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CII R01 > 7. The Regulatory Advice Framework > Flashcards

7. The Regulatory Advice Framework Flashcards

1
Q

What was the primary objectives of the Retail Distribution Review?

A
  1. Remove commission based bias
  2. Make advice clearer for the consumer
  3. Improve professional standards
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2
Q

What is the initiative of the Treating Customers Fairly review?

A

Focuses on outcomes to achieve a fair deal for the consumer

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3
Q

What service was set up to help consumers make financial decisions by providing information?

A

Money Advice Service (MAS) website

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4
Q

What is the objective of the National Strategy for Financial Capability?

A

its objective was to develop informed, confident consumers who are better able to take control of their finances.

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5
Q

What are the National Occupational Standards?

A

Are statements of the standards of performance individuals must achieve when carrying out functions in the workplace.

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6
Q

What did the Thoresen Review of Generic Financial Advice recommend?

A
  1. A Money Guidance (MG) service
  2. MG should focus on giving people information and guidance on finance
  3. MG should have a multi-channel approach (telephone, internet, etc.)
  4. MG should appeal to different groups
  5. A 2 year pathfinder service should be ruled out first
  6. The FCA should be responsible for taking MG forward
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7
Q

What does Financial Capability mean?

A
  1. Being able to manage money
  2. Keeping track of finances
  3. Planning ahead
  4. Making informed decisions about financial products
  5. Staying up to date with financial matters
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8
Q

What is the purpose of the MAS?

A

To provide free and independent information to help consumers needing practical money advice, whatever their financial circumstances.

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9
Q

How is MAS paid for?

A

By the financial services industry.

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10
Q

What is the ‘pensions freedom of choice’ regime?

A

Those over the age of 55 with a defined contribution pension are allowed to decide how to take the money out of the pension pot.

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11
Q

What is Pension Wise?

A

A free and impartial service for consumers on what they:

  1. Can do with their pension pot
  2. The different types of pensions and how they work
  3. What is and isn’t tax free
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12
Q

What are the 6 TCF outcomes the firms must achieve?

A
  1. Consumers are confident that treating customers fairly is central to corporate culture
  2. Products meet the needs of the consumer and are targeted accordingly
  3. Provide clear information and kept informed before, during and after the point-of-sale
  4. Advice is suitable to consumer circumstances
  5. Products perform to the standard expected
  6. No unreasonable post sale barriers are imposed by firms
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13
Q

What were the deadlines for firms to meet the TCF requirements?

A
  1. March 2007 - TCF should be in place in most of the firm
  2. March 2008 - Evidence should be gathered to test TCF, in the form of Management Informaiton (MI)
  3. December 2008 - MI should show firms are meeting the 6 principles
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14
Q

How is MI gathered?

A
  1. Compliance checks

2. Senior management assessments

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15
Q

What are financial advisors required to provide to consumers?

A
  1. Their status
  2. The nature of their advice
  3. How they are paid.
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16
Q

What does SCDD stand for and what did it replace?

A

Services and Costs Disclosure Document.

It replaced the Initial Disclosure Document (IDD) and the Fees and Commission Statement.

17
Q

What does SCDD allow firms to do?

A
  1. Develop their own disclosure material

2. Using SCDD and CIDD to allow them to satisfy COBS

18
Q

What does the RDR require of Independent Advice?

A

Recommendations are a fair analysis of the relevant market and unbiased and unrestricted.

19
Q

What does the RDR define restricted advice as?

A

If advice does not meet the requirement of independent advice

20
Q

From 31 December 2012, what does Remuneration require from Financial Advisors?

A
  1. Set their own charges
  2. charges should be set on the level of service
  3. Charges should be given up front
  4. Ongoing charges should only be implemented when ongoing service have been agreed
  5. Product providers are banned from giving advisors commission
21
Q

What did polarisation require advisors to do?

A

Declare either they represent a product provider or are independent.

22
Q

What is a single-tied agent?

A

Can only advise on products from the provider which they are tied.

23
Q

What is a multi-tied agent?

A

They can only advise products from a range of products which they are tied.

24
Q

What is Whole of Market (WoM)?

A

Is an advisor who access to the whole market. Receive remuneration through commissions from the providers.

25
Q

What is a Bancassurance?

A

A life office owned by a bank whose products are sold by the bank.

26
Q

What type of agents for under restricted advice category?

A
  1. Single-tied agents
  2. Multi-tied agents
  3. WoM advisors
27
Q

What is an Independent Advisor?

A

Is an advisor who access to the whole market. Receive remuneration through a flat fee from the client.

28
Q

What is the stakeholder range?

A
  1. Short-term product - cash deposit account (£10 minimum investment)
  2. Medium-term investment product - Stocks and shares component of an ISA (£20 minimum investment)
  3. Long-term pension product - a lifestyle version of the existing stakeholder pension.
29
Q

What did the Sandler review propose?

A

A range of simple, low cost and risk controlled stakeholder products.

30
Q

What financial promotions do COBS not cover?

A
  1. Deposits
  2. General insurance
  3. Home finance business
  4. Pure protection life assurance
  5. Reinsurance
31
Q

What are real-time promotions?

A

Promotions that are done in the course of a personal visit, telephone and other interactive dialogue.

32
Q

What are non-real time promotions?

A

Are all other promotions such as advertisements.

33
Q

How long must a firm keep a record of its non-real time promotions?

A
  1. Pension transfer, pension opt-out, FSAVC - forever
  2. Life and pension contracts - 6 years
  3. MiFID firm - 5 years
  4. Non MiFID firm - 3 years
34
Q

What must be included in a non-real time promotion?

A
  1. Name of firm

2. Its address or POC

35
Q

What must be included in a real time promotion?

A
  1. Fair, clear and not misleading
  2. Identifies the purpose and firm at the start
  3. If not previously agreed, check with the recipient if ok to go forward
  4. Gives the recipient a POC
  5. Does not communicate at a unsocial hour.

CII R01 (10 decks)

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