Consumer Protection Flashcards

What protection does the Consumer Rights Act 2015 provide in financial services?

Answer: It provides rights regarding unfair contract terms and requires services to be performed with reasonable care and skill

The Consumer Rights Act 2015 provides protections against unfair contract terms and requires that services (including financial services) are performed with reasonable care and skill.

What is a 'client money' account?

Answer: A segregated account holding money that belongs to clients, separate from the firm's own money

Client money must be held in segregated accounts separate from the firm's own money, as required by the FCA's Client Assets Sourcebook (CASS), to protect clients if the firm fails.

What is the purpose of FCA's Client Assets Sourcebook (CASS)?

Answer: To protect client money and assets held by firms through segregation and other safeguarding rules

CASS sets out detailed requirements for how firms must safeguard client money and assets, including segregation requirements, reconciliation, and reporting obligations.

What is an 'appropriateness assessment'?

Answer: An assessment of whether a client has the knowledge and experience to understand the risks of a non-advised product

An appropriateness assessment is required for non-advised sales of complex products. It checks whether the client has sufficient knowledge and experience to understand the risks of the product.

What rights does a consumer have when a financial firm becomes insolvent?

Answer: The right to claim compensation from the FSCS up to applicable limits

When an authorised financial firm becomes insolvent, eligible consumers can claim compensation from the FSCS up to the applicable limits for their type of claim (e.g., £85,000 for deposits).

What is the FCA's approach to 'persistent debt' on credit cards?

Answer: Firms must contact customers in persistent debt and help them repay more quickly or offer options

The FCA requires credit card firms to identify customers in persistent debt (paying more in interest and charges than they repay of the balance over 18 months) and take steps to help them, including offering ways to repay more quickly.