What changes have come in with the Consumer Composite Investment Regulations?
- Summary for each product in durable medium
- Custom Summaries by distributor
- Adviser ensures understanding (same as current)
- Adviser feedback to manufacturer
These changes aim to enhance transparency and understanding in consumer investments.
What does the Finance Bill set out regarding UK law?
- FCA sets past performance
- Extension to 2026 for UCITS
This legislation aims to regulate the provision of Key Investor Information Documents (KIIDs) and Key Information Documents (KIDs).
How long should information be kept for Pure Protection Policies?
6 years
This typically applies to term insurance and income protection insurance, excluding reinsurance.
What are the two forms of guidance?
- Product guidance
- Generic guidance
These forms help consumers make informed decisions regarding financial products.
What are the five core functions of the UK Strategy for Financial Wellbeing?
- Debt advice
- Pension guidance
- Money guidance
- Consumer protection: Government and FCA
- Strategy: work with companies and firms
These functions aim to improve financial literacy and consumer protection.
What are the six outcomes to ensure fair treatment?
- Confidence in fair treatment
- Product meets needs
- Product meets expectations
- Information is clear
- Information is suitable
- Barriers to change light
These outcomes are essential for maintaining consumer trust and satisfaction.
Why is the consumer duty necessary to protect retail customers?
- Due to asymmetry
- Cognitive bias
- Lack of knowledge
These factors can lead to unfair treatment and exploitation of consumers.
What is Principle 12 and Conduct Rule 6?
Good outcomes for customer
These principles emphasize the importance of delivering positive results for consumers.
How has remuneration changed for advisors?
They set their own rate and no longer receive product commissions
This change aims to reduce conflicts of interest and promote transparency.
What rules govern the prices you can set?
- Must be fair
- Must be the same for the same product
- Ongoing only if it’s an ongoing service
- Percentage and amount
- Upfront
- Can still charge facilitation
- Only equal to service provided
These rules ensure fairness and transparency in pricing.
What differences are there regarding stakeholder advice?
- No KYC or suitability report; instead decision-making tree and recommendation summary
- Not most suitable, only suitable
- Medium and long-term investments have max charge of 1.5% (1% after 10 years)
These differences simplify the advice process for stakeholders.
What KYC info do you need for investments?
- Knowledge and experience
- Situation
- Length
- Objective
- Ethical standards
This information is crucial for tailoring investment advice to individual clients.
What must a suitability report have?
- How it meets the objectives
- Why it is suitable
- What are the disadvantages
- Summary of consequences
These elements ensure that clients understand the rationale behind investment recommendations.
When do you need to provide a suitability report?
- Investment: Before
- SIPP or Stakeholder pension (not life policy): No later than 14th day
- Pension transfer: In good time before
- Life policy: Before the contract is concluded (if immediate: 14th day)
Timeliness of these reports is critical for informed decision-making.
When is a report not required?
- Client is out of UK
- When it’s a regulated collective investment scheme
- Increase in premium (top up you do!)
These exceptions help streamline the advisory process.
What is churn for IFA?
You cannot replace one product with another if it is not in the best interest of the client
This rule prevents unnecessary switching of products that may harm the client’s financial situation.
Do financial advisors need to be MiFID? What are they called?
If they don’t hold assets, then yes. Article 3 firms
MiFID optional exemption firms are those that may not be subject to all MiFID regulations.
What are the fiduciary responsibilities?
- Fair treatment
- Relationship to providers
- Conflict of interest
- Exclusion of liability
- Clear, fair, and not misleading
- Honest independence
- Commissions and inducements
- Charging for complaints
These responsibilities ensure that advisors act in the best interest of their clients.
When is a client agreement needed and not needed?
- Retail: Before business or just after if on phone
- Professional: Reasonable time
- None: Financial promotion or life offices selling life and pension policies
Understanding when agreements are necessary helps clarify the advisor-client relationship.
What are the limits for DB pension transfer outs?
Over 30k you need an IFA to sign off
This requirement is in place to protect clients from making uninformed decisions.
What do you need and not need to provide with execution-only transactions?
- No need for suitability
- Still need anti-money laundering checks
This distinction helps streamline the process for clients who are making informed decisions.
When is there no right to cancel?
- Pension annuity starting in a year and a day
- Pension transfer
- Income withdrawal
These conditions highlight the importance of understanding the terms of financial products.
