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IF1 - Insurance, Legal and Regulatory > Chapter 9: Legal and Regulatory Environment > Flashcards

Chapter 9: Legal and Regulatory Environment Flashcards

1
Q

Which types of insurance are compulsory in the UK?

A
  • Employer’s liability (£5m limit)
  • Motor insurance
  • Public liability insurance (for riding establishments)
  • Liability insurance (for owners of dangerous animals)
  • PI insurance (for solicitors and insurance intermediaries)
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2
Q

Which Act makes motor insurance compulsory?

A

Road Traffic Act 1988

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3
Q

Which Act makes Employer’s liability insurance mandatory?

A

Employer’s Liability (Compulsory Insurance) Act 1969

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4
Q

What does the Riding Establishments Act 1970 establish?

A

Public liability insurance is required for riding establishments.

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5
Q

What is privity of contract?

A

A principle whereby a person can only enforce a contract if they are a party to it. Therefore a Third Party cannot bring action under the contract.

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6
Q

How does the Contract (Rights of Third Parties) Act 1999 update privity of contract?

A

By allowing third parties to bring action under a contract if they are named in the contract or if the contract allows it.

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7
Q

What does the Insurance Act 2015 establish in relation to the right of a third party?

A

Allows a third party to bring a claim directly against the insurer if they become insolvent, without having to restore the insolvent company to the register.

(Taken from the Third Parties (Rights Against Insurers) Act 2010).

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8
Q

Name the three regulatory bodies in the UK.

A
  • FCA
  • PRA
  • Financial Policy Committee (FPC)
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9
Q

What did the Bank of England and Financial Services Act 2016 establish?

A

Incorporated the PRA as part of the Bank of England.

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10
Q

Which types of firms does the PRA regulate?

A

‘Systemically important firms’. I.e. those which would pose a risk to the financial system if they were to collapse.

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11
Q

What are the PRA’s threshold conditions?

A
  • Head office in UK
  • Business to be conducted prudently
  • Appropriately staffed
  • Capable of being supervised
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12
Q

What is the basis for the extent of the PRA’s regulation of a firm?

A

Its riskiness.

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13
Q

What does the PRA’s Proactive Intervention Framework (PIF) do?

A

An ongoing assessment of whether the level of regulation at present is sufficient.

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14
Q

What are the three objectives of the FCA?

A
  • Consumer protection
  • Integrity
  • Competition
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15
Q

What is the CMA?

A

Competition and Markets Authority.

An arm of the FCA responsible for handling super-complaints which were previously the competence of the OFT.

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16
Q

What influences the level of regulation on small firms by the FCA?

A

Whether the firm evidences best practice in the interests of customers.

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17
Q

Give some examples of the PRIN’s principles for business.

A
  • Integrity
  • Skill, care & diligence
  • Management and control
  • Financial prudence
  • Market conduct
  • Customer’s interests
  • Communication with clients
  • Conflicts of interest
  • Customers: relationships of trust
  • Client’s assets
  • Relations with regulators
  • Consumer duty
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18
Q

What are the FCA’s six positive outcomes?

A

1) Consumers know that fair treatment is central
2) Products are designed to meet the customers’ needs
3) Consumers are kept informed
4) Advice is suitable
5) Products perform as expected
6) No unreasonable post-sales restrictions.

19
Q

What does the SM&CR require?

A

Senior Managers and Certification Regime requires firms to clarify a manager’s roles.

20
Q

Which Act concerns whistleblowing?

A

The Public Interest Disclosure Act 1998 (PIDA)

21
Q

What does PIDA do?

A

Makes it unlawful for a firm to punish an employee for whistle-blowing in good faith.

22
Q

What is public censure?

A

Where the FCA publishes a public statement of misconduct with the intention of damaging the firm’s reputation.

23
Q

What are the three Solvency II pillars?

A

1) Financial requirements
2) Governance and supervision
3) Reporting and disclosure

24
Q

Name the two reports which Pillar three requires.

A
  • Solvency and Financial Condition Report (SFCR) - a public report
  • Regulator Supervisory Report (RSR) - a private report
25
Q

Give some ways the PRA can intervene with a firm’s operation.

A
  • Restrict premium income
  • Require more frequent accounts
  • Prevent the firm from accepting new business
  • Withdraw authorisation
26
Q

What is the ultimate intervention power of the PRA?

A

Wind-up the firm.

27
Q

How frequently must a large intermediary make financial reports?

A

Quarterly.

28
Q

To whom does the Training & Competence sourcebook apply?

A

Those who deal directly to consumers only.

29
Q

Which regulation sets the required 15 hours annual CPD?

A

The Insurance Distribution Directive (IDD)

30
Q

What does ICOBS say about inducement?

A

Anything the firm receives, such as commission or gratuity, must not allow them to favour one firm over another.

31
Q

What does the Distance Marketing Directive do?

A

Online and over-the-phone sales have a cooling-off period.

32
Q

What does ICOBS say about cancelling policies?

A

Those less than one month or where the terms of the contract have been met in full.

33
Q

What does the IDD require regarding commission?

A

The nature (not amount) of commission must be disclosed in pre-contractual discussions.

Can be waived for larger risks.

34
Q

What is an IPID?

A

Insurance Product Information Document.

A short summary of the nature of the cover which must be provided to all retail customers.

35
Q

What is placement?

A

Putting cash into the financial system.

36
Q

What is layering?

A

Creating a series of complex transactions to obfuscate the origins of the money.

37
Q

What is integration?

A

Getting access to the money.

38
Q

What does the Criminal Justice Act 1993 do?

A
  • ‘Tipping off’ (telling the suspect they are known) is a crime
  • Failing to report suspected laundering is a crime
39
Q

What did the Serious Crime Act 2007 do?

A

Abolished the Assets Recovery Agency.

Crime and Courts Act 2013 created the National Crime Agency which absorbed these powers.

40
Q

What did the Serious Crime Act 2015 do?

A

Gives law enforcement the powers needed to effectively pursue money

41
Q

How frequently must a money laundering reporting officer make a report?

A

Annually.

42
Q

Which crimes does the Bribery Act 2010 establish?

A
  • Giving a bribe
  • Receiving a bribe
  • Bribing a public official
  • Failure to prevent bribery in a company.
43
Q

What is the JMLSG?

A

Joint Money Laundering Steering Group.

Private sector group which provides advice for how to comply with money laundering regulations.

IF1 - Insurance, Legal and Regulatory (11 decks)

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