CII R05 FCA Regulations and Protection

Question 1

Which body is the primary regulator of insurance and financial advice in the UK?

Accepted Answer

Financial Conduct Authority (FCA)

Answer

Prudential Regulation Authority (PRA)

Answer

Competition and Markets Authority (CMA)

Answer

Financial Ombudsman Service (FOS)

Question 2

Under the FCA's Consumer Duty (effective July 2023), what is the primary obligation on firms selling protection products?

Accepted Answer

To deliver good outcomes for retail customers, acting in their best interests

Answer

To sell the cheapest available product to every customer

Answer

To provide a 10-year guarantee on all protection products

Answer

To obtain prior FCA approval for all individual policy sales

Question 3

What is the 'demands and needs' requirement when advising on protection insurance under FCA rules?

Accepted Answer

Advisers must ensure the product meets the customer's stated insurance demands and needs at the time of the sale

Answer

Advisers must recommend the product with the lowest premium

Answer

Advisers must obtain a minimum of three competing quotes

Answer

Advisers must disclose commission earned before making a recommendation

Question 4

What is the significance of the 'duty of fair presentation' under the Insurance Act 2015 for protection policy applicants?

Accepted Answer

The customer must disclose all material facts they know or ought to know when applying for insurance

Answer

Insurers must present their terms fairly to the customer

Answer

Advisers must present at least three insurer options to customers

Answer

Insurers must fairly present their commission structures

Question 5

Under FCA rules, what information must be provided to a customer before they take out a protection policy?

Accepted Answer

A key features document or product information document outlining the main features, risks, and costs

Answer

The insurer's full annual report and accounts

Answer

A copy of the full policy terms and conditions signed by the chief underwriter

Answer

A detailed breakdown of the insurer's investment strategy

Question 6

What does 'treating customers fairly' (TCF) require of protection advisers?

Accepted Answer

Ensuring customers have a genuine chance of making a successful claim, that products work as expected, and that advice is suitable for their individual needs

Answer

Charging customers no more than the market average premium

Answer

Offering every customer a 14-day cooling off period

Answer

Providing products exclusively from FCA-authorised insurers