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7 Flashcards

1
Q

Re Fair Treatment of Customers (FTOC), what are the first three consumer outcomes?

A
  1. Fair treatment of customers
  2. Products and services are designed to meet needs
  3. Consumers are appropriately informed
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2
Q

Re Fair Treatment of Customers (FTOC), what are the last three consumer outcomes?

A
  1. Advice is suitable
  2. Products and services are of acceptable standard
  3. No unreasonable post-sale barriers
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3
Q

What is Fair Treatment of Customers (FTOC) about? (2)

A
  1. Not about standardising services and products
  2. It’s about firms focus on outcomes for customers and how they deliver
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4
Q

Is FTOC a rule that affects all businesses?

A

Not a rule and is different for every type of business and business model

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5
Q

What is the FCA’s role on FTOC?

A

FCA provide suggestions of what outcomes may look like

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6
Q

What do you need to know about interacting with vulnerable clients? (3)

A
  1. They’re less able to represent their own interests
  2. Adviser decides whether a client is treated as vulnerable
  3. Vulnerability can be permanent or temporary
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7
Q

The four key drivers of vulnerability are:

A

Health
Resilience
Life events
Capacity

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8
Q

How should dvisers adapt their approach to accommodate vulnerable clients’ needs? (3)

A
  1. Have trusted family members present at meetings
  2. Appropriate authority on file (POA)
  3. Document steps taken
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9
Q

What kind of evidencing is required in Know your customer (KYC)?

A

Must be able to show collection of sufficient KYC data to show that u r acting on client’s best interest

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10
Q

In KYC, advisers must gather what information?

AI PIANOE

A
  1. Attitude to risk
  2. Investment preferences
  3. Personal information
  4. Income and expenditure
  5. Assets and liabilities
  6. Nationality, residence and domicile
  7. Objectives
  8. Employment details
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11
Q

What responsibilities do intermediaries have to their clients and what are their obligations? (2)

A
  1. have a fiduciary responsibility
  2. Obligations vary based on nature of the relationship
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12
Q

What are the different Fiduciary Duties?

LCD CAMM

A
  1. Duty of loyalty
  2. Duty of care
  3. Duty to disclose information
  4. Duty of confidentiality
  5. Duty to avoid unauthorised transactions
  6. Duty to monitor and review
  7. Duty to manage conflicts of interest
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13
Q

When should the complaints-handling procedures of a firm be disclosed? (3)

A
  1. Disclosed at first point of contact
  2. On request
  3. When a complaint is received
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14
Q

The complaints-handling procedure of a firm must be available to clients in what form?

A

In writing

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15
Q

What should the complaints-handling procedures of a firm be like? (2)

A
  1. Appropriate and effective
  2. Readily available for customers
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16
Q

Complaints-handling procedures should provide which key details? (4)

A
  1. How to complain
  2. What response to expect
  3. How complaints are investigated
  4. How to escalate to the FOS
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17
Q

What are two key turnaround times for complaint handling?

A
  1. Acknowledge a complaint promptly
  2. Final response within eight weeks
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18
Q

What should be communicated to a client if a complain is unresolved? (2)

A
  1. Explain why and when it’s likely to be resolved
  2. Let complainant know they can contact the FOS within six months
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19
Q

What information should the complaint summary report sent to the FCA contain? (5)

A
  1. Total complaints received
  2. Number of complaints resolved
  3. Number of complaints outstanding
  4. Number of complaints with the FOS
  5. Total amount of redress paid
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20
Q

In complaint handling, who are eligible complainants? (6)

A

Consumer
Micro-enterprises
Small business
Charities
Trusts
Guarantor

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21
Q

What records should kept about complaints? (2)

A
  1. Total complaints received
  2. Number of complaints completed and outstanding
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22
Q

How long should records about complaints be held for?

A

Records kept for three years

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23
Q

How often should a complaint summary report be sent to the FCA?

A

Summary report sent to FCA every six months

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24
Q

What is the role of The Financial Ombudsman Service (FOS)?

A

Free dispute resolution service for eligible complainants

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25
Q

What must you do before escalating a complaint to the FOS?

A

Complainant must’ve approached the firm concerned first

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26
Q

For complaints, what are the possible redress?

A

Money award as compensation or direction to take appropriate action

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27
Q

What’s the maximum award for winning a complaint?

A

£415,000 (plus reasonable costs)

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28
Q

What are the reasonable costs that can be added to the maximum award of a complaint? (4)

A
  1. Financial loss
  2. Pain and suffering
  3. Damage to reputation
  4. Distress
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29
Q

What happens when a complainant accepts/rejects the compensation offered by a firm?

A
  1. If accepts award, it is binding on the firm
  2. If rejects award, can pursue matters through the courts
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30
Q

Who is under compulsory jurisdiction of the FOS?

A

Regulated and ancillary services of authorised firms - defined in the FCA handbook

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31
Q

Who can be under voluntary jurisdiction of the FOS?

A

Businesses no’t covered by compulsory jurisdiction - defined in the FCA handbook

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32
Q

What kind of complaints can be put under voluntary jurisdiction of the FOS?

A

Complaints not covered by compulsory jurisdiction

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33
Q

What should the parties of the FOS’ voluntary jurisdiction do during investigation? (2)

A
  1. Firm must be a ‘willing participant’
  2. Parties allow investigation deemed necessary by the FOS
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34
Q

What does the Financial Services Compensation Scheme (FSCS) do?

A

Allows clients to claim for losses when a firm goes into liquidation

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35
Q

How is the FSCS funded?

A

Funded via an annual levy on authorised firms

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36
Q

What are the current limits on FSCS claims for deposits? (3)

A
  1. £85,000 per person per firm
  2. £170,000 for joint account
  3. £1million for temporary high balances (for up to six months)
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37
Q

What are the current limits on FSCS claims for investment / home finance / debt management?

A

£85,000 per person per firm

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38
Q

What are the current limits on FSCS claims for insurance business? (2)

A

1.100% of claim protected for compulsory insurance
2. 90% of claim for other insurance

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39
Q

What is the legislation on insider dealing?

A

Criminal Justice Act 1993, Part V (CJA 1993)

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40
Q

What is considered ‘inside information’? (3)

A
  1. Specific
  2. Not public
  3. Price-sensitive
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41
Q

What are the statutory offences regarding insider dealing? (3)

A
  1. Dealing with inside information
  2. Telling others to deal on inside information
  3. Improper disclosure of inside information
42
Q

Who can commit insider dealing statutory offences?

A

These offences can only be committed by an individual

43
Q

Who is considered an insider [insider information]? (2)

A
  • someone who knows it is inside information
  • someone who knows it is from an inside source
44
Q

In insider dealing, an inside source has access in which forms?

A

Access as director, employee or shareholder (directly or indirectly)

45
Q

Which securities are listed in the CJA? (2)

A
  1. Shares, debt securities, warrants, depositary receipts
  2. Derivatives on securities
46
Q

What are the general defences to insider dealing? (3)

A
  1. Did not expect to make a profit
  2. Information was sufficiently widely held
  3. Would have dealt without the information
47
Q

What are the special defences to insider dealing? (3)

A
  1. Acted in normal course of business (market makers)
  2. It was reasonable to deal despite the information
  3. Acting in accordance with ‘price stabilisation’ rules
48
Q

What is the Magistrates’ Court’s maximum penalty for insider dealing?

A

Six months imprisonment and/or £5,000 fine

49
Q

What is the Crown Court’s maximum penalty for insider dealing?

A

Ten years imprisonment and/or unlimited fine

50
Q

What does the Crown Court need to have before they can charge someone with insider dealing? (2)

A
  1. Criminal standard of evidence
  2. Beyond all reasonable doubt
51
Q

Which offences are in the Market Conduct Sourcebook (MAR)? (6)

A
  1. Insider dealing
  2. Improper Disclosure
  3. Manipulating transaction
  4. Manipulating devices
  5. Dissemination
  6. Misleading behaviour and distortion
52
Q

What are the common defences to market abuse? (2)

A
  1. Reasonable belief that behaviour is not market abuse
  2. Took all reasonable precautions to avoid market abuse allegation
53
Q

What is money laundering?

A

Use financial institutions to hide the proceeds of criminal activities, avoid conviction and confiscation of funds

54
Q

What is the maximum penalty to ‘market abuse’? (2)

A
  1. No custodial sentence
  2. Unlimited fine
55
Q

What kind of legal offence is ‘market abuse’?

A

Civil offence

56
Q

What level of evidence is required to be charged of ‘market abuse’?

A

Lower burden of proof

57
Q

What is terrorism?

A

Use of violence or threat of violence in pursuit of political, religious or ideological objectives

58
Q

What makes terrorist financing challenging to identify? (2)

A
  1. Can involve small sums of money
  2. Can be financed using legitimate funds
59
Q

What legislation covers money laundering?

A

Proceeds of Crime Act 2002

60
Q

What are the three stages to money laundering?

A

Placement, layering and integration

61
Q

What are the different offences that can be comitted under money laundering? (6)

A
  1. Concealing
  2. Arranging
  3. Acquisition
  4. Failure to disclose
  5. Tipping off
  6. Assistance
62
Q

What are the penalties to money laundering?

A

Maximum penalty is 14 years imprisonment and/or an unlimited fine

63
Q

What are the guiding principles of Joint the Money Laundering Steering Group (JMLSG) guidance? (3)

A
  1. Verifying proof of client identities
  2. Staff training
  3. Reporting suspicious activity
64
Q

What are the common defences to money laundering prosecution? (4)

A
  1. Threats to safety
  2. Did not know or suspect ML had occurred
  3. Not had required training
  4. Occurred outside UK, and is not unlawful in the country it occurred
65
Q

How should the JMLSG guiding principles affect regulated firms? (2)

A
  1. Procedures are based on JMLSG guiding principles
  2. Done using risk-based approach
66
Q

How should the JMLSG guiding principles affect clients?

A

Not burdensome for honest clients

67
Q

What is the aim of the JMLSG guiding principles?

A

Make it harder to break the law

68
Q

What does the MLR 2017 check regarding firm’s policies and procedures? (4)

A
  1. Appoint a director for compliance with regulations
  2. Have procedures for identification
  3. Appointment a MLRO
  4. Cooperate with NCA
69
Q

The MLR suggests what education and training should be provided for employees? (4)

A
  1. Regulations relating to AML
  2. Recognising suspicious transactions
  3. Proper ways to report
  4. Training is appropriate to responsibility of employee
70
Q

The MLR suggests what kind of record keeping regarding money laundering?

A

Retention of relevant records (identity checks, etc.) for five years

71
Q

When do you decide to do simplified due diligence on a client?

A

When risk of money laundering is deemed low

72
Q

What is checked during simplified due diligence? (2)

A
  1. Customer identification
  2. Reputational searches
73
Q

What happens if a customer’s identity cannot be identified during simplified DD?

A

The firm should not proceed with the business relationship

74
Q

When should you do Enhanced Due Diligence (EDD) on a client?

A

Applied on a risk sensitive basis

75
Q

Which specific circumstances is EDD mandatory? (3)

A
  1. Politically Exposed Person (PEP)
  2. Where false/stolen documents have been used
  3. Complex transactions where there is an unusual pattern of behaviour
76
Q

JMLSG suggests EDD should be carried out in wealth management to understand the client’s: (3)

A
  1. The origins of the client’s wealth
  2. Business structures
  3. The chain of title to the beneficial owner
77
Q

What is the impact of financial crime on the firm?

CLW CREDIT

A
  1. Criminal prosecutions
  2. Legal costs
  3. Weaking financial position and stability
  4. Civil lawsuits
  5. Restrictions of business activities
  6. Erosion of public trust and confidence
  7. Damage to reputation
  8. Increased scrutiny
  9. To combat financial crime, firms need to invest in robust compliance systems
78
Q

What does the data protection act apply to?

A

Applies to manual data and electronic data

79
Q

Data is widely defined but includes: (3)

A

Telephone
CCTV recordings
Photographs

80
Q

Can sensitive information be disclosed to 3rd parties?

A

Not without proper authority from client

81
Q

What kind of data systems does GDPR apply to?

A

The GDPR applies to both automated personal data and to manual filing systems where personal data is accessible

82
Q

How is GDPR implemented and what kind of data does it apply to?

A

Through the Data Protection Act (DPA) and applies to personal data

83
Q

Under the GDPR, firms need to appoint a what?

A

Data Protection Officer

84
Q

For GDPR, the definition for ‘personal data’ provides for a wide range of personal identifiers, including: (3)

A

Name
Identification number
Location data or online identifier

85
Q

What is Personal data?

A

information that can be used to identify an individual

86
Q

What is Sensitive personal data?

A

this term is used in respect of a person’s race, beliefs, health, sexual orientation or criminal record

87
Q

For GDPR, what is Processing?

A

activities that affect personal data, including disclosure to a third party

88
Q

What is a data subject?

A

the individual whose personal data is held

89
Q

What is a data controller?

A

Someone who decides how personal data is processed

90
Q

What is a data processor?

A

A body that processes data on behalf of data controller

91
Q

What are the GDPR principles?

A PLAIDS

A

Accuracy
Purposes limitation
Lawfulness, fairness and transparency
Accountability
Integrity and confidentiality (i.e. security)
Data minimization
Storage limitation

92
Q

What does the ‘storage limitation’ GDPR principle entail? (2)

A
  1. Personal data should be kept no longer than necessary
  2. Firms remove data no longer required
93
Q

What does the ‘integrity and confidentiality (i.e. security)’ GDPR principle entail?

A

Data handled to ensure ‘security of data including protection against unlawful processing, loss, or damage’

94
Q

What does the ‘lawfulness, fairness and transparency’ GDPR principle entail?

A

Data subject consented to data processing, and there is evidence in writing

95
Q

What does the ‘accountability’ GDPR principle entail?

A

Firms have appropriate records to demonstrate compliance

96
Q

What does the ‘data minimization’ GDPR principle entail?

A

Data collected should be ‘adequate, relevant and limited to what is necessary ‘

97
Q

What does the ‘purposes limitation’ GDPR principle entail?

A

Data is obtained only for specified explicit and legitimate purposes

98
Q

What does the ‘Accuracy’ GDPR principle entail?

A

data must be ‘accurate and where necessary kept up to date’

99
Q

What are the GDPR offences? (3)

A
  1. Failure to notify Information Commissioner
  2. Failure to comply with an information notice
  3. Processing data without authorisation
100
Q

What are the GDPR penalties?

A

unlimited fines and penal notices issued by the Commissioner

101
Q

What is professional integrity? (3)

A
  1. Acts beyond mere compliance
  2. Strive to exceed standards expected
  3. Following ethical principles
102
Q

In integrity and ethics, what is the order of priorities? (3)

A

Client first
Firm second
Self third

last dance (7 decks)

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