chapter 1

Question 1

What is a broker in legal terms?

Answer 1

An agent.

Question 2

Who is the principal in an agency relationship?

Answer 2

The client.

Question 3

What question must a broker ask before acting?

Answer 3

Who is my client?

Question 4

Why must a broker identify their client?

Answer 4

It determines duties and liabilities.

Question 5

Who does a retail broker normally act for?

Answer 5

The insured.

Question 6

Who does a wholesale broker normally act for?

Answer 6

The retail/introducing broker.

Question 7

Can a broker act for both insured and insurer?

Answer 7

Yes, but only if disclosed clearly.

Question 8

What principle did Winter v Irish Life establish?

Answer 8

A broker is agent of whoever employs them.

Question 9

What principle did Merrett v Babb confirm?

Answer 9

Employees can be personally liable.

Question 10

What must a broker do when client instructions are unclear?

Answer 10

Seek clarification.

Question 11

What must a broker do regarding lawful instructions?

Answer 11

Follow them personally and promptly.

Question 12

What type of tasks may a broker delegate?

Answer 12

Mechanical tasks only.

Question 13

What level of care must a broker exercise?

Answer 13

Reasonable skill and care.

Question 14

Whose interests must a broker prioritise?

Answer 14

Their principal’s.

Question 15

What must a broker do regarding conflicts of interest?

Answer 15

Avoid them and disclose any conflict.

Question 16

What must a broker do if they have personal interest in a transaction?

Answer 16

Disclose it.

Question 17

What must a broker do with client monies?

Answer 17

Account for them fully.

Question 18

What financial rights does an agent have?

Answer 18

Right to remuneration and indemnity.

Question 19

When can an agency relationship be terminated?

Answer 19

On breach or agreement.

Question 20

What must a broker obtain before using a wholesale broker?

Answer 20

Client consent.

Question 21

Where is consent to use a wholesale broker usually documented?

Answer 21

In the TOBA.

Question 22

What does Hedley Byrne v Heller establish?

Answer 22

A duty of care even without a contract.

Question 23

What is a broker’s tort duty to their client?

Answer 23

Keep them fully informed about insurance.

Question 24

When might a wholesale broker owe a duty of care to an insured?

Answer 24

Depending on case facts.

Question 25

What law codified early insurance concepts?

Answer 25

The Marine Insurance Act 1906.

Question 26

To whom does CIDRA apply?

Answer 26

Consumers.

Question 27

What do insurers have remedies for under CIDRA?

Answer 27

Qualifying misrepresentations.

Question 28

To which contracts does the Insurance Act 2015 apply?

Answer 28

Commercial insurance.

Question 29

What is the key duty under the Insurance Act 2015?

Answer 29

Fair presentation of the risk.

Question 30

What must a fair presentation include?

Answer 30

Clear and accessible disclosure of material facts.

Question 31

What type of remedies apply under IA 2015?

Answer 31

Proportionate remedies.

Question 32

How did IA 2015 change warranties?

Answer 32

They suspend cover rather than void it.

Question 33

Can insurers contract out of IA 2015?

Answer 33

Yes, but must highlight disadvantage.

Question 34

What does the TP(RAI)A 2010 allow?

Answer 34

Direct action against insurer when insured is insolvent.

Question 35

What does the Enterprise Act 2016 introduce?

Answer 35

Damages for late claim payment.

Question 36

What does the CRTPA 1999 allow?

Answer 36

Third parties to enforce contract terms.

Question 37

How can brokers avoid CRTPA applying?

Answer 37

Exclude it in contracts.

Question 38

What does GDPR regulate?

Answer 38

Storage and use of personal data.

Question 39

What does the transparency principle require?

Answer 39

Being open about data use.

Question 40

What does purpose limitation require?

Answer 40

Using data only for the original purpose.

Question 41

What does data minimisation require?

Answer 41

Collecting only necessary data.

Question 42

What does the accuracy principle require?

Answer 42

Keeping data correct and updated.

Question 43

What does storage limitation require?

Answer 43

Keeping data no longer than necessary.

Question 44

What does confidentiality require?

Answer 44

Ensuring data security.

Question 45

What does accountability require?

Answer 45

Documenting compliance.

Question 46

What is a lawful basis for processing?

Answer 46

A legitimate reason under GDPR.

Question 47

What is the consent basis?

Answer 47

Freely given, informed agreement.

Question 48

When is contract a lawful basis?

Answer 48

When processing is needed for a contract.

Question 49

When is legal obligation a lawful basis?

Answer 49

When required by law.

Question 50

When is vital interests a lawful basis?

Answer 50

To protect life.

Question 51

When is public task a lawful basis?

Answer 51

For official authority tasks.

Question 52

When is legitimate interests a lawful basis?

Answer 52

When organisation's interest outweighs privacy risk.

Question 53

How long must firms respond to SARs?

Answer 53

Within one month.

Question 54

What law makes money laundering illegal?

Answer 54

Proceeds of Crime Act 2002.

Question 55

What is a key duty under POCA?

Answer 55

Report suspicions; avoid tipping off.

Question 56

What are the three Fraud Act offences?

Answer 56

False representation, failing to disclose, abuse of position.

Question 57

What does the Bribery Act 2010 cover?

Answer 57

Bribing, being bribed, and failure to prevent bribery.

Question 58

What must firms check under sanctions rules?

Answer 58

That they do not transact with sanctioned parties.

Question 59

To what does contract law apply in broking?

Answer 59

TOBAs and agreements with insurers.

Question 60

What does a TOBA define?

Answer 60

Scope of services and broker-client terms.

Question 61

When is brokerage earned?

Answer 61

In full at inception.

Question 62

What must a client be reminded of in TOBA?

Answer 62

Duty to disclose material facts.

Question 63

What must TOBAs include about data?

Answer 63

How the firm processes client data.

Question 64

What may TOBAs include about liability?

Answer 64

Limitations of the broker’s liability.

Question 65

Why must brokers manage conflicts?

Answer 65

Required by law and FCA rules.

Question 66

What are contingent commissions?

Answer 66

Extra payments based on business volume or profitability.

Question 67

What must brokers disclose to commercial clients?

Answer 67

Nature and source of earnings.

Question 68

What determines duties in a broking chain?

Answer 68

Who the principal is at each stage.

Question 69

How may CRTPA affect broking chains?

Answer 69

Insured might enforce terms.

Question 70

What must brokers do when preparing risk information?

Answer 70

Ensure accuracy and completeness.

Question 71

What role does the broker have in fair presentation?

Answer 71

Advise client and structure information.

Question 72

Why can employees face liability?

Answer 72

They are personally responsible for their actions.

Question 73

What is vicarious liability?

Answer 73

Employer is also liable for employee actions.

Question 74

When do agency duties arise?

Answer 74

Whenever agent acts for principal.

Question 75

What is a material fact?

Answer 75

A fact that influences a prudent insurer.

Question 76

Why do conflicts occur in broking?

Answer 76

Because of remuneration or dual agency.

Question 77

What is a delegated authority?

Answer 77

Authority given to broker to act for insurer.

Question 78

Why is compliance essential?

Answer 78

To meet legal and regulatory expectations.

Question 79

What must brokers disclose about intermediary chains?

Answer 79

All parties involved.

Question 80

Why are financial crime controls needed?

Answer 80

To prevent misuse of broker services.

Question 81

What corporate offence does the Bribery Act create?

Answer 81

Failure to prevent bribery.

Question 82

What duty does confidentiality impose on brokers?

Answer 82

Protect client information.

Question 83

What must broker communications be?

Answer 83

Clear, fair, not misleading.

Question 84

Why is record-keeping important?

Answer 84

To evidence compliance.

Question 85

What rights do data subjects have?

Answer 85

Access, rectification, erasure, restriction, portability.

Question 86

What risk does poor advice create?

Answer 86

Broker liability.

Question 87

What elements form a contract?

Answer 87

Offer, acceptance, consideration, intent.

Question 88

What tasks count as mechanical?

Answer 88

Admin or processing tasks.

Question 89

When can a broker delegate tasks?

Answer 89

With consent or if mechanical.

Question 90

When may conflicts arise?

Answer 90

With profit share agreements or tied arrangements.

Question 91

What are money laundering red flags?

Answer 91

Unusual payments or third-party payers.

Question 92

What must principals do for agents?

Answer 92

Indemnify authorised actions.

Question 93

When does agency end?

Answer 93

On death, breach, agreement, or expiry.

Question 94

To whom may the broker owe duties?

Answer 94

Client, insurer, sub-brokers.

Question 95

How does tort differ from contract?

Answer 95

Tort duty can exist without contract.

Question 96

Why are sanctions checks crucial?

Answer 96

To avoid illegal transactions.

Question 97

Why must brokers treat customers fairly?

Answer 97

To align with FCA principles.