Fair and ethical outcomes for customers

Question 1

What are the FCA’s 12x Principles for Businesses?

Answer 1

1) Integrity
2) Skill, care and diligence
3) Management and control
4) Financial prudence
5) Market conduct
6) Customers’ interests
7) Communications with clients
8) Conflicts of interest
9) Customers’ relationship of trust
10) Clients’ assets
11) Relations with regulators
12) Consumer Duty

Question 2

What are the 3x key elements to the new Consumer Duty regs regarding products and services offered to ‘retail customers’?

Answer 2

The principle that “A firm must act to deliver good outcomes for retail customers”

Three “cross-cutting” obligations
— act in good faith;
— avoid foreseeable harm to customers;
— enable and support retail customers to pursue their financial objectives

Four outcomes
— Products and services
— Price and value
— Consumer understanding
— Consumer support

Question 3

Regarding a firm’s culture, the FCA identified what 4x drivers that can cause harm to customers?

Answer 3

1. Purpose.
2. Leadership.
3. Approach to rewarding and managing people.
4. Governance

Question 4

Market abuse occurs when a person or group of people acts to the disadvantage of other investors through which 3x practices?

Answer 4

1. Market manipulation
2. Unlawful disclosure of inside information
3. Insider dealing

Question 5

What are the 3x money-laundering offences that result in a penalty of max. 14 years’ imprisonment, a fine or both?

Answer 5

Concealing criminal property

Arranging criminal property

Acquisition of criminal

Question 6

What are the 3x less severe financial crime offences and their penalties?

Answer 6

1. Failure to disclose suspicions to a nominated or authorised person - up to 5 years’ imprisonment
2. Tipping off - up to 2 years’ imprisonment, a
   fine or both
3. Recklessly make a false or misleading statement

Question 7

The Financial Action Task Force (FATF) ‘ s work fall into what 3x areas?

Answer 7

1. setting appropriate standards for national anti-money-laundering programme
2. evaluating how individual countries have implemented these standards
3. identifying trends in money-laundering methods

Question 8

Organisations subject to the Money Laundering Regulations must report any suspicious financial activity to whom?

Answer 8

National Crime Agency (NCA)

Question 9

In action against money laundering, firms must confirm customer’s identity in what instances?

Answer 9

1. when entering into a new business relationship
2. when new customer’s value of a transaction exceeds €15,000 EURO
3. in every case where there is suspicion of money laundering

Question 10

Acceptable forms of identification include?

Answer 10

current passport;
driving licence with photograph;
entry on electoral roll;
recent utility bill or council tax bill

Question 11

In instances of Financial exclusion, what can a firm accept when a customer cannot provide any of acceptable forms of ID?

Answer 11

a letter or statement rom a person in a position of responsibility (e.g. solicitor, doctor or minister of religion) who knows the client

Question 12

Institutions must keep appropriate records for crime evidence such as?

Answer 12

Evidence of ID - 5 years after the relationship with the customer has ended

Evidence of transactions - 5 years after the transaction was executed

Question 13

The Data Protection Act 2018 implemented the EU General Data Protection Regulation (GDPR) in the UK. When can an individual’s data be processed without consent?

Answer 13

assessing and pricing risk in financial services and court proceedings

Question 14

Individual’s 8x rights under the legislation are?

Answer 14

Be informed of the purpose for processing the data

Subject access – free copy of data

Rectification if data is inaccurate or incomplete

The ‘right to be forgotten’

Prevent or restrict processing

Data portability - free to obtain and reuse data

Object to the processing of their data for direct marketing purposes

Automated decision-making

Question 15

Who enforces the Data Protection Act?

Answer 15

The Information Commissioner (ICO).

Question 16

Where are the requirements for how complaints are handled, found?

Answer 16

The FCA Conduct of Business contained in the DISP sourcebook of the Handbook

Question 17

How long must a firm resolve or at least acknowledge receipt a complaint?

Answer 17

3x days

Question 18

How long must records of complaints be kept?

Answer 18

3x years

or 5x for a UCITS scheme portfolio

Question 19

When must complaints be made?

Answer 19

6 years after the event causing the complaint

or 3 years from the date when the complainant became aware

Question 20

Who funds the Financial Ombudsman Service (FOS)?

Answer 20

Firms are levied, plus case fees.

Free service for individuals

Question 21

When can a complainant defer to the FOS?

Answer 21

6 months after the receipt of the firm’s final response to their complaint

Question 22

The FOS has a range of what 3x actions available if it finds in favour of the customer?

Answer 22

Compensation

Recommend to the firm that they pay more than the max figure

Direct a firm to take action (including non-financial action)

Question 23

If a firm becomes insolvent, what scheme can compensate customers?

Answer 23

The Financial Services Compensation Scheme (FSCS)