The regulatory advice framework Flashcards
what information is contained in a Key information/investor document?
the main features of any financial products they are considering
what information is contained in a product key facts illustration?
Information specific to their circumstances, quote, investment and typical scenarios in relation to returns or proceeds
What information is contained in the KID/KIID as required by the FCA?
nature of investment aims risk factors terms of investment cancellation/withdrawal rights compensation arrangements complaints information required by the Solvency directive
What type of information is also required by the solvency directive in a KID/KIID?
name and address of insurer solvency and financial conditions definition of each benefit/option term means of termination means of payment distribution of bonuses indication of surrender values and whether premiums are guaranteed Premiums unit linking details Law applicable
What are the key components of a pure protection policies?
they are long term
benefits payable on death or incapacity
contract has no surrender value or it does not exceed a single premium
no conversion or extension options
What does a life office carying out a with profits business need to have?
A PPFM document (principles and practices of financial management) setting out how they manage their business
What are the two key elements of ‘informed choice’ guidance that can be given to a customer?
Provider guidance - product information supplied directly to the customer from a provider
Generic Guidance - general information on a type of product that as not specific to a provider
What are the three bodies under MAPS (money and pension service, designed to help customer understand pensions?
Pension wise
The Money advice service
Pensions advisory service
Who is pension wise available to and what is the service offered?
phone service to the over 50’s, with defined contribution schemes in place, to help decide
What they can do with their pension pot
The different type of pensions and how they work
What is or isnt tax free
What are the aims of the MAS (money advice service) and how can you access it?
To enhance understanding and knowledge of their finances
Available online or via a consumer help line
Whats is the purpose of the TPAS (the pensions advisory service)
Deliver information and guidance on all pension matters across the board
What are the six elements of fair treatment of customers?
- confident consumers are dealing with firms where fair treatment is central to corporate culture
- Products and services are designed to meet the needs of consumers
- Provided with clear information and are kept up to date during and after the sales process
- Advice received takes account of personal circumstances
- Products are as they are led to expect and of an acceptable standard
- No unreasonable post sale barriers to change products, switch or submit a claim
What are the requirements/considerations to meet the ‘independance’ requirement by set by the FCA?
Some FCA mandated products might be excluded (such as unregulated collective investments)
Certain multi manager investment fund recommendations might be inadequate
Firms using product panels, must allow for off-panel recommendations
Using a single platform may be insufficient
model portfolios must still cater for clients individual circumstances
Firms do not need to offer pension transfers or long term care insurnace
discretionary investment services will not usually be included
what should a single tied adviser do if they do not have a suitable product within their providers product range?
They should inform the client they have nothing suitable
What stakeholder products are included in the basic advice rules?
Short term deposit based stakeholder products
medium term collective or life stakeholder products
long term stakeholder pension schemes
What is the difference between a real time and non- real time financial promotion?
A real time would be during the course of a personal visit/telephone call or other interactive dialogue
A non-real time cover all others such as strategic adverts
How long should a non real time financial promotion be kept for;
pension transfers?
General MiFID promotions (not life or pension)?
pension transfers - indefinitely
MiFID promotions - 5 years
What is the criteria for a real time promotion to a client?
fair, clear and not misleading
the purpose is clear at the start and the person identifies themselves and the firm
Check the recipient wishes to proceed if not previously agreed and stop if necessary
Gives a contact point
Does not may contact at unsocial hour or by an unlisted number without permission
Under what circumstances could a customer receive a cold call?
only if the customer has an established relationship with the firm
the promotionrelates to a generally marketable packaged product which is not highly volatile
When must a suitability report be issued?
Buys, sells all or part of a holding of a collective investment scheme, trust via a trust savings scheme or wrapped ISA
Buys, sells, surrenders, converts, cancels or suspends a personal or stakeholder pension
makes withdrawals or an uncrystalised funds pension lump sum payment
purchase of short term annuities
takes up a life policy following a recommendation
It what timescale must a suitability report be provided?
Life policy - before the contract is concluded
pensions - no later than the fourteenth day after conclusion
Any other case - asap
What are the guidelines in making a suitable recommendation?
Give considered advice, conscientiously, in clients best interest
each need quantified and shortfalls between existing cover indentified
for each need, provide a list of suitable products
Compare the products available and by the process of elimination, ID the most suitable
Ensure the client understands the disadvantages as well as the benefits and any risks
Ensure it is clear past performance is not a guarantee of future
If a client disagrees with your recommendation and instructs you to take a diferent course of action you consider to be unsuitable, can you proceed.
Yes, you can but with caution. You are able to decline the transaction if you believe it is significantly disadvantageous to your client
Why would financial advisers be exempt from MiFD11 (market in Financial Instruments Directive)
if they do not hold client assets or money
if they do no do business outside the UK
(article 3 firms)
