Chapter Flashcards
The regulatory and commercial environment I: The PRA and the FCA
The first attempt at imposing any form of supervision of UK insurance happened…..
…with the passing of the Insurance Brokers (Registration) Act 1977
What Act of Parliament created the FSA
Financial Services and Markets Act 2000
Since 1 April 2013, regulation has been the responsibility of
the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
A third body the Financial Policy Committee (FPC) is responsible for monitoring emerging risks to the UK financial system
What Act gave powers of supervision to the PRA and FCA
The FCA and PRA took most duties previously allocated tot he FSA under powers granted by the Financial Services Act 2012
What is the PRC and when was it established
The Prudential Regulation Committee. It is part o f the Bank of England, replacing the PRA Board from 1 March 2017. The PRC operates alongside other two Bank Committees, the FPC and the MPC
What are the objectives of the PRA
- Promote safety and soundness of the firms it regulates
- Protection of insurance policyholders
- Facilitate effective competition - this objective is secondary
What is the singe strategic objective of the FCA
The FCA has a single strategic objective to ensure that the relevant markets function well.
What operational objectives support the FCA strategic objective
- To promote effective competition in the interests of consumers
- To secure an appropriate degree of consumer protection
- To protect and enhance the integrity of the UK financial system
What organisations is the FCA responsible for
- FOS - Financial Ombudsman Service
- MAS - Money Advice Service
- FSCS - Financial Services Compensation Scheme
What key conduct principle falls under the remit of responsibilities of the FCA
Treating Customers Fairly
The FCA Supervision Model is based on which three pillars
- Firm Systematic Framework (FSF)
- Event-driven work
- Issues and products
What does Firm Systematic Framework mean in the context of FCA supervision
Preventative work through structured conduct assessment of firms
What does event-driven work mean in the context of FCA supervision
Dealing decisively with problems that are emerging or have occurred, and securing customer redress where necessary
What does issues and products mean in the context of FCA supervision
Fast, intensive campaigns on sectors that are putting or may put consumers at risk
Who does the FCA report its findings to
HM Treasury
Which two books have incorporated the old principles of the FSA Handbook
The PRA Rulebook and the FCA Handbook
Name the 11 Principles for businesses (PRIN) in the PRA Rulebook and the FCA Handbook
- integrity
- skill, care and diligence
- management and control
- financial prudence
- market conduct
- customers’ interests
- communication with clients
- conflicts of interest
- customers: relationship of trust
- clients’ assets
- relationship with regulators
What five areas of the underwriting function are impacted by the PRA and FCA regulation
- Principles for Business (PRIN)
- Training and Competence (TC)
- Fair treatment of customers
- Monitoring and Auditing the business
- Complaint and dispute resolution
What are the six consumer outcomes created by the FSA in 2006 linked to the TCF principle
- TCF is central to corporate culture
- Products are designed to meet the needs of customers
- Consumers are provided with clear information
- The advice provided is suitable
- Products perform as firms have led them to expect
- No unreasonable post-sale barriers
When was the Aldermanbury Declaration published and what does it set up
The Aldermanbury Declaration was published in March 2010. It laid down a framework for the achievement and maintenance of professional standards in the insurance industry.
What does the Consumer Dispute Resolution: Complaints (DISP) section of the FCA Handbook state?
That any expression of dissatisfaction should be treated as a complaint
what does the dispute resolution complaints section of the FCA handbook state
the dispute resolution complaints section states that any expression of dissatisfaction should be treated as a complaint
what is the basic principle of insurance
the basic principle of insurance is that the losses of the few will be met by the contributions of the many
When was the financial services compensation scheme established
the financial services compensation scheme was established under section 212 of the financial services and markets act in 2000
why was the financial services compensation scheme established
the financial services compensation scheme was established to compensate eligible claimant and policyholders where are authorised persons where unable to satisfy claims against them
what is the amount of compensation that a policyholder account received under the financial services compensation scheme
protection is 100% for compulsory insurance professional Indemnity Insurance and long-term insurance as well as certain claims for injury sickness or infirmity of the policyholder
protection is 90% on the claim with no upper limit for other types of policy including general insurance advice and arranging
how are the costs of the financial services compensation scheme funded
the costs of the financial services compensation scheme are funded by a lady unauthorised firms
name four rules of the Financial Ombudsman Service
provisions on time limits
who can complain to the FOS
activities which are covered by the FOS
factors the FOS will take into account when considering a case
what type of dispute can be taken to the Financial Ombudsman Service
Claims brought by individual consumers and buy small to medium sized Enterprises with an annual turnover of less than 2 million and fewer than 10 employees
what are the implications of the Decisions of the Financial Ombudsman Service for underwriters
once a decision is made an agreed it is binding on both parties
How many insurance related complaints to the Financial Ombudsman Service were held in 2016
in 2016-2017 around 30% of in insurance related complaint to the Financial Ombudsman Service were upheld
