Topic 24 (Other regulation affecting the advice process)

Question 1

What are the rules relating to data protection?

Answer 1

1. Interacting with Financial services institutions inevitability involves the customer providing personal information
2. If the information isn’t handled appropriately, it exposes the customer to identity theft

Question 2

What is Identity Theft?

Answer 2

When someone uses a persons personal data to open bank accounts, take out credit cards, other goods, take over current accounts or apply for key documents

Question 3

What is the General data protection regulation (GDPR)?

Answer 3

It applies to personal data and reflects changes in technology and they way information is collected

Question 4

What is the max fine for criminal offences under the GDPR?

Answer 4

Max fine is £20m or 4% of an organisations worldwide turnover

Question 5

What is the role of the pensions regulator?

Answer 5

It’s mission is to improve confidence in work-based pensions by protecting the benefits of scheme members and encouraging high standards and good practice in running pension schemes

Question 6

The regulator considers the combined effect of what 2 factors?

Answer 6

1. The likelihood of the event occurring

2. The impact of the event on the scheme and it’s members

Question 7

What are the 3 pension regulators powers?

Answer 7

1- Investigating schemes
2- Putting things right
3- Acting against avoidance

Question 8

What is Direct pay arrangement?

Answer 8

Where the employer collects an employee’s pension contributions from their gross salary and pays them over to the pension provider

Question 9

Why was the pension protection fund established?

Answer 9

To protect members of private sector final salary (defined-benefit) pension schemes whose first become insolvent with insufficient funds to maintain full benefits for members

Question 10

What is Electronic money (e-money)?

Answer 10

Electronically stored monetary value issued on receipt of funds for the purpose of making payment transactions

Question 11

What was the aim of the investments services directive 1996?

Answer 11

The aim was to enable investments firms to operate in different European states

Question 12

What are the features of MiFID? (Markets in Financial Instruments Directive)

Answer 12

• Covers shares, bonds and units in a collective investment
• Main objective is to increase both competition and consumer protection by settling 3 main areas
  
  1. Conduct of business
  2. Organistion
  3. Market Transparency

Question 13

What doesn’t MiFID apply to?

Answer 13

1. Life assurance
2. Pensions
3. Mortgage business

Question 14

MiFID II represents a comprehensive set off reforms covering what 8 areas?

Answer 14

1. Conduct of business rules 2. Transparency
2. Development in market structures
3. Organisational requirements
4. Commodity derivatives
5. High frequency trading 7. Disclosure
6. Suitability

Question 15

What do UCITS apply to? (undertakings for collective investment in transferable securities)

Answer 15

• applies to regulated investment funds that can be sold to the general public throughput the EU
• UCITS aims to provide a common framework of investor protection

Question 16

What is the key aim of IMD (insurance distribution directive)

Answer 16

To regulate the sales standards of insurance brokers and intermediaries

Question 17

What is Insurance mediation?

Answer 17

the activities of introducing, proposing or carrying out other work preparatory to the conclusion of contracts if insurance or assisting in the administration and performance of such contracts in the event of a claim

Question 18

What is the aim of the insurance distribution directive?

Answer 18

to address issues of inconsistency with regard to the way the IMD was adopted across member states and provide better consumer protection and greater legal clarity and certainty