Chapter Six Flashcards
Regulations (10 cards)
What is the difference between a consumer and a commercial customer according to the FCA?
A consumer is a natural person acting for purposes outside their trade, while a commercial customer is a business entity purchasing insurance for business purposes.
What is the purpose of the financial services compensation scheme (FSCS)?
The FSCS compensates customers when an authorised financial services firm is unable to pay claims, typically due to insolvency.
How does the FCA approach the regulation of firms?
The FCA adopts a proactive approach focusing on treating customers fairly and intervening early to prevent consumer harm.
What are the key responsibilities of the council of Lloyds?
The council of Lloyds is responsible for rule-making, managing the affairs of Lloyds and overseeing the strategic direction of the market.
How does the PRA ensure the stability of financial institutions?
The PRA focuses on the safety and soundness of regulated firms and ensures they can fail without threatening the entire financial system.
What are the aims of regulation in the insurance industry?
The aims of regulation in the insurance industry include ensuring consumer protection, maintaining market integrity and promoting effective competition.
What is the role of the financial ombudsman service (FOS)?
The FOS provides an independent service to resolve disputes between consumers and financial service providers.
Who are the three main regulatory bodies in the UK financial services framework?
The three main regulatory bodies are the financial conduct authority (FCA), the prudential regulation authority (PRA) and the financial policy committee (FPC0 of the bank of England.
What is meant by ‘run-off’ in the context of insurance companies?
Runn-off refers to the process where an insurer ceases to accept new business but continues to manage existing policies until they expire.
What is the significance of the consumer duty introduced by the FCA?
The consumer duty sets a standard of care that firms must provide to retail customers , ensuring they deliver good outcomes and protect consumers form harm.
