8. Fair And Ethical Outcomes For Customers

Question 1

What are the FCA’s 12 Principles for Business?

Answer 1

Integrity
Skill, care and diligence
Management and control
Financial prudence
Market conduct
Customers interests
Communication with clients
Conflicts of interest
Customers relationship of trust
Clients assets
Relations with regulators
Consumer Duty

Question 2

What are the 6 outcomes of Fair Treatment of Customers

Answer 2

Customers treated fairly
Products designed to meet consumer groups - targeted
Consumers provided with clear info
Advice is suitable
Products perform as expected
No unreasonable post-sale barriers to change/switch/claim/complain

Question 3

What are the 4 outcomes of the new Consumer Duty?

Answer 3

Communications equip consumers to make effective, timely, informed decisions

Products + services specifically designed to meet needs, and sold to those whose needs they meet

Customer service meets needs of consumers

Prices represent fair value for consumers

Question 4

What is the difference between insider dealing and market manipulation?

Answer 4

Insider dealing: acting on non-public info for personal gain

Market manipulation: spreading false/misleading info to influence share price for personal gain

Question 5

What are the 3 main money laundering offences and what is the maximum penalty?

Answer 5

Concealing: disguising/transferring/removing criminal property

Arranging: facilitating acquisition/use of criminal property

Acquisition: use/possession of criminal property

Max 14 years prison and/or fine

Question 6

What are the 3 main functions of FATF?

Answer 6

Setting standards for national AML

Evaluating implementation of standards

Identifying trends in money laundering methods

Question 7

What are the 11 AML requirements for authorised firms?

Answer 7

Accountabilities/procedures to prevent money laundering

Educate staff + regular training

Establish process for CDD

Carry out CDD

Report suspicious circumstances

No tipping off

Appoint MLRO

Staff must report money laundering to MLRO who may report to NCA

Keep procedures up to date

MLRO produced annual report

Strengthen controls against deficiencies identified in MLRO report

Question 8

What are the thresholds to carry out CDD on a transaction and life assurance (annual + single)

Answer 8

Transaction >€15k

Life assurance premium >€1k (annual) or >€2.5k (single)

Question 9

How long should evidence of CDD be retained? (ID + transaction evidence)

Answer 9

ID retained for 5 years from end of customer relationship

Evidence of transactions retained for 5 years from transaction date

Question 10

What are the 7 Data Protection principles?

Answer 10

Lawful, fair, transparent
Purpose limitation; collected for proper reason
Data minimisation; not excessive
Accuracy
Storage limitation; not kept forever
Integrity + confidentiality
Accountability

Question 11

What 9 rights do individuals have under the Data Protection Act?

Answer 11

Know the purpose for processing, and identity of Data Controller
Access to data held; must be provided in 1 month (or 3 if complex)
Rectification of inaccurate data; must be done in 1/3 months
Right to be forgotten
Prevent/restrict processing of data
Obtain and reuse data for free
Object to processing data for marketing
Object to automated decision-making
Can complain to ICO/courts

Question 12

What are the 5 enforcement powers of the ICO?

Answer 12

Information notice; must provide info

Assessment notice; compulsory audit

Enforcement notice; required to take specific steps

Issue of undertakings; firm commits to specific action

Monetary - up to €20m for serious breaches or €10m for others

Question 13

Who are the 7 eligible complainants whose complaints are subject to the FCA & FOS complaints requirements?

Answer 13

Consumers/private individuals
Micro enterprises; <10 staff, <€2m revenue and BS
Small businesses; <50 staff, <£6.5 rev, <£5m BS
Charities with rev <£6.5m
Trust with net asset value <£5m
Consumer buy to let customers
Guarantors for micro/small business

Question 14

What are the timelines for complaints? (Acknowledgement and response/resolution)

Answer 14

Written acknowledgement promptly unless resolved in 3 days

Expected to respond/resolve in 8 weeks

Question 15

How long should records of complaints be retained?
a) normal
b) collective portfolio management
c) MiFID

Answer 15

3 years

5 years for collective portfolio management

No min for MiFID businesses

Question 16

What is the time limit on making a complaint?

Answer 16

Must be made by the later of:

6 years from event

3 years from becoming (or should have become) aware of cause for complaint

Question 17

What are the key features of the FOS? (4)

Answer 17

Independent, not for profit

Settles disputes between firms + customers

Free to individuals and small businesses

Only considers complaints first made to firm + not happy or late response

Question 18

What are the FOS compensation limits?

Answer 18

For referrals made on/after 1 April 2022;

Events before 1 Apr19: £170k
Events on/after 1 Apr19: £375k

Question 19

FSCS: What are the temporary high balances circumstances (5) and level of protection (£ + time) ?

Answer 19

£1m for 6 months from life event

Selling own home

Inheritance

Redundancy payment

Compensation for personal injury / criminal injustice

Divorce settlement

Question 20

FSCS: which insurance claims are 100% covered? (4)
What is the % limit for other insurance claims?

Answer 20

Compulsory eg car
Pure protection
Long term care
Long term insurance

Other insurance = 90%

Question 21

Who must be members of FOS and what is the fee?

Answer 21

Authorised firms must be members
General levy + fee for 4th and each subsequent case p.a

Question 22

How long does a complainant have to refer to FOS?

Answer 22

6 months from the firm’s response to original complaint