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M80 - Underwriting Practice > Chapter > Flashcards

Chapter Flashcards

The regulatory and commercial environment I: The PRA and the FCA

1
Q

The first attempt at imposing any form of supervision of UK insurance happened…..

A

…with the passing of the Insurance Brokers (Registration) Act 1977

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2
Q

What Act of Parliament created the FSA

A

Financial Services and Markets Act 2000

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3
Q

Since 1 April 2013, regulation has been the responsibility of

A

the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).

A third body the Financial Policy Committee (FPC) is responsible for monitoring emerging risks to the UK financial system

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4
Q

What Act gave powers of supervision to the PRA and FCA

A

The FCA and PRA took most duties previously allocated tot he FSA under powers granted by the Financial Services Act 2012

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5
Q

What is the PRC and when was it established

A

The Prudential Regulation Committee. It is part o f the Bank of England, replacing the PRA Board from 1 March 2017. The PRC operates alongside other two Bank Committees, the FPC and the MPC

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6
Q

What are the objectives of the PRA

A
  1. Promote safety and soundness of the firms it regulates
  2. Protection of insurance policyholders
  3. Facilitate effective competition - this objective is secondary
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7
Q

What is the singe strategic objective of the FCA

A

The FCA has a single strategic objective to ensure that the relevant markets function well.

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8
Q

What operational objectives support the FCA strategic objective

A
  1. To promote effective competition in the interests of consumers
  2. To secure an appropriate degree of consumer protection
  3. To protect and enhance the integrity of the UK financial system
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9
Q

What organisations is the FCA responsible for

A
  • FOS - Financial Ombudsman Service
  • MAS - Money Advice Service
  • FSCS - Financial Services Compensation Scheme
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10
Q

What key conduct principle falls under the remit of responsibilities of the FCA

A

Treating Customers Fairly

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11
Q

The FCA Supervision Model is based on which three pillars

A
  1. Firm Systematic Framework (FSF)
  2. Event-driven work
  3. Issues and products
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12
Q

What does Firm Systematic Framework mean in the context of FCA supervision

A

Preventative work through structured conduct assessment of firms

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13
Q

What does event-driven work mean in the context of FCA supervision

A

Dealing decisively with problems that are emerging or have occurred, and securing customer redress where necessary

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14
Q

What does issues and products mean in the context of FCA supervision

A

Fast, intensive campaigns on sectors that are putting or may put consumers at risk

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15
Q

Who does the FCA report its findings to

A

HM Treasury

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16
Q

Which two books have incorporated the old principles of the FSA Handbook

A

The PRA Rulebook and the FCA Handbook

17
Q

Name the 11 Principles for businesses (PRIN) in the PRA Rulebook and the FCA Handbook

A
  1. integrity
  2. skill, care and diligence
  3. management and control
  4. financial prudence
  5. market conduct
  6. customers’ interests
  7. communication with clients
  8. conflicts of interest
  9. customers: relationship of trust
  10. clients’ assets
  11. relationship with regulators
18
Q

What five areas of the underwriting function are impacted by the PRA and FCA regulation

A
  1. Principles for Business (PRIN)
  2. Training and Competence (TC)
  3. Fair treatment of customers
  4. Monitoring and Auditing the business
  5. Complaint and dispute resolution
19
Q

What are the six consumer outcomes created by the FSA in 2006 linked to the TCF principle

A
  1. TCF is central to corporate culture
  2. Products are designed to meet the needs of customers
  3. Consumers are provided with clear information
  4. The advice provided is suitable
  5. Products perform as firms have led them to expect
  6. No unreasonable post-sale barriers
20
Q

When was the Aldermanbury Declaration published and what does it set up

A

The Aldermanbury Declaration was published in March 2010. It laid down a framework for the achievement and maintenance of professional standards in the insurance industry.

21
Q

What does the Consumer Dispute Resolution: Complaints (DISP) section of the FCA Handbook state?

A

That any expression of dissatisfaction should be treated as a complaint

22
Q

what does the dispute resolution complaints section of the FCA handbook state

A

the dispute resolution complaints section states that any expression of dissatisfaction should be treated as a complaint

23
Q

what is the basic principle of insurance

A

the basic principle of insurance is that the losses of the few will be met by the contributions of the many

24
Q

When was the financial services compensation scheme established

A

the financial services compensation scheme was established under section 212 of the financial services and markets act in 2000

25
Q

why was the financial services compensation scheme established

A

the financial services compensation scheme was established to compensate eligible claimant and policyholders where are authorised persons where unable to satisfy claims against them

26
Q

what is the amount of compensation that a policyholder account received under the financial services compensation scheme

A

protection is 100% for compulsory insurance professional Indemnity Insurance and long-term insurance as well as certain claims for injury sickness or infirmity of the policyholder

protection is 90% on the claim with no upper limit for other types of policy including general insurance advice and arranging

27
Q

how are the costs of the financial services compensation scheme funded

A

the costs of the financial services compensation scheme are funded by a lady unauthorised firms

28
Q

name four rules of the Financial Ombudsman Service

A

provisions on time limits
who can complain to the FOS
activities which are covered by the FOS
factors the FOS will take into account when considering a case

29
Q

what type of dispute can be taken to the Financial Ombudsman Service

A

Claims brought by individual consumers and buy small to medium sized Enterprises with an annual turnover of less than 2 million and fewer than 10 employees

30
Q

what are the implications of the Decisions of the Financial Ombudsman Service for underwriters

A

once a decision is made an agreed it is binding on both parties

31
Q

How many insurance related complaints to the Financial Ombudsman Service were held in 2016

A

in 2016-2017 around 30% of in insurance related complaint to the Financial Ombudsman Service were upheld

M80 - Underwriting Practice (1 decks)

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