M81 Chapter 2 - Regulation of Intermediaries

Question 1

Who are the FCA?

Answer 1

A non government body set up under the Financial Services and Markets Act 200. Regulates conduct of all financial services firms

Question 2

What Insurance policies are excluded from statutory regulation from the FCA?

Answer 2

Engineering Inspection

Extended Warranties

Question 3

What is a consumer?

Answer 3

a natural person acting outside of their normal trade or profession

Question 4

What is Commercial Customer?

Answer 4

Anyone who is not a consumer

Question 5

What are 4 regulated activities? (High level)

4 x A’s

Answer 5

Arranging insurance

Advising on insurance products

Acting as an agent EG Binding cover, submitting proposals

Assisting in performance on insurance contracts EG Claims

Question 6

What is defined as large risk?

Answer 6

Railway rolling stock, aircraft, ships, goods in transit, aircraft & ship liability

Credit and Suretyship

Land vehicles, property, liability, general liability where balance sheet is over 6.2M euros, net turnover exceeds 12,8m euro or has an average headcount of over 250 (2 from the 3)

Question 7

What are the 3 objectives of the PRA

Answer 7

Promote safety and soundness of the firms it regulates

Specific to Insurance firms, to contribute to securing an appropriate level of protection for those that that are or may become policy holders

Secondary objective, facilitate effective competition

Question 8

What are the 3 objectives of the FCA?

CIC

Answer 8

Consumer protection - Securing appropriate level of protection for consumers

Integrity - Protecting and enhancing the UK financial system

Competition - Promote effective competition for consumers in the market for regulated financial services, services recognised by investment exchange

Question 9

What 3 things must a staff member have to be deemed ‘competent’

Answer 9

Knowledge, skills and ability to perform their duties completely

Question 10

When must competency be assessed?

Answer 10

At recruitment
Before the employee engages in regulated activity
At regular intervals

Question 11

What is needed for training to be deemed effective?

Answer 11

Technical knowledge and application
Skills

Changes to markets, products, legislation and regulation

Question 12

Who can claim via FSCS

Answer 12

Consumers

Firms with less than 50 employees, Less than 6.5m turnover and/or less that 3.26m on balance sheet (2 from 3)

Other business’s, but only from Statutory covers and only up to the maximum statutory limit. EG Employers Liability, RTA Laibility

Question 13

What are the limits of protection from FSCS and what must the insured have done?

Answer 13

Compulsory covers = 100%
All other = 90%

Insured must have complied with all policy terms and conditions EG Have a valid claim

Question 14

What are the contract certainty ‘promptly’ timescales for document issue?

Answer 14

Consumer = 7 Dyas
Commercial = 30 Days

Question 15

Between a producing and placing broker, when should commission be agreed?

Answer 15

Before the conclusion of the contract

Question 16

What areas of Insurance broking operations & what people within Insurance brokers are expected to adhere to FCA regulations of fair treatment of customers?

Answer 16

All & Everyone

Question 17

In the USA, who regulates Insurer brokers?

Answer 17

The individual commissioner in each State

Question 18

When does a wholesale broker have a DIRECT duty of care to the insured?

Answer 18

When the producing broker goes into liquidation

Question 19

What is another name for a ‘Retail Broker’

Answer 19

Producing Broker, as they supply policies to the Wholesaler broker