Chapter 1

Question 1

The Financial Policy Committee

Answer 1

• sits within bank of england
• responsible for macro-prudential supervision
• protect and enhance financial stability

Question 2

Prudential Regulation Authority

Answer 2

• regulates and supervises firms
• promotes safety and soundness
• protects insurance policyholders
• facilitate effective competition

Question 3

Financial Conduct Authority

Answer 3

• ensure markets function well
• consumer protection
• integrity of UK financial system
• promote competition

Question 4

Principles For Business (PRIN)

Answer 4

Claims department should embed 1, 2, 6, 7, 8, 9 and 12

1. Integrity
2. Skill, Care and Diligence
3. Management and Control
4. Financial Prudence
5. Market Conduct
6. Customer Interests
7. Communications
8. Conflicts Of Interest
9. Relationships
10. Client Assets
11. Relationships with Regulators
12. Consumer Duty

Question 5

Training and Competence (TC)

Answer 5

• employees are/remain competent
• employees are appropriately supervised
• employees competence is reviewed regularly
• competence levels match nature of business

Question 6

Insurance Distribution Directive

Answer 6

15 hours of personal development completed per year

Question 7

Dispute Resplution : Complaints (DISP)

Answer 7

how complaints are dealt with by respondents and the FOS

Question 8

ICOBS

Answer 8

• contains detailed requirements for day to day business
• divided into 8 sections
• specifically outlines rules for claims handling

Question 9

ICOBS 8.1.1

Answer 9

• handle claims promptly and fairly
• provide reasonable guidance to help policyholders make claims
• not unreasonably reject claims
• settle claims promptly once settlement terms are agreed

Question 10

Consumer Rights Act

Answer 10

requires services to be performed within a reasonable time

Question 11

Enterprise Act 2016

Answer 11

insurers must pay claims settlements within a reasonable time

Question 12

ICOBS 1.1.2 and 1.1.3

Answer 12

• provides additional protection for consumer policyholders
• defines a consumer as someone acting outside their trade, business or profession
• unreasonable to reject a claim except in cases of fraud, non-disclosure or misrepresentation

Question 13

ICOBS 8.2

Answer 13

• motor vehicle liability
• requires TP motor claims to be settled within three months if liability is admitted and damage quantified

Question 14

ICOBS 8.4

Answer 14

concerns employers liability and the use of an EL’s register to identify the appropriate insurer

Question 15

Principle 8 PRIN

Answer 15

requires a firm to manage conflicts of interest fairly

Question 16

when is a firm likely to be a customer’s agent?

Answer 16

when it acts for a customer in arranging a policy

Question 17

Six Consumer Outcomes

Answer 17

• fair treatment of customers
• product design
• clear information
• suitable advice
• product performance
• no unreasonable barriers

Question 18

Four Outcomes under the Consumer Duty

Answer 18

• products and services
• price and value
• consumer understanding
• consumer support

Question 19

Principle 12 PRIN

Answer 19

“a firm must act to deliver good outcomes for retail customers”

Question 20

Cross-Cutting Rules

Answer 20

• act in good faith towards retail customers
• avoid causing foreseeable harm to retail customers
• enable and support retail customers to pursue their financial objectives

Question 21

CII members are required to

Answer 21

• comply with the code and all relevant laws and regulations
• act with the highest ethical standards and integrity
• act in the best interests of each client
• provide a high standard of service
• treat people fairly

Question 22

Environmental Factors

Answer 22

focuses on a company’s environmental impact, including carbon footprint, energy efficiency and waste management

Question 23

Social Factors

Answer 23

• relationships with employees, communities and stakeholders
• diversity
• community engagement

Question 24

Governance Factors

Answer 24

involved transparent and ethical decision-making processes, effective board oversight and alignment with shareholder interests

Question 25

UN Environmental Programme’s Principles for Sustainable Insurance Initiative

Answer 25

• embed ESG issues in decision-making • raise awareness and manage ESG risks with clients and partners • promote action on ESG issues with government and stakeholders • demonstrate accountability and transparency in ESG progress

Question 26

Outsourcing Claims Handling

Answer 26

• often outsource claims handling to TPAs or MGAs • insurers remain responsible for meeting ICOBS standards

Question 27

ICOBS 2.5.3

Answer 27

• a firm cannot pass on its regulatory responsibilities to others • even if outsourced, it is still responsible for meeting regulatory requirements

Question 28

Definition of a “complaint”

Answer 28

any oral or written expression of dissatisfaction, whether justified or not

Question 29

Complaint Informal Resolution

Answer 29

• if resolved by the third day with consumer agreement, provide a summary resolution in writing • inform the customer of their rights to take the complaint to the FOS

Question 30

Complex Complaints

Answer 30

• must be resolved within 8 weeks • provide progress updates and a final response explaining the decision and any redress • inform the complainant of their right to refer to the FOS

Question 31

Reporting Complaints

Answer 31

• firms must report complaint numbers to the FCA twice a year • includes complaints resolved informally within 3 days

Question 32

FOS Eligible Claimants

Answer 32

• consumer • micro-enterprise with no fewer than 10 employees and a turnover or balance sheet total of no more than €2 • charities with an annual income of less than £6.5m • trustees of trusts with a net value of less than £5m • small business with an annual turnover of less than £6.5m and fewer than 50 employees or a balance sheet total of less than £5m • guarantors

Question 33

Referring complaints to the FOS

Answer 33

• six months of the date on the firm’s letter advising the claimant of it’s final decision • six years after the event complained about • three years after the complainant knew, or should have known, that they had cause for complaint

Question 34

FOS awards

Answer 34

Money Award: date complaint referred to the FOS on or after and act occurred on or after 1st April 2024 - £430,000 date complaint referred to the FOS on or after 1st April 2024 and act occurred before 1st April 2019 - £195,000 A “directions award” telling the firm what actions it needs to take to put things right for its customer

Question 35

FOS funding

Answer 35

• a general levy paid by all firms • a case fee payable by the firm to which the complaint relates

Question 36

Regulation in Non-UK Jurisdictions

Answer 36

• insurers may write business in jurisdictions worldwide • ensure that the claims adjuster is equipped to handle these appropriately