Reglagory Advice Framework Flashcards
Pure protection life policies
- covered by the solevency II directive .
- benefits are payable on death or sickness
- no surrender value or might cause it to fail and previous tests
- it mainly applies to term assurance and income protection insurance. Covered by insurance conduct of business sourcebook.
Gudience
Generic - generic non provider information given to an individual on a product type.
Provider guidance - product information supplied by if the proceeds representatives directly to the customer.
Fair treatment of customers
- all levels and at heart of all prcocceses in the business.
1) cofnfident dealing with friend where the treatment or customerS is fair and thought the business
2)products and services are marketed and sold in the retail market are designed to meet the needs of identified consumer groups and targeted accordingly.
3) consumers are proceed with clear information and are kept appropriately informed before during and after the point of sale.
4) where do she re receive advice, the advice is suitable and takes account of their circumstances
5)consumers are provided with products that perform as firms have led them to expect and the associated service is both of an acceptable standard and as they have been led to expect.
6) consumers do not face unreasonable post sale barriers imposed by firms to change product switch provider submit a clear complaint.
Advisers firms must implement them - but they decide when the FCA asks how they do it.
Ensure they have appropriate systems in place
Fair treatment continued
- evidence can come ins variety of forms such as complaints compliance call centre traffic and press.
- There is also a further area of concern about the need to include financial inclusion in the UK and firms need to take this into account - it vulnerable customers - access to banking anf financial services and how this emerges
Restricted advice
- a personal recommendation to trefoil client in relation to products that is not independent. - in other worlds personal recommendations that do not meet the standard of indoendant advice.
- simplified advice and basic advice is classed as restricted advice
Single tied
These are advices that only recommend products of one provider. They Cavan recycle be different types of product such a as life aussrwncr pensions and investments but all the products will be from the same provider.
Single tied advisers work for the provider and they must ensure that it’s relerensrtaives fo not advise on a product unless it is issued by the firm or another member of its marketing group.
Whew a single tied tied adviser identifies a situation where they do not have a product they must refer the client to an if oebdent adviser and confirm they do not have anything suitable. There must be no product bias in the remumeratjon of a providers representative and they can not refer retail clients to an intermediary breach of the indictment rules
Indoendant advice
- firms describing themselves as indepdneant must assess a sufficient range of relevant products that are sufficiently diverse in terms of type and insurer to ensure that the clients investment objectives can be suitably met.
An adviser offering indoendant must make it clear that their independence relates to a specific advice only. They’d might be advising only a particular group of clients such as those with specific ethical or religious constraints.
Suitability
- need explanation as to why they transferred the pension
- needs to be before the transfer finishes for investments
- personal pension and stakeholder - CObS15 apply require notification of right to do cancel no later than the fourteenth day after the contract is finished
- pensison transfer or conversion in good time before the transfer is effected
- life policy before the transfer is conculeded unless the necessary information is provided orally of immediate cover is necessary
- SIPP - before 14 days
- not required when it’s a firm acting as investment manager for a retail client for collective investment.
- not required when a personal recommendation is made to increase a register premium to an ecsustibg product or to invest additional premiums to an existing packaged product, where previous single premiums are in place.
Recommendations
- needs to be in party south suitability and know your customer
- quantify the needs and identify the shortfall in needs and existing provider.
- did each quantified neeed the adviser should prepare a list of suitable products from the range available to them.
- by contrast laying these products with the clients circumstances the adviser can identify the most suitable product for each need bu process of elimination
- in presenting reccomrndationd the adviser just see that the client understands the disadvantages as well as the benefits of each product recommended and the practical effects of any risks involved.
- if last performance is used to illustrate investment projections it must be made clear that past performsvde is no garuntee of future performance.
- the adviser must e execute skill and care in the formulation of reccomebdations to clients and prospective clients .
MARKETS IN FINANCIAL INSRUMENTS DIRECTIVES II 2
- MIFID applies to firms providing investment services such as advice to clients relations to financial instruments such as shares bonds units in collective investment shakes and derivatives.
- firms that don’t hold money are exempt (article 3) but are subject to a number of regulations from mifi
- fees must be disclosed before and expressed as both cash and an amount.
- advisers need to gather information on epidural and feed it back to the manufacturers to show them how the the products are affecting the target market.
- describing advice services - they need to review a multititufe of products - structured and non structured if they are indoendant
- structured products - firms that with to carry out certain regulated activities such as advising on arranging investments in relation to structured products will need to have this permission.
- suitabaibilrt - suitability Rules apply to reccomendation and they need to carry out reviews at least annually.
- recording conversations - article three firms can either record them or take phone notes.
- the firms need to follow the o dice meant rules so that products are picked not for the advisers but for needs of client.
Insurance distribution directive
- enhance co Sumer protection when buying insurance including general insurance lice insurance .
- wanted to create a level playing field
- it governs the conduct of insurance firms and closely align the cusor
We protections with those provided by MIFID
Types of client press-up also
Per se
- local government
- private institutions
- credit
- pension funds
- commodity derivatives dealer
- investment firms
- midis business large undertaking either €2 million if funds or €40 million turnover or€20 million balance shee
Elective
- carrying out transactions in significant size and in a high frequency. Has a large instrument portfolio of €50000
- worked in the financial sector did at least one year ina professional position
Types of client counterparty
Per se
- government
- credit
- pension fund
- national government
- central banks
- collective insurance scheme
- super national organisations
- investment firm
- insurance company
Some that are not per se can be elective but financi advisers would rarely deal with them
Other principles
- fairness to clients
- they are not agents of the provider
- conflicts of interest must be disclosed
- not allowed to exclude liability.
- clear fair
- they can not say they are independent if they are not fulfilling the independent criteria
- no inducements on commissions
- customers can’t pay to put in a complaint
Status disclosure and fees
- when they first start speaking the firm needs to confirm to the client who they are what services they provide before a fact find and include the fees.
- are they independent?
- trail commission needs to be offered to the client in reducing feee
- fees neee to be agreed before being taken
- renumeration of the adviser needs to be confirmed. Any additional benefits that the adviser will get besides pay needs to be disclosed.
- client agreement and terms is business needs to be agreed
Exemptions from disclose and fees
- if the business was done I’ve the phone they don’t need the agreement before hand.
- if the adviser calls the client they must confirm their details then send it as a follow up in writing
- don’t need to do a full disclosure agreement for execution only in non life packages products
