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

The Financial Conduct Authority (FCA) is the conduct regulator for financial services firms in the UK, including those selling insurance products. The PRA handles prudential regulation of certain deposit-takers and insurers.

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

Consumer Duty requires firms to act to deliver good outcomes for retail customers — encompassing products and services, price and value, consumer understanding, and consumer support. It is a higher standard than mere compliance with rules.

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

Under the Insurance Distribution Directive and FCA rules, advisers must ascertain the customer's demands and needs before recommending a product, and the recommended product must meet those demands and needs.

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

The Insurance Act 2015 replaced the doctrine of utmost good faith with a duty of fair presentation, requiring the insured to disclose all material information they know or ought to know in a clear and accessible manner.

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

Before a protection policy is concluded, the customer must be provided with appropriate product information — typically a key features document or insurance product information document (IPID) — covering key features, exclusions, costs, and how to claim.

CII R05 Practice Test

CII R05 Practice Test

CII R05 FCA Regulations and Protection