Fair Dealing Flashcards
What three facets of product design and marketing will regulators look for?
- Governance + Oversight
- Target Market
- Distribution
What must financial promotions be?
- Clear, fair and not misleading
- Disseminated through appropriate means of communication.
Must disclosures must financial promotions make in relation capital and investments?
- Risk to capital
- Balanced quotes on long-term and short-term yields.
- Regulator is named
What must intermediaries using 3rd party literature do/
- Ensure that an authorised firm has approved the FP.
- The FP is communicated to the intended market
- The FP is clear, fair and not mis-leading
- The FP hasn’t been withdrawn by the manufacturer
What constitutes key product information?
- Prospectus
- T&Cs
- Complaint process
- Compensation process
For a retail client, when must an agreement relating to investment business be provided?
In good time before the client is bound by the agreement.
When is it acceptable to provide the agreement immediately after the client is bound by the agreement?
- If the agreement was concluded by means of distance communication.
- If the agreement was concluded via telephone call, a a record of the call is made and the client confirms they are happy to proceed.
What are the record keeping requirements for investment agreements?
The longest of:
- 5 years
- Till the conclusion of the client relationship
- Indefinitely in relation to pension transfers
What is the UK law surrounding contract terms?
The Unfair Contract Terms Act 1997
What does the Unfair Contact Terms Act 1977 do?
- Limit the operation and legality of some contract terms. Terms excluding of limiting liability can be subject to reasonableness depending on the nature of the obligation. It can also depend on whether the liability is acting against a consumer.
What provisions have improved the management of counterparty risk in relation to fulfilling investment contracts?
- The use of Delivery vs. Payment systems
- The use of central counterparties for clearing and settlement.
Where can counterparty risk arise?
With off exchange transactions such as CDS trades.
What can a compliance function do to minimise counterparty risk?
Carry out detailed KYC assessments on market counterparties and understand the client’s risk appetite.
In what situations must a firm obtain detail client information before proceeding with a transaction?
When making personal recommendations or managing client investments.
What sort of information must a firm obtain from a client before giving a personal recommendation or managing their investments?
- Knowledge and experience of investment field.
- Client financial situation
- Investment objectives.
