Chapter 5 - Legal and Regulatory requirements Flashcards
What insurances are compulsory for individuals and businesses?
Individuals - Third party motor and public liability in respect to ownership of dangerous animals
Businesses - Motor and employers’ liability for any company with road vehicles and employees.
Why are certain forms of insurance compulsory?
To provide funds for compensation
In response to national concerns
How does breaches of these vary from normal and compulsory insurance?
Breaches of warranty - more difficult for insurers not to pay claims even if this occurs
The duties of good faith and fair presentation
What are some other compulsory insurances in other countries
USA - has compulsory motor insurance in every state and workers’ compensation provides coverage for employees who become ill at work
Turkey - requirement for property-owners to purchase insurance against earthquakes, and some compulsory motor
Australia - In all but 2 states, there is only one provider of the basic compulsory motor insurance
Germany - requirement to have third party liability insurance for any event which the German court might consider you negligent
What is Insurance Premium tax (IPT)?
a tax levied by the UK government on general insurance premiums in the UK.
Standard rate is 12% and higher rate is 20% for travel insurance and some insurances such as those sold in conjunction with the purchase of vehicles and electrical appliances.
The insurer is responsible for collecting this tax from the insured on behalf of the UK government
What are the 3 parts of Senior Managers and Certification Regime (SM&CR)?
Senior managers regime
Certification regime
rules of conduct
What does senior managers regime cover?
Any senior management functions (SMFs) described by the FCA and PRA, list is:
Executive
No-executive
A statement of responsibilities should be prepared for each senior manager, setting out their responsibility in managing the firm’s affairs.
What does the certification regime cover?
applies to individuals who are not carrying out SMFs but whose roles have been deemed capable of causing significant harm to the firm or its customers.
What are the first (individual conduct) tier Rules?
First tier: Must act with integrity
Must act with due skill, care and diligence
Must be open and cooperative with regulators
Must pay due regard to customers and treat them fairly
most observe poor standards of market conduct
What are the second (senior manager conduct) tier rules?
SC1 - must take reasonable steps to ensure the business of the firm is controlled effectively
SC2 - take steps to ensure the firm complies with the relevant requirements and standards of the regulatory system
SC3 - any delegation of responsibilities is to an appropriate person.
SC4 - must disclose appropriately any info the FCA or PRA would expect notice of
What are the range of functions undertaken by a designated Compliance officer (must be senior manager or director)?
Communication of the company’s policies
Completion of regulatory returns such as governance, finance and complaints
reviewing company procedures
maintaining the firm’s compliance manual
checking that all stages of the business process are being conducted in accordance with the compliance manual
What is a Money Laundering Reporting Officer (MLRO)?
Individual who is nominated and they must be senior management and is regulated by PRA and FCA. Ensures appropriate money laundering checks are taking place and there are appropriate procedures
