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IF1 Chapter 2 > CH 10 > Flashcards

CH 10 Flashcards

CONSUMER PROTECTION AND DISPUTE SOLUTION

1
Q

What is the Data Protection Act of 1984

A

This Act gave individuals protection, if an organisation lost, disclosed without authorization or retained inaccurate information about them. Computer Data was defined as Data for the purpose of this Act

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2
Q

What is the Data Protection Act of 1998

A

This replaced the Data Protection Act of 1984, and was concerned with the regulation of data transfer, but not confined to computer data. Individual information stored in pother types of systems fell in this scope,as long as the system were organised in a way data could be interrogated by name

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3
Q

General Data Protection Regulation(GDPR)

A

Came into effect 25/05/2018,has Implication on every global firm that holds or use data on EU citizen and residents. Non-EU organisation doing business in the EU and holding EU personal data need to comply with this regulation

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4
Q

Data Protection Act 2018

A

recieved assent on 25/05/2018. It modernizes data protection laws to ensure they are effective in today’s digital economy

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5
Q

What provision does the Data Protection Act 2018 apply

A

It applies the provision of General Data Protection Regulation and the Law enforcement Directive to UK law

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6
Q

Who does the GDPR apply to

A

It applies to controllers and processors,the controller says how and why personal data is processed and the processor acts on the behalf of the controller

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7
Q

The GDPR places specific legal obligation on who

A

It places specific legal obligation on the processors, like having to maintain records of personal data and processing. This obligation are new requirement under the GDPR

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8
Q

Are controllers relieved of their obligations, where a processor is involved

A

No, they are not, the GDPR places further obligations on controllers to ensure their contracts with processors comply with GDPR

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9
Q

What information does the GDPR apply to

A

It applies to personal data, including changes reflecting in technology and the way in which information is collected.
It applies to both personal data and manual filing system s

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10
Q

Which categories are included, in sensitive personal data

A
  1. race
  2. ethnic origin
  3. politics
  4. religion
  5. trade union membership
  6. genetics
  7. biometrics
  8. health
  9. sex life
  10. sexual orientation
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11
Q

Under the GDPR, the data protection principles are similar to those of Data Protection Act 1998 with some detailed addition, which is the most significant addition

A

The most significant addition is the accountability principle, where by the GDPR requires firms to show how they comply with principles

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12
Q

What is required for processing to be lawful under the GDPR

A

Firms need to identify a lawful basis before the can process data and document it

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13
Q

How does the GDPR lawful basis have an effect on an individuals right

A

a firm relies on someone’s consent, the individual usually has stronger rights

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14
Q

What are the new GDPR rights

A
  1. The right to be informed
  2. The right of access to their information, free of charge
  3. The right to rectification
  4. The right to erasure
  5. The right to restrict processing
  6. The right to data portability
  7. The right to object
  8. right in relation to automated decisions
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15
Q

The right to be informed

A

Data subjects have a right to receive information about how and why their information is used ad what their rights are.
This is provided in the form of a privacy note

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16
Q

What are the certain, mandatory information to be included in a Privacy note

A
  1. detail of controller/processor
  2. what will be done with their data
  3. who the data will be passed to
  4. how long it will be kept for
  5. what their individual rights are
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17
Q

The right of access

A

Individuals have the right to their information, free of charge. It is referred to as a subject access request

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18
Q

The right to erasure

A

It is often referred to as right to be forgotten. It doesn’t always apply in insurance,because insurance customer information may be required for longer for than expected as some policy can be claimed against many years after event can take place.

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19
Q

The right to object

A

In insurance , all individuals have the right to object direct marketing and this right should be explicitly bought tot heir attention

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20
Q

Under the GDPR which officer is mandatory for some companies to have

A

A Data Protection officer is mandatory, but for majority small/medium companies insurance brokers will not be required

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21
Q

GDPR introduces duty on all organisation to report certain types of data breach to relevant authority and the individuals affected

A

GDPR provision breaches lead to up to 20 M pounds or 4% of global annual turnover of the preceding financial year
Other breaches lead to up to 10 M pounds or 2% of global annual turnover of the preceding financial year ,whichever is greater

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22
Q

The GDPR restricts the transfer of personal data to

A

It restricts the transfer of data outside the European Union, to third countries or international organisation

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23
Q

The main elements of the Data Protection act 2018

A
  1. General Data Processing

2. Regulation and enforcement

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24
Q

Subjects of ethics are tied up with

A

They are tied up with issued of morality

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25
Q

Ethical Standards are concerned with

A

They are concerned with the way in which moral outcome ca be achieved in a given circumstance

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26
Q

According to ethical standards what is the hallmark of a professional

A

Is the ability to step back from issues of self interest and provide competent independent advise in the interest of the client. This will inspire public trust in their services

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27
Q

Code of conduct

A

All professional bodies produce a code, to which each member must adhere.They are not forcible by law, but may lead to penalties if failure to comply

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28
Q

Do professional bodies take disciplinary action against members who fail to comply by their codes like trade bodies

A

No, they do not take any disciplinary action to their members, it follows failure to comply with the code will bring members into disrepute

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29
Q

What do the codes of ethics of the CII represent

A

This represents a set of ethical principles for insurance and financial services professionals world wide

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30
Q

What is the basis of the CII code of ethics

A

It’s principal based, thus takes it is flexible enough to take into account wide range of different roles undertaken within the sector

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31
Q

what are the overlapping requirements of ethical behavior for CII

A 
Integrity
Fairness
Service
Client's Interest
Compliance
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32
Q

The code of the CII is more concerned with

A

It is more concerned with behavior and attitude

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33
Q

What are measures taken by the CII, in the failure of members to follow the code

A

The CII will take disciplinary action

34
Q

What are the five main principles in the Code of Ethics of the CII.

A

The members must

  1. comply with the code and all relevant laws and regulation
  2. act with the highest ethical standards and integrity
  3. act in the best interest of each client
  4. provide a high standard of service
  5. treat people fairly regardless of their categories of sensitive data
35
Q

The decisions of the FOS financial ombudsman service are highlighted

A

There decisions are independent of the court system and demonstrate the FOS expectation of fairness of treatment to the consumer

36
Q

Emphasizing the ethical nature of the code

A

Members must abide by both Spirit and letter of the law

37
Q

Highest ethical standard and integrity principle deals with

A

It deals with avoiding taking unfair advantage of a client.colleague or thirdpaty. Its not all prohibitory, members must promote professional standards and encourage the use of ethical codes within the fir,

38
Q

What theme to the FCA and the code have in common

A

The fair treatment to clients

39
Q

High standards of service principle deals with

A

It deals with ensuring communication with clients must be accurate and straightforwards.Transparency and suitability are the main elements of this section

40
Q

High-level rules, applying to all authorized firms are found in which source book

A

They are found in Senior Management arrangement, systems and controls(sysc)

41
Q

What does the FCA place great importance on

A

It places importance on quality of performance and quality of advise given to clients

42
Q

According to the source book The principles of the the firm must

A
  1. employ personnel with the skills, knowledge and expertise necessary to carry out responsibilities allocated to them
  2. take into account nature, scale and complexity of it business and nature and range of financial services and activities undertaken
43
Q

For those providing advice in general insurance, what is the extra requirement

A

The extra requirement of the training and competence source book apply only to firms whose employees advise on contracts with consumers

44
Q

What does competence mean

A

This means having the skills, knowledge and expertise needed to carry out responsibilities of the employees role

45
Q

Competence means being able to achieve

A

Good standard of ethical behavior

46
Q

The FCA states three key areas of training and competence that firm must consider are

A

1.assesing competence
maintaining competence
3.record keeping

47
Q

Firms must put in place a detailed written manual for

A

That indicates how they deal both with assessment of competence and its maintenance at every stage of an employee’s development. This applies from initial stage when the person applies for a job through the point they are deemed to be competent

48
Q

FCA insists a range of approved qualifications for

A

For those who wish to provide financial advice in areas of life insurance, pension and investment, but for general insurance it is not required

49
Q

Once competent, the maintenance of competence must take account of

A
  1. technical knowledge and application
  2. skills and expertise
  3. change in the market and to products, legislation and regulation
50
Q

For firms advising on insurance, what does the FCA require on record keeping of a ceased employee

A

It requires that records of training and assessment of competence to be kept for at least three years from the time employment ended

51
Q

The FCA regulations are concerned with two categories of complaint, which are

A

Eligible and non eligible

52
Q

What is the starting point of the complaint handling procedure

A

The starting point is establishing whether the situation falls within the firms definition of a complaint

53
Q

Who is an eligible compliant

A
  1. consumer
  2. a charity with annual income less than 6.5m pounds
  3. a trust with net asset value of less than 5 m pounds
  4. A Consumer buy to let consumer
  5. a small b’ness with annual turnover less then 6.5m and fewer than 50 employees or balance sheet total of less than 5m
  6. a micro-enterprise which employs less than 10 people, and annual balance sheet or turnover not exceeding 2M pounds
  7. a guarantor
54
Q

All complaints from eligible complainants are subject to

A

FCA complaint handling rules and the complainants within these categories have a right of access to the FOS

55
Q

How will the FOS determine the eligibility of and eligible complainant

A

They will determine the eligibility by reference to appropriate evidence such as audited accounts or VAT returns

56
Q

What about non-eligible complaints

A

Firms must have in place and operate, appropriate procedures for registering and responding to the expression of dissatisfaction

57
Q

What should the complaints file include

A
  1. the name of the person dealing with the complaint
  2. the name of the complainant
  3. the capacity(eligible or non-eligible)
  4. the substance of the complaint
  5. all correspondence and files notes relating to the complaint
  6. any redress offered
58
Q

How long should complaints files be stored for

A

they should be retained for at least 3 years

59
Q

What is a master compliants log used for

A

This is used for tracking the progress of a complaint

60
Q

According to the FCA,how should complaints be handeled

A

They should be handled promptly and the progress should be monitored

61
Q

If complaints are resolved early (within three business days) how should this be handled

A

They are handled less formally without sending out final response letter. They will issue a Summary Resolution Communication to complainants. If the complainants feel that the complaint has not been resolved, they can take it up to the FOS

62
Q

within 8 weeks of receiving a complaint a firm must provide

A
  1. a final response, being a written response from the respondent
  2. a written response
63
Q

What should be enclosed in a final response from the respondent, within 8 weeks of receiving a complaint

A
  1. accepts complaint, where appropriate offers redress action
  2. offers redress action, without accepting complaint
  3. rejects complaint and gives reasons for doing so
  4. attached a copy of the FOS standard explanatory leaflet
  5. Inform the complainants if they are not satisfied with the response, the must take it up with the FOS, and must do so within 6 months
64
Q

What should be enclosed in a written response from the respondent, within 8 weeks of receiving a complaint

A
  1. explain why it is not in the position to make a final response and Indicate when it will be able to provide one
  2. inform the complainant they can now refer the complaint to the FOS
  3. attach a copy of the FOS standard explanatory leaflet
65
Q

The Financial Ombudsman Service was introduced following the enactment of

A

Financial Services and Markets Act 2000(FSMA)

66
Q

What is the Financial Ombudsman Service

A

This is an independent body that has a memorandum of understanding with the FCA for cooperation and communication as they carry out independent roles

67
Q

Membership of the FOS is compulsory to which firms

A

Authorized insurers and other authorized firms like intermediaries

68
Q

What is type of mechanism is the Financial Ombudsman Service

A

This is an independent mechanism for dealing with disputes from eligible compalints

69
Q

What does the FOS aim to provide

A

It aims to provide impartial and independent resolution of disputes between insurer and policyholder or intermediaries and their clients. It is not concerned with commercial customers of large enterprises

70
Q

Vast majority of cases referred to the FOS deal with

A

They deal with claims, but complaints re also investigated

71
Q

How does a complaint reach the FOS

A

First a complaint will require a final response from the firm before it can be take up by the FOS. The complaints procedures of the authorized firm has been exhausted .If the dispute remains unresolved between the insurer and compliant then the FOS steps in

72
Q

What is the maximum financial reward FOS and make

A

150,000 pounds, however they may recommend a higher figure if appropriate but this will not be binding

73
Q

What shall the insurer or insured do if the insured accepts or rejects the FOS decison

A

If insured accepts, then the insurer or intermediary has to pay an award up to the monetary limit. If the insured refuses they can still choose to issue legal proceedings

74
Q

What is the Financial Services Compensation Scheme

A

This is the Uk’s compensation fund of the last resort for customers of deposit-taking companies and investment firms,and authorized firms of insurance companies and intermediaries

75
Q

The Financial Services Compensation Scheme covers claims for which firms

A

It covers claims against firms where they are unable or likely to be unable to pay claims against them.I occurs when a firm has become insolvent or gone out of buisness

76
Q

Why was the Financial services compensation scheme set up

A

It was set up to assist private individual, however small businesses(with less that 1 million turnover) are covered

77
Q

What type of insurance does the Financial services compensation scheme cover

A

compulsory(third part), general and life insurance. Triggered when an insurance company is out of business or under liquidation

78
Q

Under the Financial services compensation scheme the type of compensation policyholder receives depends on

A

IT will depend on the type of policy.

79
Q

Protection is 100% guaranteed for which policies

A
  1. Compulsory Insurance(Third pary and employers liability)
  2. Professional Indemnity Insurance
  3. Long term insurance(pension and life)
  4. certain claims of injury/sickness/infirmity of the policyholder
80
Q

Protection is 90% guaranteed for which policies

A

For a claim with no upper limit for other types of policy including general insurance advice and arranging

81
Q

How is the financial Service Compensation Scheme funded

A

It is funded by a levy on all authorized firms who receive income from eligible claimants

IF1 Chapter 2 (10 decks)

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