Chapter 9:

Question 1

Why must firms take care of their customers personal data?

Answer 1

• To comply with data protection regulations.
• Stop personal info falling into criminal hands (fraudsters can undertake financial transactions in customer’s name).

Question 2

What legal responsibilities do firms have to comply with the Data Protection Act?

Answer 2

• Notify the Information Commissioner’s Office (ICO) that they’re processing info.
• Processing personal info in accordance with the data protection principles.
• Answering subject-access requests received from individuals.

Question 3

What do the regulations around data protection lay out?

Answer 3

Data protection principles that set out the main responsibilities of organisations.

Question 4

What do the regulations around data protection require personal data to be?

Answer 4

• Processed lawfully, fairly and in a transparent manner in relation to individuals.
• Collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes.
• Adequate, relevant and limited to what is necessary in relation to the purposes for which it’s processed.
• Accurate and kept up to date; every reasonable step must be taken to ensure that personal data that’s inaccurate, having regard to the purposes for which it is processed, is erased or rectified without delay.
• Kept in a form which permits identification of data subjects for no longer than it’s necessary for the purposes for which the personal data is processed.
• Processes in a manner that ensures appropriate security of the personal data, including protection against unauthorised or unlawful processing and against accidental loss, destruction or damage, using appropriate technical or organisational measures.

Question 5

What do the regulations require personal data to be processed like?

Answer 5

Require personal data to be processed in a manner that ensures its security. Includes protection against:
* Unauthorised or unlawful processing
* Accidental loss, destruction/damage.

Question 6

What must a firm do to ensure data protection if it outsources work?

Answer 6

• Assess the organisation can carry out work in a secure way.
• Check that they’re carrying out work in a secure way.
• Take proper security measures.
• Have a written contract with the organisation (lay down how it can use and disclose the info entrusted to it).

Question 7

What are the purpose of rules which take place during a data breach?

Answer 7

Rules place a duty on all organisations to report certain types of data breach to the relevant supervisory authority. I
Organisations have to report certain types of data breach to the individuals affected where it’s likely to result in a high risk to the rights and freedoms of individuals.

Question 8

What does the FCA require firms to do about complaints?

Answer 8

FCA requires authorised firms to deal with complaints from eligible complainants promptly and fairly. Eligible complainants are individuals and small businesses.

Question 9

What does the FCA require firms to have when dealing with complaints?

Answer 9

Written procedures for handling expressions of dissatisfaction from eligible complainants. These should be followed regardless of whether the complaint is oral or written and whether its justified or not, as long as it relates to the firm’s provision of/or failure to provide a financial service.

Question 10

What should internal complaints-handling procedures provide?

Answer 10

• Receiving of complaints
• Acknowledgement of complaints in a timely manner
• Responding to those complaints
• Appropriately investigating the complaints
• Notifying the complainants of their right to go to the Financial Ombudsman Service (FOS) when relevant.

Question 11

What does the complaints-handling procedures require the firm to do?

Answer 11

Issue its final response to the complainant within 8 weeks of the date of the original complaint and the complainant must be notified of their right to refer their complaint to the FOS if they’re dissatisfied with the firm’s response.

Question 12

What must internal complaints-handling procedure make provision for?

Answer 12

Make provision for the complaints to be investigated by an employee of sufficient competence who was not directly involved in the matter that’s the subject of the complaint.

Question 13

What must the person charged with responding to complaints have the authority to do?

Answer 13

Settle the complaint, including offering redress if appropriate, or should have access to someone with necessary authority.

Question 14

What should the response adequately address?

Answer 14

Address the subject matter of the complaint and, when a complaint is upheld, offer appropriate redress.

Question 15

What happens if the firm decides the redress is appropriate?

Answer 15

Firm must provide the complaint with fair compensation for any acts or omissions for which it was responsible and comply with any offer of redress the complainants accepts.

Question 16

What should any redress for financial loss include?

Answer 16

Should include consequential or prospective loss, in addition to actual loss.

Question 17

Who should firms make aware of the firm’s complaints-handling procedures?

Answer 17

Firm must take reasonable steps to ensure all relevant employees (including any of the firm’s appointed representatives) are aware of the procedures and endeavor to act in accordance with these.

Question 18

What is the Financial Ombudsman Service (FOS)?

Answer 18

The UK dispute resolution scheme.

Question 19

What’s the FOS designed to resolve?

Answer 19

Resolve complaints about financial services firms quickly and with minimum formality; it’s funded by industry contributions through levies and case fees. Eligible complainants are able to refer to complaints to the FOS if they’re not satisfied with the response of a financial firm.

Question 20

Are decisions of the FOS binding?

Answer 20

Yes on firms but not on the person making the complaint. Under legislation that established the FOS, financial services businesses are required to cooperate with the ombudsman service and the ombudsman decision is final and binding on the business.

Question 21

Can the FOS require firms to pay over money as a result of a complaint?

Answer 21

Yes. This money award against the firm will be of such amount that the Ombudsman considers to be fair compensation.

Question 22

What amount can FOS compensation not exceed?

Answer 22

£355,000.

Question 23

What can the FOS award compensation for?

Answer 23

• Financial loss
• Pain and suffering
• Damage to reputation
• Distress / Inconvenience

Question 24

What’s the FSCS?

Answer 24

Financial Services Compensation Scheme

Question 25

Why was the FSCS established?

Answer 25

Established to pay compensation or arrange continuing cover to eligible claimants in the event of a default by an unauthorised person or firm.

Question 26

What is Default?

Answer 26

Typically a firm suffering insolvency.

Question 27

What's the FSCS funded by?

Answer 27

By compulsory financial services sector contributions.

Question 28

Who are eligible claimants of FSCS?

Answer 28

Less knowledgeable clients of the form, e.g. individuals and small organisations (generally firm's 'private customers' and exclude the more knowledgeable 'professional customers').

Question 29

What's the maximum level of compensation against firms declared in default?

Answer 29

100% of the first £85,000 per person per firm for investments, and £85,000 for bank deposits. There are different rules for other financial products and services.

Question 30

What's the FSCS scheme similar to and why?

Answer 30

Insurance policy that's paid for by all authorised firms and provides protection to some clients in the event of a firm collapsing. The claims could come from money on deposit with a bank, or claims in connection with investment business, such as the collapse of a fund manager or stockbroker.

Question 31

What is a checklist for dealing with a tough decision at work?

Answer 31

* Open - is everyone whom your action or decision affects fully aware of it, or will they be made aware of it? * Honest - does it comply with applicable law or regulation? * Transparent - it's clear to all parties involved what is happening/will happen? * Is the transaction or decision fair to everyone involved in it or affected by it?

Question 32

What is a key requirement for any industry in which trust is a central feature?

Answer 32

Demonstrable standards of practice and the means to enforce them.

Question 33

What are the words in the introduction of the CISI Code of Conduct?

Answer 33

'Professionals within securities and investment industry owe important duties to their clients, the market, the industry and society at large. Where these duties are set out in law, or in regulation, the professional must always comply with the requirements in an open and transparent manner'. 'Members of the CISI are required to meet the standards set out within the Institute's Principles. These Principles impose an obligation on members to act in a way beyond mere compliance and to support the underlying values of the Institute'.

Question 34

What are the words in the introduction of the CISI Code of Conduct?

Answer 34

'Professionals within securities and investment industry owe important duties to their clients, the market, the industry and society at large. Where these duties are set out in law, or in regulation, the professional must always comply with the requirements in an open and transparent manner'. 'Members of the CISI are required to meet the standards set out within the Institute's Principles. These Principles impose an obligation on members to act in a way beyond mere compliance and to support the underlying values of the Institute'.

Question 35

How many CISI principles are there?

Answer 35

8

Question 36

What are the CISI principles?

Answer 36

* Personal Accountability * Client Focus * Conflict of Interest * Respect for Market Participants * Aware of Capabilities * Respect Others and the Environment * Speak Up & Listen Up

Question 37

What's meant by Personal Accountability?

Answer 37

Strive and uphold the highest level of personal and professional standards at all times, acting with integrity, honesty, due skill, care and diligence to avoid any acts, either in person, in a remote working environment or digitally which may damage the reputation of your organisation, your professional body or the financial services profession.

Question 38

What's meant by Client Focus?

Answer 38

Put interests of clients and customers first by treating them fairly, being a good steward of their interests, never seeking personal advantage from confidential info received and utilising client data only for a defined purpose.

Question 39

What's meant by Conflict of Interest?

Answer 39

Being alert to, and actively manage , fairly and effectively any personal or other conflicts of interest, obeying legislation and complying with regulations to the best of your ability, ensuring you are open and cooperative with all your regulators, challenging and reporting unlawful/unethical behaviour.

Question 40

What's meant by Respect for Market Participants?

Answer 40

Treat all counterparties and business partners with respects, to observe proper standards of market integrity, good practice, conduct and confidentiality required to maintain the highest level of mutual trust.

Question 41

What's meant by Professional Development?

Answer 41

Strive for professional excellence, committing to Continuous Professional Development (CPD) and promoting and supporting the development of others.

Question 42

What's meant by Aware of Capabilities?

Answer 42

Decline to act on any matter about which you are not competent or qualified unless you have access to such advice or assistance to carry out the work in a professional manner, taking into account the nature of the individual mandates given by your customers and counterparties.

Question 43

What's meant by Respect Others and the Environment?

Answer 43

Treat everyone fairly and with respect, supporting opportunity for all, embracing diversity and inclusion and ensuring that the environment impact of your work is considered.

Question 44

What's meant by Speak Up & Listen Up?

Answer 44

Be active in speaking up and encouraging others to do so by listening up, promoting a safe environment for all and recognising the responsibilities you have to the communities in which you operate.