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Financial Advice R01 > R01 > Flashcards

R01 Flashcards

(110 cards)

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1
Q

Why consider reviewable critical illness cover?

A

Cheaper premiums than under a guaranteed contract.

Reviewed based on advancements in medical science not the insured’s health circumstances.

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2
Q

Global regulatory body

A

Financial action task force

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3
Q

Debt management plan

A

Consolidation of debt in to one affordable payment which involves negotiation with existing creditors.

Adviser must be licensed under consumer credit act

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4
Q

Lifetime morgage

A

Property still owned by client

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5
Q

Home reversion

A

Sale of property for lump sum

Client retains right to stay in property

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6
Q

Income protection policy

A

Benefits paid after a deferred period

4 week minimum or 12, 26 or, 52 weeks

Period chosen by client when taking out policy

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7
Q

Payment protection insurance

A

Contributions paid monthly

Only available in connection with a loan to cover monthly repayments is made redundant or unable to work due to accident or sickness

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8
Q

CPA

A

Annuity purchased from a pension fund

Whole premium is taxed

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9
Q

PLA

A

Can be purchased from other capital including a tax free lump sum from a pension

Only income element is taxable

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10
Q

Interest

A

Banks and building societies pay interest gross on deposit accounts

Basic rate tax payer has £1000 savings allowance,

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11
Q

PIBS

A

issued by building societies

No redemption dates

Interest payments to investors can be missed in exceptional circumstances

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12
Q

Unit trusts

A

Open ended

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13
Q

Investment trusts

A

Listed companies with a set number of shares

Closed ended

Investments need to be made via an investment trust savings scheme

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14
Q

Public limited company

A

Must disclose the shareholdings of the company

Must have at least 2 directors and 2 shareholders

Must provide fully audited accounts

Must use plc at the end of thier name

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15
Q

Banks and building societies

A

Created as a place for investors to keep thier money safe and easily accessible

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16
Q

Building societies

A

Owned by members

Any profit is returned to members in the form of better interest on savings or lower interest on loans

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17
Q

EU initiatives

A

Driven and influenced around 70% of FCA policy making

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18
Q

Residence nil rate band

A

£125,000

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19
Q

Income protection and personal accident and sickness policies

A

Pay a regular benefit in the event of being unable to work due to accident or illness

Neither pay out on death

Accident and sickness may pay out a lump sum on diagnosis of certain permanent disabilities

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20
Q

Full new state pension

A

Must have 35 qualifying years

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21
Q

Platform advantages

A

Allows investor to aggregate his holdings from different companies on the same platform

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22
Q

Derivative

A

A right or obligation to buy or sell another type of asset at a specified date and time in the future

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23
Q

Enduring power of attorney

A

Cannot relate to health or welfare decisions

Must be over 18

Cannot make substantial gifts

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24
Q

Lasting power of attorney

A

Has power to make decisions about donor’s welfare and financial maters

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25
Bankruptcy
Lasts 12 months
26
Pensions regulator took over from
OPRA
27
Punishment for market abuse
Maximum 7 years in prison Unlimited fine
28
Flexible portfolio firms
Smaller firms Supervised through event driven reactive supervision and thematic issue (product) supervision
29
Fixed portfolio firms
Larger firms Require more proactive supervision
30
ICOBS insurance categories
General insurance Pure protection - term assurance, critical illness, income protection Payment protection
31
MCOB
Rules for conduct for mortgage business in the UK Standard terms and meanings for communications
32
FCA notification of investigation
Not required for insider trading, market abuse and misleading statements
33
Exempt status
A firm can qualify for exempt status if it is contracted to an authorised person who takes responsibility for all regulated activities
34
Persistency of products
Data on policy cancellations
35
Reporting to FCA
Amount held in client bank accounts Persistency stats Number of complaints Annual accounts Value of client assets in discretionary portfolios Types of business being conducted Number of staff
36
Proceeds of crime act 2002
Uk's principal statute on anti money laundering Created several criminal offences - disguising criminal property - removing criminal property from UK - failing to disclose suspected money laundering
37
Client data
NI records Family circumstances Bank details Address Date of birth Medical records
38
Pure protection policies
No surrender value Benefits payable on death or incapacity Term assurance Income protection
39
Exempt from providing client agreements
Direct offer promotions Life offices selling life and pension policies
40
Client agreement
Must include - risk warnings - restrictions - confirmation of FCA regulation
41
Acceptable limitations
Reliance on information provided by client Reliance on others (third parties) Insufficient evidence to make a recommendation
42
Monetary Policy
Concerned with the management of interest rates and supply of money Increasing interest rates will reduce an individuals ability to spend as borrowing becomes more expensive
43
Fiscal policy
Levels of tax and spending Increased government spending stimulates the economy Reducing taxes stimulates the economy
44
3 stages of money laundering
Placement - cash is deposited, eg purchasing insurance policy Layering - refund policy to get clean cheque from a legal source Integration - integrate the money in to the legal economy
45
Insurable interest
Financial interest between the life assured and the policy holder
46
Life assurance acceptance
Valid once the first premium had been paid
47
NS&I
Not regulated by the FCA
48
Pensions regulator fines
£50k on a company £5k on an individual
49
Failure to monitor compliance
Could lead to unwelcome publicity
50
Capital adequacy assessment
Should be carried out annually
51
FCA minimum threshold (location)
If the corporate body is constituted under UK law, its head office and registered office must be in the UK
52
FCA approval
A firm cannot claim their affairs have FCA approval unless the FCA requires it
53
FCA application fee
Not refundable
54
Capital requirement directive
Divides capital for the purpose of risk assessments into three tiers based on loss absorbency and permanence of capital
55
COBS
Conduct of business sourcebook
56
UK mortgage market review
Did not include imposing limits on multiple incomes and banning affordability tests
57
Client money
The FCA expects an intermediary firm holding client money to reconcile client money every day Interest earned belongs to the client Must be paid in to a designated client bank account (held by an approved bank) next working day
58
FOS compensation
Maximum of £350k plus the claimants costs and interest
59
Stakeholder products
Medium term - minimum investment £20
60
After making a product recommendation
Must provide client with product information to allow them to decide if it's suitable
61
Principles for business
Integrity Skill, care and dilligence Management and control Financial prudence Market conduct Customers interests Communication with clients Conflicts of interest Customers: relationships of trust Client assets Relationship with regulators
62
Outcomes based regulation
Allows the FCA to make judgements on what might happen in the future
63
Approved person
Someone approved to carry out a controlled function
64
Fit and proper
Honesty, integrity and reputation Competence and capability Financial soundness
65
Four key areas of an ethical culture
Capabilities - how well equipped are staff to exhibit the ethical standards expected of them Leadership Practices Narratives
66
Fair treatment of customers MI
Accuracy Relevant Consistent Timely
67
Ethics measures
Indirect - employee engagement and ethics training Direct - customer complaints and ethical feedback
68
Pre FSMA authorisation
Automatically authorised if previously under: Banking act 1987 Insurance companies act 1982 SRO under financial services act 1986
69
Before Appointing an AR
Must ensure: Will not prevent the firm meeting threshold conditions Firm will have adequate control over regulated activities AR is solvent
70
Customer complaints - reporting requirements
Must be submitted twice per year Must include number of complaints How many were closed within four weeks How many closed within 8 weeks of receipt Also those which are open longer Must not distinguish between actual complaints and expressions of dissatisfaction as all of these are considered complaints by the FCA
71
Due dilligence
Must be carried out if: money laundering is suspected When establishing a business relationship Carrying out ad-hoc transactions
72
GDPR
Implemented in the UK under the data protection act Implemented across all general data processing Gives extra powers to the information commissioner Maximum fine £17m or 4% of turnover
73
Direct offer financial promotion
Must give the consumer enough information to make an informed decision as to whether the product is suitable Must include that the firm is authorised or regulated by the FCA Full name and address of person offering the investment Details of any charges and expenses
74
A required function example
Compliance oversight officer
75
Maximum FOS award
£350k
76
Records of investment advice
Must be kept for 5 years
77
Maximum time to Complete qualifications after starting to give advice
4 years
78
Record of advertising pensions. Not including transfers, opt outs or free standing voluntary contribution schemes
Must be kept for 6 years
79
Suitability report
Should be received within 14 days after the contract has concluded
80
Recommendation summary provided for....
Stakeholder pension
81
IFA doesn't need to provide advice on....
Long term care insurance
82
CMA objectives
Deliver effective enforcement Extending competition frontiers refocusing consumer protection achieving professional excellence developing integrated performance
83
FCA Handbook threshold conditions
``` Location of offices Effective supervision Business model Resources Suitability ```
84
FCA high level standards | Systems and controls
Common platform requirements
85
Cooling off period | Sale and rent back
14 days
86
Demands and needs statement
Details the clients needs with reasins for recommendations
87
Mortgage credit directive | What is the name of the product disclosure document starting 21st march 2019
European standardised information sheet
88
How did the consumer credit act 2016 change the definition of an individual
Included sole traders Small partnerships (less than 3) Unincorporated associations
89
How do the fca and cma work together Regarding standard terms in contracts
Fca deals with regulated firms Cma deals with unregulated firms
90
Client agreement Must include
Services the firm offers Cost of those services How they are paid for Investment objectives Risk warnings Reviews Should be kept for 5 years
91
E-commerce directive rules
Provide access to name, address and email address Status Services provided How to order product How to amend order Provide immediate acknowledgement when order is placed
92
Key features document
Nature and aims of investment Risk factors Principle terms Cancellation rights Compensation arrangements fscs Complaints procedure
93
A Principles and Practise of Financial | Management document
A with profit regular savings policy
94
Who had a statutory duty to investigate bankruptcy
The official receiver
95
Charging clause Why?
To allow professional trustees to be remunerated for their services
96
MIPRU Who is covered?
Home finance Mortgage people etc
97
FA may transact businesses without the prior existence of a client agreement when....
Business is done over the phone
98
Free asset ratios When would you compare?
Considering a with profits investment
99
Why use a nominee company?
To protect the assets of a client
100
Who is exempt from the FCA T&C rules
Non uk domiciled firms
101
FCA fit and proper bankruptcy rules
Bankruptcy would not automatically preclude an individual Individually asessed
102
FCA fit and proper Latest point to meet criteria for new employees
Before the start date
103
FOC penalty
£150k plus costs
104
Per se eligible counterparty Example
A government of a country
105
Help to buy maximum contribution
£3400
106
Who is ultimately responsible for compliance
Senior management
107
FOS rules
Costs cannot be deducted from a compensation award All FOS decisons are binding
108
Execution only and limited advice transactions
Client can always insist in proceeding Know your customer rules apply to limited advice transactions Complaint handling rules in relation to FOS apply to limited advice transactions
109
Cancellation rights
If cancellation rights are not issued when required, a client may cancel at anytime For pension transfers the firm may issue a pre sale right to withdraw as an alernative Cancellation rights on open market options apply for 30 days before an annuity is processed
110
Catergories of organisations who introduce business to a firm
Firms that are not fca authorised Exempt firms Firms that are regulated by a designated professional body

Financial Advice R01 (4 decks)

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