M81 > chapter 3 > Flashcards

chapter 3 Flashcards

(93 cards)

Study These Flashcards
1
Q

Who issues ICOBS?

A

The Financial Conduct Authority (FCA).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the basis of ICOBs

A

Principles-based and outcomes-focused.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does ICOBS mainly aim to protect?

A

Customers buying general insurance and pure protection contracts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Give two examples of pure protection contracts under ICOBS.

A

Term assurance and critical illness (also income protection or PPI).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What do (R) and (G) stand for in ICOBS?

A

R = Rule, G = Guidance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

To which firms does ICOBS apply?

A

FCA-authorised firms carrying out insurance distribution.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Does ICOBS apply to reinsurance?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

When does ICOBS not fully apply to large commercial risks?

A

When they are large risks located outside the EEA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who is responsible for ICOBS compliance in a broker chain?

A

producing broker

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Can firms choose to apply COBS instead of ICOBS for pure protection?

A

Yes, they may elect to apply COBS instead.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What must brokers do for group policies under ICOBS?

A

Give information to the policyholder and tell them to pass it on to all insured persons.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Do FCA Principles apply even where ICOBS does not?

A

Yes, FCA Principles apply across all activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Who is a policyholder under ICOBS?

A

Anyone who can claim directly under a policy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Who is a customer under ICOBS?

A

The policyholder who arranges the contract.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is a commercial customer under ICOBS?

A

Any customer who is not a consumer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

If unsure whether a customer is a consumer or commercial, how must you treat them?

A

As a consumer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How is a driving instructor with mixed business and private use treated?

A

As a commercial customer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What standard must all ICOBS communications meet?

A

Clear, fair and not misleading.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What must be shown when claiming ‘cheapest premium’ in a promotion?

A

The basis of the claim and any significant limitations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What must pricing claims be based on?

A

Results reasonably expected for most customers or with clear limits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is an inducement under ICOBS?

A

A benefit that could influence a firm to act in a particular way.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

When must firms not offer or accept inducements?

A

When they may conflict with duties to customers or risk unfair treatment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Why must staff incentive schemes be carefully designed?

A

To avoid rewarding sales of unsuitable products.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Why is record-keeping important under ICOBS 2?

A

To evidence compliance with ICOBS and FCA Principles.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What does ICOBS say about excluding liability?
Firms must not exclude duties in a way that conflicts with ICOBS or FCA Principles.
26
When is it acceptable to rely on another firm?
When it is reasonable and you have done appropriate due diligence.
27
When does ICOBS 3 apply?
When selling by distance means such as phone, internet or email.
28
What two areas does ICOBS 3 cover?
Distance marketing with consumers and e-commerce with all customers.
29
Who does ICOBS 3 mainly affect?
Direct writers, but also brokers selling remotely.
30
When must information about the firm and its services be given?
In good time before conclusion of the contract.
31
In what form should ICOBS 4 information normally be given?
In a durable medium, usually in English.
32
What basic details about the firm must be disclosed?
Name, address, FCA authorisation and how to verify it.
33
What ownership links must be disclosed?
Any 10% or more holding in an insurer, or by an insurer in the firm.
34
What complaints details must a firm disclose?
How to complain and how to contact the Financial Ombudsman Service.
35
What must a firm say about who it represents?
Whether it is acting for the customer or the insurer.
36
What must an introducer disclose to a customer?
Its name, address and whether it is part of the broker or insurer.
37
What is a broker’s scope of service?
What the broker will do in terms of markets approached and placement.
38
What three options must a broker disclose about scope of service?
Fair analysis of the market, limited panel, or single/limited insurers.
39
What must a broker say about advice versus information?
Whether it will give a personal recommendation or just provide information.
40
What must be disclosed about fees under ICOBS 4?
The nature and amount of any fees payable by the customer.
41
When must a broker disclose commission to a commercial customer?
When the commercial customer asks for it.
42
Must commission paid to associates be disclosed?
Yes, it must be disclosed on request.
43
Are brokers required to disclose commission to consumers under ICOBS rules?
No, but they must do so if a consumer asks under agency law.
44
What is initial disclosure documentation?
A document combining key information on status, scope, fees and FSCS cover.
45
What must initial disclosure say about FSCS?
Whether the firm is covered and a brief outline of the protection.
46
What must brokers ensure about customer eligibility?
That customers only buy policies under which they can claim.
47
How should brokers handle partial eligibility within a policy?
Explain which parts apply and which do not.
48
What must brokers explain about disclosure for commercial customers?
The duty of fair presentation of the risk.
49
What is a fair presentation of risk?
Telling the insurer all material circumstances or enough to prompt further enquiries.
50
How should brokers handle disclosure with consumers?
Ask clear, specific questions and explain the duty to take reasonable care.
51
Why must brokers explain consequences of misrepresentation?
Because careless, reckless or deliberate misrepresentation can affect claims.
52
What must be established before recommending a product?
The customer’s demands and needs.
53
When must demands and needs be specified?
Before the contract is concluded.
54
How detailed should a demands and needs statement be?
Proportionate to the complexity of the product.
55
In what form must a demands and needs statement be provided?
On paper or another durable medium, clearly and free of charge.
56
What must happen if a contract is concluded by phone?
The demands and needs statement must be sent immediately afterwards.
57
Is there a fixed format for non-advised demands and needs statements?
No, format is flexible if content is appropriate.
58
What is the key duty in advised sales under ICOBS 5?
To take reasonable care to ensure suitability of advice.
59
What three points must be considered for suitability in protection policies?
Level of cover, cost where relevant, and impact of exclusions and conditions.
60
Can a broker recommend a product that does not meet all demands and needs?
Yes, if no product fully meets them, but unmet needs must be highlighted.
61
What does 'advice on a fair analysis' require?
Considering a sufficiently large number of contracts before recommending.
62
What must insurers provide to brokers under ICOBS 6?
Information in good time so brokers can meet their duties.
63
What must brokers ensure about product information to customers?
That it is appropriate, timely and comprehensible.
64
What does 'in good time' aim to achieve?
Giving customers time to consider terms and shop around if needed.
65
How can brokers evidence prompt cover documentation?
By meeting contract certainty targets (e.g. seven days for consumers).
66
What must brokers do for group policies under ICOBS 6?
Give information to the customer and ask them to pass it to every insured person.
67
What must be disclosed when insurance is sold with other goods?
The separate premium and whether the insurance is compulsory.
68
What is the purpose of a policy summary or key features document?
To give consumers a clear summary of key terms and exclusions.
69
Name two key items that must appear in a policy summary.
Type of insurance and significant exclusions/limitations.
70
What claims information must be included in a policy summary?
How to make a claim and how to complain, including FOS rights.
71
What is an Insurance Product Information Document (IPID)?
A standardised summary of key information for non-life retail products.
72
What is the main aim of the IPID?
To help customers compare products and understand cover.
73
What must be shown on a consumer renewal notice?
Last year’s premium alongside the renewal premium.
74
What should renewal notices encourage consumers to do?
Check their cover and shop around for alternatives.
75
What extra message is needed after four renewals with the same firm?
A stronger prompt encouraging the customer to shop around.
76
What is an 'add-on' in ICOBS terms?
A separate policy or optional extra sold with a primary product.
77
What selling practice for add-ons is banned?
Opt-out selling (pre-ticked boxes).
78
What must firms ensure about information on add-ons?
That it is clear, timely and helps customers judge value.
79
What type of business do ICOBS 6A.7 reforms target?
Multi-occupancy residential buildings insurance.
80
Who normally receives multi-occupancy disclosure information?
The customer such as the freeholder or managing agent.
81
What must that customer do with the disclosures?
Pass them on to leaseholders.
82
Who usually has cancellation rights under ICOBS 7?
Consumers, not commercial customers.
83
What is the minimum cancellation period for most general insurance for consumers?
14 days.
84
Do cancellation rights apply at both inception and renewal?
Yes, they apply at both.
85
When does the cancellation period start?
From contract conclusion (or notification for pure protection) and receipt of terms and information.
86
How must a consumer give notice of cancellation?
On paper or another durable medium before the deadline.
87
Within how long must premiums be refunded after cancellation?
Within 30 days.
88
Name two general duties on insurers under ICOBS 8.
Handle claims promptly and fairly, and keep policyholders informed.
89
When is it unreasonable to reject a claim for misrepresentation?
When it is not a qualifying misrepresentation under CIDRA 2012.
90
When is it unreasonable to reject a claim for breach of warranty?
When the breach is not connected with the circumstances of the claim (unless fraud).
91
What must brokers avoid when helping with claims?
Delaying or frustrating the insurer’s claims handling duties.
92
What must a broker tell a customer if acting for the insurer on a claim?
That it is acting for the insurer and not for the customer.
93
What should a broker do if it receives a claim notification but has no authority?
Pass it promptly to the insurer and inform the customer.
M81
flashcards
Decks in class (10)
# Cards
Brainscape helps you reach your goals faster, through stronger study habits.
© 2026 Bold Learning Solutions. Terms and Conditions