Chapter 8 - The Sales Process

Question 1

Once a client has agreed to disclose information in the fact find process, this stage the adviser will meet the Know Your Customer requirements.
This should include…

4 marks

Answer 1

Their existing arrangements
Attitude towards taking risk
Income and expenditure
Priorities for taking action

Question 2

A suitability report should include…

9 points

Answer 2

Recap on the client circumstances
Outline the client aims and objectives
Explain any possible disadvantage of the transaction for the client
Include an explanation of all areas of the recommendation including term, waiver of premium, costs, risk etc.
Link each recommendation to the clients circumstances.
Refer to alternative products discussed or products first recommended and rejected by client.
Be personalised in plain English with technical terms explained.
Refer to need areas highlighted by the adviser but not taken forward and the reasons why
Include additional prescribed information for income drawdown case

Question 3

The suitability report must be sent out….

Life policy

Personal pension

Other case

Answer 3

Before the contract has concluded

No later than the 14th day after the contract is concluded

As soon as possible after the transaction is effected.

Question 4

Initial contact with client the adviser must disclose…

4 points

Answer 4

Client agreement (terms of business)
Adviser status (independent, restricted)
Services and costs
Issues combined initial discloser document

Question 5

The penalty for knowingly assisting in laundering money is…

Answer 5

Up to 14 years imprisonment, a fine or both.

Question 6

Data protection, individual access rights…

Answer 6

A firm must provide a copy of all personal data within 40 days and may make a charge of up to £10

Question 7

The DPA distinguishes a difference between ordinary data and sensitive data

Sensitive data covers matters such as…

8 points

Answer 7

Racial or ethnic origin
Political opinions
Religious beliefs
Whether they are a member of a trade union
Physical or mental health condition
Sexual life
Commission or alleged commission of an offence
Any proceedings for any offence committed or alleged to have been committed by them, the disposal of such proceedings or the sentence of any court in such proceedings.

Question 8

What happens if the adviser make a significant omission or gives misleading information?

Answer 8

As a rule of thumb mistakes made during the fact find can be rectified at a second meeting or in writing.
Most supervisors would regrade intervening during an observation as a last resort, however from time to time may be required to protect the client and comply with FCA rules.

Question 9

A general structure for post observation will be as follows..

4 points

Answer 9

Supervisor to ask adviser for their views
Provide feedback backed by evidence
Reconcile differences
Agree a development plan

Question 10

If the 11 FCA Principles for Business, which 6 have a direct impact in the sales process?

Answer 10

Principle 1 - a firm must conduct business with integrity
Principle 2 - a firm must conduct its business with due skill, care and diligence
Principle 3 - a firm must take reasonable care to organise and control its affairs responsibility and effectively with adequate risk management systems.
Principle 6 - a firm must pay regard to the interests of its customers and treat them fairly.
Principle 7 - a firm must pay due regard to the information needs of its clients and communicate information to them in a way that is clear, fair and not misleading.
Principle 9 - a firm must take reasonable care to ensure the suitability of its advice.