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Flashcards in UK contract and trust law Deck (21):
1

What are the main powers of the FSCS?

1. Raise funds by imposing levies on insurers/intermediaries to provide compensation to policyholders affected by default of insurer/intermediary authorised by FCA/PRA. In accordance with FCA/PRA rules
2. Can transfer all or part of an insurers business to another insurer or assist that insurer carry on its business, if it's in financial difficulty

2

Why was FOS set up and what are its key responsibilities?

0. Set up by FSMA to resolve individual disputes between consumers and financial services companies
Responsibilities:
1. Making rules of procedure for complaints to scheme and investigation/consideration/determination
2. Rules relating to award of costs
3. Rules for levying case fees
4. Report to regulator on functions and publishing the report

3

What are the protected characteristics of the Equality Act 2010?

1. Age
2. Sex (Gender directive)
3. Race
4. Disability
5. Gender reassignment
6. Marriage/civil partnership
7. Pregnancy/maternity
8. Religion and belief
9. Sexual orientation

4

When is an individual regarded as disabled?

1. Have physical or mental impairment, and
2. The impairment has substantial and long-term adverse effect on their ability to carry out normal day to day activities

5

What does the 'unfair terms in consumer contracts regulations 1999' act allow the FCA to do? What doesn't the regulation do?

FCA has power to challenge firms using unfair contract terms
It doesn't offer redress to individuals

6

What is the general test to whether a term of a contract is unfair?
Is a ruling based on the precise legal definition of 'unfair contract term'?

If, contrary to good faith, it could give a significant advantage to firm that could cause detriment to policyholder
The FOS can use 'fair and reasonable' test, not the precise legal definition

7

Are the following examples of unfair terms?
1. Firm can change contract terms without consulting without valid reason
2. Charges too large sum if cancelled
3. Firm can change, without valid reason, characteristic of its service, without consulting
4. Firm can interpret any term in contract how it sees fit
5. Misleads about terms of contract

Yes

8

What is the key anti-discrimination law for UK?
What does it cover?

Equality Act 2010
9 characteristics, which can't be used as reason to treat individuals unfairly in provision of goods/faciiities/services

9

What is direct discrimination? What is indirect discrimination?

Direct = treat someone less favourably because of one of the 9 protected characteristics
Indirect = a policy, which is applied in the same way for all, disadvantages people with one of the 9 protected characteristics (apart from pregnancy/maternity)

10

What was the main impact on the life insurance market brought by the Equality Act 2010?

No age discrimination

11

Explain how insurance prices can still be varied by age, despite the Equality Act 2010? Discuss the use of age bands and limits. (4)

1. Prices allowed to vary by age as long as reflects genuine risks and costs
2. Age bands permitted if based on appropriate data about risks
3. Age limits allowed if reflect risks and costs, may need to refer to another provider
4. Insurers required to make data on some products available to industry

12

Explain the rule relating to special terms for a disabled?

1. Allowed if decision based on info/data relevant to the particular risk to be insured
2. That info/data must be from reliable source
3. The decision must be reasonable given the data/info from the source and any other relevant factors

13

EU gender directive part 1. Background?

1. Passed in 2k4, Equality act 2010 passed it into UK law
2. "Principle of equal treatment for men/women in access to provision of goods/services"

14

EU gender directive part 2. Original form?

1. Opt-out for financial and insurance products if conditions were met
2. ECJ rules not valid, must be taken out from 21/12/12
3. Meant no gender as rating factor on NB from 21/12/12

15

EU gender directive part 3. Existing business effect?

1. Reviewable premiums not treated as NB
2. Need to be careful to not use proxy rating factors which might be deemed indirect discrimination by gender and so not allowed

16

EU gender directive part 4. Implications on pricing.

1. Particular effect on annuity and protection business where mortality/morbidity are very different by sex
2. Can't average premiums, need contingency for business mix not as expected under gender neutral pricing
3. Some business already had it e.g. Protected Rights annuities

17

Equality Act 2010 Part 1. Background?

1. Key anti-discrimination law for UK
2. Covers 9 proected characteristics which can't be used as reason to treat individuals differently in provision of goods/facilities/services including insurance
3. Can't discriminate directly or indirectly against someone on basis of protected characteristic
4. For life insurers, the main change was to make it unlawful to discriminate by age

18

Equality Act 2010 Part 2. Protected Characteristics?

1. Age
2. Sex (Gender directive)
3. Race
4. Disability
5. Gender reassignment
6. Marriage/civil partnership
7. Pregnancy/maternity
8. Religion and belief
9. Sexual orientation

19

Equality Act 2010 Part 3. Direct and indirect discrimination?

Direct:
1. Treating someone less favourably because of a protected characteristic
2. Age not discriminating if 'proportionate means of achieving legitimate aim'
Indirect:
1. Policy applies in same way to everyone but particularly disadvantages people with protected characteristic, because they have the PC
2. Not discriminating if 'proportionate means of achieving legitimate aim'
3. Doesn't apply to pregnancy/maternity

20

Equality Act 2010 Part 4. Pricing by age.

1. Can vary by age if genuinely reflects risks or costs
2. Age bands permitted if based on appropriate data on risks
3. Age limits permitted if relevant to risks and costs, some providers may have to refer declined customers to another provider
4. Must make data on some products available to industry

21

Equality Act 2010 Part 5. Disability

1. Was not new to insurance.
2. Person disabled if:
a. physical/mental impairment and
b. Has substantial and long term effect on carrying out normal day 2 day activities
3. Impose special terms if
a: decision uses info/data relevant to the risk,
b: from reliable source, and
c: reasonable given info/data used and other relevant factors