Discipline and enforcement Flashcards
What measures/sanctions are avaliable to the FCA/PRA when an insurer fails to meet requirements?
- Public censure (basically expose failure to public)
- Financial penalties
- Prosecution for criminal offences
- Civil/less formal remedies (withdrawal of approval, prohibit individuals carrying out regulated activities)
All UK companies wishing to transact insurance in the EU must be authorised by the PRA - true or false?
True - PRA must be satisfied that the company complies with its requirements
What is a solvency margin?
The amount by which assets exceed liabilities (basically how much money a company has after debts are taken away)
What are the 3 pillars of solvency II?
1) Capital adequacy (how much money a firm needs to remain afloat
2) Systems of governance (own risk and solvency assessment is a set of processes which are used to identify/monitor risks and assess the amount of funds needed to ensure they remain solvent)
3) Supervisory reporting (ensures transparency across industry and means companies must report to regulators)
What is solvency II?
Legislation which concerns the amount of money EU insurance companies must hold to reduce the risk of going bankrupt
What are the 2 types if solvency report?
- Solvency and financial conduct report (public)
- Regulator supervisory report (private between the firm and its national supervisor)
Both reports include qualitative and quantitative data
What is an ORSA?
Own risk and solvency assessment- set of processes used to look at the risks insurers face
Enables companies to assess the amount of funds needed to stay afloat
What is winding up?
If an insurance company fails to meet its requirements the PRA can intervene and the company is “wound up” (no longer operates).
An Appointed Representative is exempt from FCA regulation- true or false?
True - this is because a principal takes responsibility for their Appointed Reps activities
What is the retail mediation activities return?
Firms must complete this a submit the details via an online system called Gabriel. Purpose of it is to provide a framework for the collection of information required by the FCA
Complaints monitoring - what details must firms provide to the FCA?
The type of product they’ve received complaints about
Nature of the complaint
How long it’s taken to handle the complaint
Amount of redress paid
What is the insurance conduct of business source book?
Rulebook which applies to the sales and admin process for general insurance
8 chapters on total looking at;
General matters - different rules apply to consumers and commercial customers
Financial promotions - term used to describe advertising
Inducements - treat customers fairly in every situation
Record keeping- records kept to demonstrate compliance with rules
Exclusion of liability- firms cannot contract out regulatory requirements but can delegate tasks to a third party
Distance communications
Information and the firm, its services and renumeration
Identifying client needs and advertising
Product information
GAP insurance
Cancellation
Claims handling
What is the Insurance Distribution Directive?
Legislation which aims to make it easier for firms to trade across borders
Strengthen policy holder protection
Provide level playing field
Where there is a chain of intermediaries between the insurer and the customer, who fo the ICOBS rules apply to?
The intermediary who is in contact with the customer
What does the intensity of PRA regulation depend on?
Riskiness of a firm
