CH 10 Flashcards
CONSUMER PROTECTION AND DISPUTE SOLUTION
What is the Data Protection Act of 1984
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
What is the Data Protection Act of 1998
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
General Data Protection Regulation(GDPR)
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
Data Protection Act 2018
recieved assent on 25/05/2018. It modernizes data protection laws to ensure they are effective in today’s digital economy
What provision does the Data Protection Act 2018 apply
It applies the provision of General Data Protection Regulation and the Law enforcement Directive to UK law
Who does the GDPR apply to
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
The GDPR places specific legal obligation on who
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
Are controllers relieved of their obligations, where a processor is involved
No, they are not, the GDPR places further obligations on controllers to ensure their contracts with processors comply with GDPR
What information does the GDPR apply to
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
Which categories are included, in sensitive personal data
- race
- ethnic origin
- politics
- religion
- trade union membership
- genetics
- biometrics
- health
- sex life
- sexual orientation
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
The most significant addition is the accountability principle, where by the GDPR requires firms to show how they comply with principles
What is required for processing to be lawful under the GDPR
Firms need to identify a lawful basis before the can process data and document it
How does the GDPR lawful basis have an effect on an individuals right
a firm relies on someone’s consent, the individual usually has stronger rights
What are the new GDPR rights
- The right to be informed
- The right of access to their information, free of charge
- The right to rectification
- The right to erasure
- The right to restrict processing
- The right to data portability
- The right to object
- right in relation to automated decisions
The right to be informed
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
What are the certain, mandatory information to be included in a Privacy note
- detail of controller/processor
- what will be done with their data
- who the data will be passed to
- how long it will be kept for
- what their individual rights are
The right of access
Individuals have the right to their information, free of charge. It is referred to as a subject access request
The right to erasure
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.
The right to object
In insurance , all individuals have the right to object direct marketing and this right should be explicitly bought tot heir attention
Under the GDPR which officer is mandatory for some companies to have
A Data Protection officer is mandatory, but for majority small/medium companies insurance brokers will not be required
GDPR introduces duty on all organisation to report certain types of data breach to relevant authority and the individuals affected
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
The GDPR restricts the transfer of personal data to
It restricts the transfer of data outside the European Union, to third countries or international organisation
The main elements of the Data Protection act 2018
- General Data Processing
2. Regulation and enforcement
Subjects of ethics are tied up with
They are tied up with issued of morality
Ethical Standards are concerned with
They are concerned with the way in which moral outcome ca be achieved in a given circumstance
According to ethical standards what is the hallmark of a professional
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
Code of conduct
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
Do professional bodies take disciplinary action against members who fail to comply by their codes like trade bodies
No, they do not take any disciplinary action to their members, it follows failure to comply with the code will bring members into disrepute
What do the codes of ethics of the CII represent
This represents a set of ethical principles for insurance and financial services professionals world wide
What is the basis of the CII code of ethics
It’s principal based, thus takes it is flexible enough to take into account wide range of different roles undertaken within the sector
what are the overlapping requirements of ethical behavior for CII
Integrity Fairness Service Client's Interest Compliance
The code of the CII is more concerned with
It is more concerned with behavior and attitude
What are measures taken by the CII, in the failure of members to follow the code
The CII will take disciplinary action
What are the five main principles in the Code of Ethics of the CII.
The members must
- comply with the code and all relevant laws and regulation
- act with the highest ethical standards and integrity
- act in the best interest of each client
- provide a high standard of service
- treat people fairly regardless of their categories of sensitive data
The decisions of the FOS financial ombudsman service are highlighted
There decisions are independent of the court system and demonstrate the FOS expectation of fairness of treatment to the consumer
Emphasizing the ethical nature of the code
Members must abide by both Spirit and letter of the law
Highest ethical standard and integrity principle deals with
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,
What theme to the FCA and the code have in common
The fair treatment to clients
High standards of service principle deals with
It deals with ensuring communication with clients must be accurate and straightforwards.Transparency and suitability are the main elements of this section
High-level rules, applying to all authorized firms are found in which source book
They are found in Senior Management arrangement, systems and controls(sysc)
What does the FCA place great importance on
It places importance on quality of performance and quality of advise given to clients
According to the source book The principles of the the firm must
- employ personnel with the skills, knowledge and expertise necessary to carry out responsibilities allocated to them
- take into account nature, scale and complexity of it business and nature and range of financial services and activities undertaken
For those providing advice in general insurance, what is the extra requirement
The extra requirement of the training and competence source book apply only to firms whose employees advise on contracts with consumers
What does competence mean
This means having the skills, knowledge and expertise needed to carry out responsibilities of the employees role
Competence means being able to achieve
Good standard of ethical behavior
The FCA states three key areas of training and competence that firm must consider are
1.assesing competence
maintaining competence
3.record keeping
Firms must put in place a detailed written manual for
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
FCA insists a range of approved qualifications for
For those who wish to provide financial advice in areas of life insurance, pension and investment, but for general insurance it is not required
Once competent, the maintenance of competence must take account of
- technical knowledge and application
- skills and expertise
- change in the market and to products, legislation and regulation
For firms advising on insurance, what does the FCA require on record keeping of a ceased employee
It requires that records of training and assessment of competence to be kept for at least three years from the time employment ended
The FCA regulations are concerned with two categories of complaint, which are
Eligible and non eligible
What is the starting point of the complaint handling procedure
The starting point is establishing whether the situation falls within the firms definition of a complaint
Who is an eligible compliant
- consumer
- a charity with annual income less than 6.5m pounds
- a trust with net asset value of less than 5 m pounds
- A Consumer buy to let consumer
- a small b’ness with annual turnover less then 6.5m and fewer than 50 employees or balance sheet total of less than 5m
- a micro-enterprise which employs less than 10 people, and annual balance sheet or turnover not exceeding 2M pounds
- a guarantor
All complaints from eligible complainants are subject to
FCA complaint handling rules and the complainants within these categories have a right of access to the FOS
How will the FOS determine the eligibility of and eligible complainant
They will determine the eligibility by reference to appropriate evidence such as audited accounts or VAT returns
What about non-eligible complaints
Firms must have in place and operate, appropriate procedures for registering and responding to the expression of dissatisfaction
What should the complaints file include
- the name of the person dealing with the complaint
- the name of the complainant
- the capacity(eligible or non-eligible)
- the substance of the complaint
- all correspondence and files notes relating to the complaint
- any redress offered
How long should complaints files be stored for
they should be retained for at least 3 years
What is a master compliants log used for
This is used for tracking the progress of a complaint
According to the FCA,how should complaints be handeled
They should be handled promptly and the progress should be monitored
If complaints are resolved early (within three business days) how should this be handled
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
within 8 weeks of receiving a complaint a firm must provide
- a final response, being a written response from the respondent
- a written response
What should be enclosed in a final response from the respondent, within 8 weeks of receiving a complaint
- accepts complaint, where appropriate offers redress action
- offers redress action, without accepting complaint
- rejects complaint and gives reasons for doing so
- attached a copy of the FOS standard explanatory leaflet
- 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
What should be enclosed in a written response from the respondent, within 8 weeks of receiving a complaint
- explain why it is not in the position to make a final response and Indicate when it will be able to provide one
- inform the complainant they can now refer the complaint to the FOS
- attach a copy of the FOS standard explanatory leaflet
The Financial Ombudsman Service was introduced following the enactment of
Financial Services and Markets Act 2000(FSMA)
What is the Financial Ombudsman Service
This is an independent body that has a memorandum of understanding with the FCA for cooperation and communication as they carry out independent roles
Membership of the FOS is compulsory to which firms
Authorized insurers and other authorized firms like intermediaries
What is type of mechanism is the Financial Ombudsman Service
This is an independent mechanism for dealing with disputes from eligible compalints
What does the FOS aim to provide
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
Vast majority of cases referred to the FOS deal with
They deal with claims, but complaints re also investigated
How does a complaint reach the FOS
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
What is the maximum financial reward FOS and make
150,000 pounds, however they may recommend a higher figure if appropriate but this will not be binding
What shall the insurer or insured do if the insured accepts or rejects the FOS decison
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
What is the Financial Services Compensation Scheme
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
The Financial Services Compensation Scheme covers claims for which firms
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
Why was the Financial services compensation scheme set up
It was set up to assist private individual, however small businesses(with less that 1 million turnover) are covered
What type of insurance does the Financial services compensation scheme cover
compulsory(third part), general and life insurance. Triggered when an insurance company is out of business or under liquidation
Under the Financial services compensation scheme the type of compensation policyholder receives depends on
IT will depend on the type of policy.
Protection is 100% guaranteed for which policies
- Compulsory Insurance(Third pary and employers liability)
- Professional Indemnity Insurance
- Long term insurance(pension and life)
- certain claims of injury/sickness/infirmity of the policyholder
Protection is 90% guaranteed for which policies
For a claim with no upper limit for other types of policy including general insurance advice and arranging
How is the financial Service Compensation Scheme funded
It is funded by a levy on all authorized firms who receive income from eligible claimants
