Chapter 2 - Broking Fundamentals

Question 1

What does the Financial Conduct Authority (FCA) require brokers to do in their business operations?

Answer 1

The FCA requires brokers to conduct their business in line with the fair treatment of customers

Question 2

Under the law of agency, what duties do brokers have toward their clients?

Answer 2

Brokers, as agents, have a legal duty to act in the best interests of their clients.

Question 3

What are the business benefits of a ‘customer first’ culture in broking firms?

Answer 3

A ‘customer first’ culture can lead to high client retention, increased recommendations, and a good reputation with customers, insurers, and competitors.

Question 4

What are the core broking functions that brokers perform?

Answer 4

Provision of products and services
Negotiation and placement
Selection of insurers
Claims negotiation, collection, and payment
Design and operation of insurance programmes

Question 5

Why do clients use the services of insurance brokers?

Answer 5

Clients may use insurance brokers because they may not know about or understand the intricacies of insurance. They may need help understanding the product they require and how the policy will benefit them.