CII R05 FCA Regulations and Protection 2

Question 1

What is the FCA's approach to the regulation of 'non-investment insurance contracts' such as term assurance?

Accepted Answer

They require FCA authorisation under the Insurance Distribution Directive but are subject to lighter touch conduct rules than investments

Answer

Non-investment protection contracts (term assurance, income protection, critical illness) require firms to be FCA authorised. While subject to conduct of business rules, they are generally subject to proportionate regulation compared to investment products.

Question 2

What is the purpose of the Financial Ombudsman Service (FOS) in the context of protection insurance?

Accepted Answer

To provide an independent service to resolve disputes between consumers and financial firms, including insurers

Answer

The FOS provides free, independent dispute resolution for consumers who cannot resolve complaints with their financial services firm. It can award compensation and require firms to take remedial action.

Question 3

Under FCA rules, what is the maximum time an insurer has to provide a final response to a complaint?

Accepted Answer

8 weeks

Answer

Under FCA complaint handling rules (DISP), firms must acknowledge a complaint promptly and provide a final response within 8 weeks. If unresolved, the complainant can refer the matter to the FOS.

Question 4

What is a 'cooling off' period for protection policies and how long does it last?

Accepted Answer

14 days, during which the policyholder can cancel the policy and receive a refund of premiums

Answer

Under FCA rules and the Insurance Distribution Directive, consumers have a 14-day right to cancel (cooling off period) for distance contracts of insurance, including term assurance and income protection, from the later of inception or receipt of documents.

Question 5

What is the FCA's 'suitability' requirement when an adviser makes a personal recommendation on a protection product?

Accepted Answer

The recommendation must be suitable for the individual customer based on their personal circumstances, financial situation, and protection needs

Answer

Suitability requires that personal recommendations are appropriate for the individual customer. The adviser must gather sufficient information about the customer's circumstances to ensure the recommendation genuinely meets their needs.

CII R05 Practice Test

CII R05 Practice Test

CII R05 FCA Regulations and Protection 2