Regulatory Awareness

Question 1

Which two authorities regulate the UK insurance industry?

Answer 1

1. Financial Conduct Authority (FCA)

2. Prudential Regulation Authority (PRA)

Question 2

What is the difference between the FCA and the PRA?

Answer 2

The FCA regulate conduct of business

The PRA regulate financial matters, they are particularly concerned with solvency of firms of particular important to the UK financial system

(The FCA also handle solvency for smaller firms)

Question 3

What is the statutory objective of the FCA?

Answer 3

To ensure the relevant markets function well

Question 4

What are the FCA’s operational objectives?

Answer 4

1. To secure an appropriate degree of protection for consumers
2. To promote effective competition in the interests of consumers
3. Protect and enhance the integrity of the UK financial system

Question 5

What do the FCA say is fair treatment of customers?

Answer 5

A mind-set and not about systems or rules. A system to be applied appropriately in all situations

Putting customer interests at the hearts of our business structure and culture and applies to the whole of the customer life cycle

Question 6

What are the FCA’s six outcomes for consumers?

Answer 6

1. Products are designed to meet the needs of consumers and are targeted appropriately
2. Consumers can be confident they are dealing with firms where fair treatment of customers is central to their culture
3. Consumer advice is suitable and takes account of their circumstances
4. Information provided is clear and consumers are kept appropriately informed before, during, and after a sale
5. Products perform in the way that consumers have been led to expect and service is of an acceptable standard
6. Consumers do not face unreasonable barriers to change product or provider, make a claim, or make a complaint

Question 7

What does ICOBS stand for?

Answer 7

Insurance Conduct of Business Sourcebook

Question 8

What is the purpose of ICOBS?

Answer 8

A rule book for the sales and administration process of general insurance

Question 9

What must financial promotions be?

Answer 9

Fair, clear, and not misleading

Question 10

What are some examples that may be inducements?

Answer 10

Hospitality, cash, training, commission, goods, etc

Question 11

What does ICOBS say record keeping must be?

Answer 11

Adequate and accurate

Question 12

How long is appropriate to keep records?

Answer 12

Three years

Question 13

What is meant by the term “exclusion of liability”?

Answer 13

It is not possible to contract out of regulatory requirements. It is permitted for a firm to delegate tasks to a third party but the firm is still responsible for the regulatory requirements

Question 14

When do the ICOBS rules around cancellation not apply?

Answer 14

For short term policies less than one month, or where the terms of the contract have been met in full

Question 15

What is meant by “cooling-off period”?

Answer 15

A consumer has 14 days following inception to cancel without charge

This does not apply to commercial customers

Question 16

What is meant by “distance communications”?

Answer 16

Rules that apply to protect consumers who have entered into a contract at a distance. They get extra protection as they may not have had the benefit of advice

Question 17

What is meant by “e-commerce”?

Answer 17

Rules governing what firms must supply when transacting business using electronic means, such as internet or unsolicited email. Organised correspondence over emails does not fall within these rules as it is held to be written communication

Question 18

What is chapter 8 of ICOBS?

Answer 18

Claims handling

Question 19

What is chapter 6 of ICOBS?

Answer 19

Product information

Question 20

Define complaint

Answer 20

Any oral or written expression of dissatisfaction, justified or not, from or on behalf of a person about the provision of, or failure to provide, a financial service. Alleges that the complainant has or may suffer from financial loss, material distress, and/or material inconvenience

Question 21

Who do the FCA categorise as an “eligible complainant”?

Answer 21

A consumer
A micro enterprise
A charity with an annual income under £6.5million
A trustee with a net asset value under £5 million
A CBTL consumer (consumer buy-to-let)
A guarantor

A business with an annual turnover of less than £6.5 million AND either an annual balance sheet of under £5 million OR under 50 employees

Question 22

When did ICOBS come into force?

Answer 22

6th January 2008