Chapter 1 Flashcards
The Financial Policy Committee
• sits within bank of england
• responsible for macro-prudential supervision
• protect and enhance financial stability
Prudential Regulation Authority
• regulates and supervises firms
• promotes safety and soundness
• protects insurance policyholders
• facilitate effective competition
Financial Conduct Authority
• ensure markets function well
• consumer protection
• integrity of UK financial system
• promote competition
Principles For Business (PRIN)
Claims department should embed 1, 2, 6, 7, 8, 9 and 12
- Integrity
- Skill, Care and Diligence
- Management and Control
- Financial Prudence
- Market Conduct
- Customer Interests
- Communications
- Conflicts Of Interest
- Relationships
- Client Assets
- Relationships with Regulators
- Consumer Duty
Training and Competence (TC)
• employees are/remain competent
• employees are appropriately supervised
• employees competence is reviewed regularly
• competence levels match nature of business
Insurance Distribution Directive
15 hours of personal development completed per year
Dispute Resplution : Complaints (DISP)
how complaints are dealt with by respondents and the FOS
ICOBS
• contains detailed requirements for day to day business
• divided into 8 sections
• specifically outlines rules for claims handling
ICOBS 8.1.1
• handle claims promptly and fairly
• provide reasonable guidance to help policyholders make claims
• not unreasonably reject claims
• settle claims promptly once settlement terms are agreed
Consumer Rights Act
requires services to be performed within a reasonable time
Enterprise Act 2016
insurers must pay claims settlements within a reasonable time
ICOBS 1.1.2 and 1.1.3
• provides additional protection for consumer policyholders
• defines a consumer as someone acting outside their trade, business or profession
• unreasonable to reject a claim except in cases of fraud, non-disclosure or misrepresentation
ICOBS 8.2
• motor vehicle liability
• requires TP motor claims to be settled within three months if liability is admitted and damage quantified
ICOBS 8.4
concerns employers liability and the use of an EL’s register to identify the appropriate insurer
Principle 8 PRIN
requires a firm to manage conflicts of interest fairly
when is a firm likely to be a customer’s agent?
when it acts for a customer in arranging a policy
Six Consumer Outcomes
• fair treatment of customers
• product design
• clear information
• suitable advice
• product performance
• no unreasonable barriers
Four Outcomes under the Consumer Duty
• products and services
• price and value
• consumer understanding
• consumer support
Principle 12 PRIN
“a firm must act to deliver good outcomes for retail customers”
Cross-Cutting Rules
• act in good faith towards retail customers
• avoid causing foreseeable harm to retail customers
• enable and support retail customers to pursue their financial objectives
CII members are required to
• comply with the code and all relevant laws and regulations
• act with the highest ethical standards and integrity
• act in the best interests of each client
• provide a high standard of service
• treat people fairly
Environmental Factors
focuses on a company’s environmental impact, including carbon footprint, energy efficiency and waste management
Social Factors
• relationships with employees, communities and stakeholders
• diversity
• community engagement
Governance Factors
involved transparent and ethical decision-making processes, effective board oversight and alignment with shareholder interests
UN Environmental Programme’s Principles for Sustainable Insurance Initiative
• embed ESG issues in decision-making
• raise awareness and manage ESG risks with clients and partners
• promote action on ESG issues with government and stakeholders
• demonstrate accountability and transparency in ESG progress
Outsourcing Claims Handling
• often outsource claims handling to TPAs or MGAs
• insurers remain responsible for meeting ICOBS standards
ICOBS 2.5.3
• a firm cannot pass on its regulatory responsibilities to others
• even if outsourced, it is still responsible for meeting regulatory requirements
Definition of a “complaint”
any oral or written expression of dissatisfaction, whether justified or not
Complaint Informal Resolution
• if resolved by the third day with consumer agreement, provide a summary resolution in writing
• inform the customer of their rights to take the complaint to the FOS
Complex Complaints
• must be resolved within 8 weeks
• provide progress updates and a final response explaining the decision and any redress
• inform the complainant of their right to refer to the FOS
Reporting Complaints
• firms must report complaint numbers to the FCA twice a year
• includes complaints resolved informally within 3 days
FOS Eligible Claimants
• consumer
• micro-enterprise with no fewer than 10 employees and a turnover or balance sheet total of no more than €2
• charities with an annual income of less than £6.5m
• trustees of trusts with a net value of less than £5m
• small business with an annual turnover of less than £6.5m and fewer than 50 employees or a balance sheet total of less than £5m
• guarantors
Referring complaints to the FOS
• six months of the date on the firm’s letter advising the claimant of it’s final decision
• six years after the event complained about
• three years after the complainant knew, or should have known, that they had cause for complaint
FOS awards
Money Award:
date complaint referred to the FOS on or after and act occurred on or after 1st April 2024 - £430,000
date complaint referred to the FOS on or after 1st April 2024 and act occurred before 1st April 2019 - £195,000
A “directions award”
telling the firm what actions it needs to take to put things right for its customer
FOS funding
• a general levy paid by all firms
• a case fee payable by the firm to which the complaint relates
Regulation in Non-UK Jurisdictions
• insurers may write business in jurisdictions worldwide
• ensure that the claims adjuster is equipped to handle these appropriately
