Chapter 9 Flashcards
- Which of these offers the best definition of financial advice?
A. When a professional adviser assesses a client’s personal circumstances and
recommends financial products that are suitable for them
B. Where written recommendations are given based on a client’s shortfalls
C. All verbal discussions between an adviser and a client within the context of a meeting
D. Anyone offering generic information on the subject of financial services
A - Financial advice is when a professional adviser assesses a client’s personal circumstances and recommends a financial product that is suitable for him or her.
Providing generic advice does not constitute giving financial advice, and answers b) and c) are not the definition of financial advice (although may be part of the process).
- When conducting a fact-find with a new client, why would their employment details be important to understand?
A. To establish if they are able to pay a fee for the advice
B. To understand any benefits provided by the employer e.g. sick pay, pension and to
determine the client’s earned income
C. To allow the adviser to consider whether or not the employer’s group scheme might be affected by NEST
D. To determine if the client might be at risk of redundancy
B - As part of the fact-finding process, an adviser must obtain information about the client’s employment details, as the client may have a number of benefits through his or her employer such
as sick pay and pension. Whether or not the employer’s scheme is affected by NEST would not be an initial consideration between the adviser and the employee. Answers a) and d) would not be an
important part of the fact-find.
- You are conducting a fact-find with new clients, Jim and Clare. Why might you ask them about their views and hopes for the future?
A. To understand the clients’ likelihood of proceeding with the adviser’s
recommendations
B. To indicate to the adviser where to concentrate their recommendations and areas for future
consideration
C. To allow the adviser to determine the level of fee to charge the clients
D. To determine whether to offer upfront or on-going advice
B - As part of the fact-finding process, an adviser must ask clients about their views and hope for the future to give them an indication as to where to concentrate the recommendation and areas for future consideration. Answers a) and d) are not relevant when completing a
fact-find, and the adviser’s fees should be set out in the initial disclosure before the fact find takes place.
- Alan and Cam wish to discuss investing for their future retirements. How can an adviser best establish a client’s attitude to risk?
A. By asking the client the risk they are willing to take based on a scale of 1-10
B. Through considering their existing investments
C. By careful questioning to clarify understanding, knowledge and experience
D. By understanding their attitude to any potential loss
C - Establishing a client’s attitude to risk should be done through careful questioning,
knowledge and experience. Answers b) and d) may form part of the process, but would not, on their own, provide enough information to understand the client’s attitude to risk. Answer a) is an unsophisticated approach and unlikely to be used nowadays.
What is the timeframe for dealing with ‘rapid resolution complaints’?
3 days
How is the FOS funded?
General levy paid by all firms, plus a case fee by a firm being complained about
What is the FSCS limit for deposits, investments, home finance mediation and SIPP providers?
£85k
How is the FSCS funded?
Levy on authorised firms
Give one example of an eligible complainant
- Consumer
- Micro-enterprise (Fewer than 10 employees, turnover no more than 2m euros)
- Small business (No more than 50 employees, turnover less than £6.5m
- Charity with annual income below £6.5m
- Trustee of a trust with net asset value below £5m
- Consumer buy-to-let consumer
- Guarantor
