hides information from the regulator.
Check dates carefully for complaints (8 weeks, 6 months) and cancellation periods.

The learning outcomes

LO / AC	Topic	Our note
LO6 (AC6.1)	Skills for advising: communication, information gathering, analysis, solutions, recommendations, insistent clients	fre2_01_advice_skills
LO7 AC7.1	Principles for Businesses and conduct rules, preventing harm to consumers, market conduct (MAR), culture and senior management, consumer rights and unfair terms	fre2_02_fair_outcomes
LO7 AC7.2	Record keeping and notifications, anti-money laundering, data protection, complaints, the FOS, the FSCS, treating customers fairly and conduct risk	fre2_03_reg_framework
LO7 AC7.3	The advice framework: client relationships and types, fiduciary duties, service types and disclosure, adviser charging, limits of authority, cancellation, vulnerable clients, advice standards, reviews and due diligence	fre2_04_advice_framework
LO8 (AC8.1 to 8.3)	Ethics: theories and values, codes of ethics, business ethics, ethics versus compliance, whistleblowing, CPD	fre2_05_ethics

LO7 has the most content, spread over three assessment criteria. Walbrook publishes no official split of questions between learning outcomes, so any weighting, including ours, is an estimate.

Consumer Duty

The official FRE2 text does not use the words "Consumer Duty". It refers to "the FCA's guiding principle on the prevention or reduction of harm to consumers" and to "consumer outcomes". The Consumer Duty is current FCA regulation that matches those ideas closely, so our notes teach it as linked material.

How FRE2 relates to the old UKFR units

The old CeMAP 1 (UKFR) had two units, ITFS and UKFS, each examined by 50 standalone questions. Officially, passes in both are equivalent to FRE1 and FRE2 together; Walbrook does not map individual learning outcomes. The table below is our own reading of the two syllabuses and is not official.

FRE2 area	Closest old UKFR content (our reading)
LO6 advice skills	ITFS LO5 (the advice process: attitude to risk, matching solutions, affordability, communication skills, monitoring and review); UKFS U3.7 (insistent clients)
AC7.1 fair outcomes	UKFS K1.2 (Principles for Businesses), K1.3 (fair treatment and conduct risk), K1.4 (senior managers), K1.6 (market abuse), K2.5 (unfair contract terms and the Consumer Rights Act)
AC7.2 framework rules	UKFS U2.2 (reporting and record keeping), LO7 (anti-money laundering), LO8 (complaints, FOS, FSCS), LO9 (data protection)
AC7.3 advice framework	UKFS LO6 (types of customer, terms of business, status disclosure, suitability, fees and commission, cancellation, MCOB and ICOB rules)
LO8 ethics	UKFS K1.1 (ethical conduct), K1.6 (whistleblowing), K3.2 (codes of conduct and professional bodies), U2.3 (training and competence)

What is new or stronger in FRE2

Ethical theory (for example consequences versus duties) is new; UKFR dealt with ethics mainly through rules.
Skills are assessed as skills, through scenarios, rather than as lists of rules.
Vulnerable clients and consumer outcomes are named explicitly.
Some UKFR topics, such as the Pensions Ombudsman and the Pension Protection Fund, do not appear in the FRE2 syllabus.

How to prepare

Learn the key time limits as a set: complaints, FOS referral, cancellation periods, data breach and subject access deadlines, and record-keeping periods.
Learn the FSCS and FOS limits for 2026/27 and the dates that pick the right limit.
Practise spotting the "best outcome" answer in scenarios, not just the "lawful" one.
Read the ethics note last; it ties the other topics together.

Exam traps

FRE2 is examined separately from FRE1, in its own one-hour exam with its own 28/40 pass mark.
All questions are single-answer, 4-option MCQs, including the case-study questions.
Merit and distinction are awarded per unit; the overall CeMAP qualification is pass or fail.
Older UKFR material may quote out-of-date figures, such as the £85,000 deposit limit. The FSCS deposit limit is £120,000 for firms failing from 1 December 2025.

Recap

FRE2 is 40 marks in 1 hour: 25 standalone questions and 3 case studies of 5. Pass at 28/40.
It covers LO6 (advice skills), LO7 (fair outcomes, framework rules and the advice framework) and LO8 (ethics).
Case studies test applied judgement: pick the answer that is compliant and gives the customer a good outcome.
Officially, both old UKFR units together equal FRE1 plus FRE2; our LO-level mapping is an informal guide.
Learn the time limits and compensation figures as a set, and check that older notes use 2026/27 values.