TOPIC 9 Flashcards
Which of the following are covered during the factfind process? Select all that apply.
a) Customer’s income and outgoings.
b) Customer’s employment.
c) Recommended mortgage product.
d) Customer’s attitude to interest rate rises.
e) Customer’s medical history.
f) Customer’s ideal mortgage term.
a) Customer’s income and outgoings.
b) Customer’s employment.
d) Customer’s attitude to interest rate rises.
f) Customer’s ideal mortgage term.
The recommended product is determined as a result of, rather than during, the factfind process. The customer’s medical history is not directly relevant to this process.
Ben is advising a customer on a suitable mortgage to buy her next house. It is sufficient for Ben to provide the customer with a key features illustration. True or false?
True False
False
Any new mortgage is an MCD regulated mortgage, so Ben must provide the customer with a European Standardised Information Sheet (ESIS).
Which of the following apply once a mortgage application has been submitted? Select all that apply.
a) The lender is responsible for underwriting the application.
b) The adviser may be required to collect further information or documentation from the customer.
c) The lender is responsible for explaining the underwriting process to the customer.
d) The lender usually explains the offer documentation to the customer.
a) The lender is responsible for underwriting the application.
b) The adviser may be required to collect further information or documentation from the customer.
The adviser usually explains the underwriting process and offer documentation.
From a regulatory perspective, ethical advice is best achieved:
through tight regulations.
by regulatory guidelines and good examples.
by allowing firms to set their own rules.
by regulatory guidelines and good examples.
Which of the FCA’s Principles for Businesses listed below is of least relevance to the fair treatment of customers?
Principle 2: A firm must conduct its business with due skill, care and diligence.
Principle 6: A firm must pay due regard to the interests of its customers, and treat them fairly.
Principle 10: A firm must arrange adequate protection for clients’ assets when it is responsible for them.
Principle 10: A firm must arrange adequate protection for clients’ assets when it is responsible for them.
While Principle 10 is important, Principles 2 and 6 are more directly relevant to the fair treatment of customers.
The FCA Consumer Duty:
replaces the 11 FCA Principles for Businesses.
establishes a new FCA Principle for Businesses – Principle 12.
comprises a detailed set of rules
establishes a new FCA Principle for Businesses – Principle 12.
The Consumer Duty introduces an additional Principle 12 for Businesses.
The fair treatment of customers means that an adviser:
must recommend the most appropriate product from their range.
must always recommend the type of product the customer stated they require.
may recommend a product in which the customer has not expressed an interest.
may recommend a product in which the customer has not expressed an interest.
If the adviser does not have a suitable product within the range they offer, no recommendation should be made. In doing what is best for the client, the adviser may recommend a product entirely different from the one in which the client initially expressed an interest.
The primary requirement of the advice process is that:
the recommendation should be suitable for the customer’s needs.
the amount of time the adviser invests in the customer should be reflected in the commission earned.
the customer should be sold the product they ask for.
the product recommended should be the best fit to the customer’s needs from the range available.
the recommendation should be suitable for the customer’s needs.
If a mortgage adviser asks a customer about the age at which they expect to retire, this is most likely to be so that the adviser can:
establish whether the customer is good at long‑term planning.
ascertain whether the type of property the customer is interested in buying is suitable for them.
ensure that the customer can afford the repayments from their pension income.
recommend an appropriate term for the mortgage.
recommend an appropriate term for the mortgage.
Many lenders are reluctant to agree to borrowing that will not be repaid before the customer retires.
Why might an adviser want to know about a customer’s future career plans or expectations of promotion, as well as their current situation?
It might influence the price of a product.
It might influence a mortgage lender’s decision.
It might influence the type of product the adviser would recommend.
It might influence the type of product the adviser would recommend.
What are the four key pieces of information that an adviser needs from their customer in order to provide a recommendation that meets the customer’s needs?
Needs, wants, circumstances and attitude to risk.
Wants, circumstances, objectives and attitude to risk.
Needs, circumstances, objectives and attitude to risk.
Needs, circumstances, objectives and attitude to risk.
The Consumer Duty includes three ‘cross-cutting’ obligations, which develop the overarching expectations from Principle 12. Which of the following is not one of them? Firms must:
act in good faith towards retail customers.
avoid foreseeable harm to customers.
ensure products provide fair value for customers.
ensure products provide fair value for customers.
The requirement for a firm to ensure products provide fair value for customers is a Customer Duty outcome rather than a cross cutting obligation.
The Customer Duty supersedes which Principles for Businesses in relation to a firm’s retail business?
Principles 4 and 5.
Principles 8 and 9.
Principles 6 and 7.
Principles 6 and 7.
