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CeMAP Unit 2 > Topic 25 Consumer Rights, Complaints & Compensation > Flashcards

Topic 25 Consumer Rights, Complaints & Compensation Flashcards

1
Q

The below are what in relation to consumer rights legislation?

  • Clear & honest information before they buy
  • Get what they paid for
  • Be supplied with goods that are fit for purpose & services that are performed with reasonable care & skill
  • Have any faults corrected free of charge, or get a refund/replacement
A

Key Consumer Rights

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2
Q

When did the Consumer Rights Act come into effect?

A

1st October 2015

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3
Q

The below are what in relation to Consumer Rights Act 2015 (CRA)?

  • What to do when goods are faulty
  • What should happen when digital content is faulty
  • How services should match up to what has been agreed & what should happen if they are not
A

What the Consumer Rights Act (CRA) covers

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4
Q

The below are what in relation to Consumer Rights Act 2015 (CRA)?

  • What should happen when goods & services are not provided with reasonable care/skill
  • Unfair terms in contracts
  • Greater flexibility such as the FCA & training standards to respond to breaches of consumer law
A

What the Consumer Rights Act (CRA) covers

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5
Q

The Consumer Rights Act (CRA) was the first consumer rights legislation to detail what should happen if a service is not provided with reasonable care and skill.

True or False

A

True

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6
Q

What is the purpose of the Alternative Dispute Regulation (ADR)?

A
  • Reduce the number of disputes between businesses & consumers ending in court action
  • Improved speed which disputes are resolved
  • Costs of disputes reduced
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7
Q

How does a business go about resolving a dispute?

A

Approach the services of a certified alternative dispute resolution provider

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8
Q

When approaching a certified alternative dispute provider the business must find out whether or not the customer is willing to use the service.

True or False

A

True

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9
Q

What Alternative Dispute Resolution (ADR) is this?

Decisions can be appealed through courts.

A

Adjudication

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10
Q

What Alternative Dispute Resolution (ADR) is this?

Decisions cannot be appealed through courts

A

Arbitration

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11
Q

The below are what in relation to Alternative Dispute Resolution (ADR)?

  • Based on information provided by both parties
  • Binding on both parties
  • Can be enforced by courts
A

Decisions

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12
Q

The legislation in relation to Unfair Contract Terms covers what?

A
  • Fairness
  • Transparency
  • Good Faith
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13
Q

Which legislation in relation to Unfair contact terms is this?

  • All terms of the contract be fair
  • All terms must adhere to the requirement of food faith
  • Any unfair term or notice will not be binding on the customer (unless they choose to be bound by it)
A

Fairness

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14
Q

All the below are what in relation to fairness?

  • Disproportionately high charges where the customers decides not to proceed with services yet to be provided
  • Terms allowing the business to determine subject matter after the customer is bound
  • Terms allowing the business to determine the price after the customer is bound
A

Terms that are deemed unfair

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15
Q

Which legislation in relation to Unfair contact terms is this?

Written terms of a contract should be transparent & expressed in clear, easily understood language.

A

Transparency

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16
Q

If there is any doubt about the meaning of a written term who’s interpretation is adopted?

Customers or Business?

A

Customers

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17
Q

Which legislation in relation to Unfair contact terms is this?

Term that causes a significant imbalance between the rights & obligations of the various parties to the contract to the detriment of the consumer will be deemed a breach of good faith

A

Good Faith

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18
Q

The below are what in relation to consumer contacts?

  • Request that a firm amend or remove an unfair contract term from it’s future consumer contracts
  • Prevent a firm imposing the terms against existing customers
A

How the FCA can challenge unfair terms

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19
Q

To prevent a firm imposing the terms against existing customers what does the FCA need to do?

A

Appeal to a court for an injunction

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20
Q

The below is what in relation to the FCA’s handbook what section does it cover?

  • Firms should take into account consumer’s legitimate interests in relation to contracts
  • Fairness is not contrary to the Prudential management of a firm but part of it
  • Focusing on narrow technical arguments to justify a contract term maybe unfair
A

Unfair Contract Terms & Consumer Notices Regulatory Guide (UNFCOG)

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21
Q

The below is what in relation to the FCA’s handbook what section does it cover?

  • Schedule to the CRA & UTCCR’s each contain an indicative & non-exhaustive list of terms that maybe regarded as unfair
  • Firms should take into account developments in legislation & relevent case law concerning the fairness & transparency of terms in consumer contracts
A

Unfair Contract Terms & Consumer Notices Regulatory Guide (UNFCOG)

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22
Q

The below are all examples of what?

  • Legislation
  • Ombudsman bureau & other arbitration schemes
  • Voluntary codes of practice
  • Compensation Schemes
  • Consumer bodies
A

Consumer Protection

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23
Q

Regarding consumer protection the FCA lists that it cannot do what?

A
  • Cannot protect investors from falls in the stock market
  • Sets limits on the amount of compensation from the Financial Services Compensation Scheme (FSCS)
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24
Q

Which government department has these responsibilities?

  • Maintaining control over public spending
  • Working to achieve stronger & sustainable economic growth
  • Responsible for regulation of financial services under the authority of the chancellor
A

HM Treasury

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25
Q

Which government department has these responsibilities?

  • Collects money that pays for UK’s public services
  • Helps individuals with targeted financial support
  • Deal with individuals who require self assessment
  • Pension providers also have dealings to reclaim tax taken at source
A

HM Revenue & Customs (HMRC)

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26
Q

Which government department has these responsibilities?

  • Responsible for welfare, pensions & child maintenance
  • Administers state pension
  • Adminsers working age, disability, Ill health benefits
A

The Department for Work & Pensions

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27
Q

Which government department has these responsibilities?

  • Protect members of the public by disrupting & being to justice organised criminals
  • Tackles money laundering, fraud, bribery & corruption
A

National Crime Agency (NCA)

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28
Q

The below services have been brought together to make what service?

  • Money Advice Service
  • The Pensions Advisory Service
  • Pension Wise
A

The Money & Pensions Service (MaPS)

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29
Q

The Money & Pensions Service (MaSP) is sponsored by the Department for Work & Pensions?

True or False

A

True

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30
Q

What is the aim of the Money & Pensions Service (MaPS)?

A

Help individuals manage their personal finances

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31
Q

The below are what in relation to The Money & Pensions Service (MaPS)?

  • Pensions Guidance
  • Debt Advice
  • Money Guidance
  • Customer Protection
  • Strategy
A

5 functions of The Money & Pensions Service (MaPS)

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32
Q

What does Which? do?

A
  • Protect consumer rights
  • Review products & service
  • Offers independent advice on variety of subjects
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33
Q

What does Citizens Advice do?

A
  • Offer free, confidential & independent advice to help people overcome their problems
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34
Q

Both Which? & Citizens Advice have “Super-Complaint” status but what does it mean?

A

Can make complaints straight to the FCA

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35
Q

Where are the rules for dealing with complaints & compensation set out?

A
  • Dispute Resolution Handbook (DISP)
  • Compensation Handbook (COMP) rules governing eligiblity under Financial Services Compensation Scheme (FSCS)
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36
Q

What is this is relation to a complaint?

  • Financial Loss
  • Material Distress
  • Material Inconvenience
A

What the FCA defines as a compliment

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37
Q

A private individual is eligible to complain according the FCA but what about the below?

  • Personal guarantors for a loan to businesses
  • Consumer Buy to Let businesses
A

Yes they are also eligible

38
Q

For a business with an annual turnover below £6.5 Millon to be eligible to complain it must also what?

A
  • Fewer then 50 employees
  • Annual balance sheet of below £5 million
39
Q

To be eligible to complain according to the FCA a charity must have an annual income of less than £6.5 million when a complaint is made?

True or False

A

True

40
Q

To be eligible to complain according to the FCA a trustee of a trust must have an annual income of less than £5 million when a complaint is made?

True or False

A

True

41
Q

To be eligible to complain according to the FCA what is the maximum turnover or annual balance sheet for a micro- enterprise with 10 employees or less

True or False

A

£2 Million

42
Q

Which stage of the complaint handling process is this?

Acknowledge receipt of a complaint promptly in writing

A

Acknowledge

43
Q

Which stage of the complaint handling process is this?

Ensuring complaints are investigated by a person of sufficient competence (ideally someone not involved in the complaint)

A

Investigate

44
Q

Which stage of the complaint handling process is this?

Aim to resolve complaints promptly within 8 weeks

A

Resolve

45
Q

Which stage of the complaint handling process is this?

Keep the complaint informed on progress

A

Inform

46
Q

Which stage of the complaint handling process is this?

Advise the customer that they can refer the matter to the Financial Ombudsman Service (FOS) where a solution cannot be found within 8 weeks

A

Advise

47
Q

Which stage of the complaint handling process is this?

Provide the complaint with a final response letter & notify the complaints of their right to approach the FOS within 6 months of the letter if they are not satisfied

A

Provide

48
Q

Within how many days must a payment service provider give full response to a complaint by?

A

15 days

49
Q

What is the most number of days a payment service provider can delay a response to in exceptional circumstances?

A

35 days

50
Q

How often does a firm need to report to the FCA on their complaints handling business?

A

6 monthly basis

51
Q

A firm must appoint a individual at the firm to be responsible for the oversight of the firms compliance with complaints rules.

True or False

A

True

52
Q

Minor complaints such as rudeness by a staff member or misspellings on communications can normally be resolved by when?

A

Close or business on the 3rd day following it’s receipt

53
Q

Does a firm need to provide a final response letter following a minor complaint?

A

No but they need to provide a summary resolution to a customer

54
Q

What is Root Cause Analysis?

A

When a firm reviews it’s management control to try and avoid complaints of the same nature reoccurring

55
Q

What is the maximum period a firm must keep records of it’s complaints?

A

3 years

56
Q

Where a complaint relates to collective portfolio management in a UCITS scheme how long do records need to be kept?

A

5 years

57
Q

Where a complaint relates to MiFID business how long do records need to be kept?

A

Minimum of 5 years with a maximum of 7 years

58
Q

What are the below in relation to a firm’s responsibility to report complaint from the last 6 months to the FCA?

  • Total number of complaints received
  • Total number of complaints closed
  • Total number of complaints
  • Total amount of redresses paid in respect of complaints during the reporting period
  • Root cause of complaints & corrective action taken to prevent recurrence
A

What must be on the report to the FCA every 6 months

59
Q

When a consumer body makes a super compliant to the FCA how long does the FCA have to respond to the complaint?

A

Within 90 days

60
Q

What are these in relation to the FCA response to super complaints?

  • Announce plans to consult on an issue
  • Set out timeline for regulatory action
  • Explain how the FCA is already taking action to address an action
  • Explain why it is taking action
A

Likely responses to Super-Complaints

61
Q

How does the Financial Ombudsman Scheme (FOS) work?

A

A team of adjudicators & assessors aim to investigate & resolve cases

Senior management (Ombudsman) then make the final decision

62
Q

Does a consumer have the right to take their case to court if they don’t agree with the Financial Ombudsman’s decision?

A

Yes they can

63
Q

How is the Financial Ombudsman Service (FOS) funded?

A

General levy on members for which all firms must have compulsory memberships

64
Q

What are these in relation to the Financial Ombudsman Scheme (FOS)

-Within 6 months of receiving a complaint
- 6 years of the event that lead to the complaint
- Within 3 years of the time when the complaint had cause for complaint

A

When a consumer should make a complaint to the Financial Ombudsman Service (FOS)

65
Q

What is a “Time Barred Complaint”?

A

A complaint make outside the time limits for a referral to the Financial Ombudsman Service (FOS) which a firm must reject

66
Q

What are the compensation limits set by the Financial Ombudsman Service (FOS)?

A

Set

67
Q

What does the Pension Ombudsman Service (POS) do?

A

Deals with complaints about person & occupational pension schemes. Also complaints to the Pension Protection Fund (PPF)

68
Q

Does the Pension Ombudsman Service (POS) deal with complaints to the about the sale & marketing of pension schemes?

A

No these are covered by the Financial Ombudsman Service (FOS)

69
Q

When must a complaint to the Pension Ombudsman Service (POS) be made?

A

Within 3 years of the event being complained about

70
Q

Who appoints the Ombudsman for Pensions?

A

Secretary of State for Work & Pensions

71
Q

Can a consumer who makes a complaint to the Pension Ombudsman Service (POS) take their complaint to court if they disagree with the Pension Ombudsman’s decision?

A

No they are binding on all parties

72
Q

Who is responsible for the rule making & oversight of the Financial Services Compensation Scheme (FSCS)?

A

The PRA & FCA

73
Q

How is the Financial Services Compensation Scheme (FSCS) funded?

A

Levies on firms authorised by the FCA & PRA

74
Q

What are these in relation to the Financial Services Compensation Scheme (FSCS)?

  • Compensation can only be paid when an authorised firm is in default
  • Compensation can only be paid for financial loss & there are limited to amount of compensation payable
  • Set up mainly to assist private individuals (smaller business are covered)
  • Does not cover firms in CIIOM
A

How a claimant is eligible under the Financial Services Compensation Scheme (FSCS)

75
Q

Which sub scheme of the Financial Services Compensation Scheme (FSCS)?

  • Covers failed deposit taking firms
  • Triggered when a firm authorised to accept deposits by the PRA goes out of business
A

Deposits

76
Q

Which sub scheme of the Financial Services Compensation Scheme (FSCS)?

  • 100% of £85,000 per person
A

Maximum Claim for Deposits

77
Q

The cover up limit of £1 Million for the Financial Services Compensation Scheme (FSCS) sub scheme for Maximum Claims applies to balances held for how long?

A

Less than 6 months

78
Q

Which sub scheme of the Financial Services Compensation Scheme (FSCS)?

Customers with money held by debt management firms maybe covered in relation to client money held with a failed debt management firm of up £85,000 per person

A

Debt Management

79
Q

Which sub scheme of the Financial Services Compensation Scheme (FSCS)?

Customers with money held by debt management firms maybe covered in relation to client money held with a failed debt management firm of up £85,000 per person

A

Debt Management

80
Q

Which sub scheme of the Financial Services Compensation Scheme (FSCS)?

FSCS authorised to advise on or arrange investments goes out of business

A

Investments

81
Q

Which sub scheme of the Financial Services Compensation Scheme (FSCS)?

  • FSCS can provide protection if a mortgage firm is unable or unlikely to pay claims against it
  • FSCS is triggered when a firm that advises or arranges mortgages goes out of business
A

Home Finance

82
Q

Which sub scheme of the Financial Services Compensation Scheme (FSCS)?

Covers claims that arise following the failure of an authorised insurance (life & general)

A

Insurance Companies

83
Q

What is the maximum compensation amount for long term & general insurance that provide benefits on death/disability only?

A

100% of the policy

84
Q

What is the maximum compensation for a long term policy including savings in addition to a protection element?

A

100% of the policy

85
Q

What is the maximum compensation for an Annuity that also provides an income?

A

100%

86
Q

Compulsory insurance such as employer’s liability cover or motor insurance has what compensation limit?

A

100%

87
Q

Which sub scheme of the Financial Services Compensation Scheme (FSCS)?

  • FSCS will safeguard policyholders if an authorised firm is unable to pay claims against it
A

Insurance Brokers

88
Q

What is the maximum claim limit for claims made against insurance brokers set by the FSCS?

A

90%

89
Q

Within how many weeks does the FCA expect the vast majority of complaints to be resolved?

A

Within 8 weeks

90
Q

Other types of insurance have what percentage compensation limits?

A

90% with no upper limit

91
Q

Is a decision made by the Financial Ombudsman Service (FOS) scheme binding on the firm and customer?

A
  • Only the firm
  • Customer can challenge in court if they disagree

CeMAP Unit 2 (11 decks)

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