Questions from study text - Chapter 5

Question 1

What are the FCA’s main areas of regulatory responsibility in respect of insurance broking firms?

Answer 1

The authorisation of insurance brokers (prudential regulation) and conduct regulation.

Question 2

How does the FCA define insurance mediation?

Answer 2

Introducing, proposing or carrying out any other work preparatory to the conclusion of contracts of insurance or concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim.

Question 3

What are the four main activities that are regulated in terms of insurance broking?

Answer 3

• arranging the purchase of general insurance policies
• advising on insurance purchases
• dealing as agent; and
• assisting in the administration and performance of insurance policies

Question 4

When authorising firms, what is the FCA likely to focus on?

Answer 4

The firm’s business model, governance and culture.

Question 5

What powers does the FCA have under the Financial Services Act 2012 should an authorised insurance broker fall short of the regulator’s expectations?

Answer 5

• withdraw that firm’s authorisation
• discipline both individual and firms
• impose penalties
• apply to the court for injunctions
• prosecute

Question 6

What are the main regulatory implications for insurance brokers of the current regulatory environment?

Answer 6

• it is now a criminal offence to carry on regulated activities without authorisation
• regulated firms must establish that the insurers, other brokers or intermediaries they deal with are properly authorised or exempt
• regulated firms are supervised by the FCA and must adhere to its rules and principles to maintain their authorisation
• broking firms and individual approved persons who breach the rules and principles may be subject to FCA enforcement action

Question 7

What is the purpose of the FCA’s Principles for Businesses?

Answer 7

Eleven Principles for Business - provides foundation for regulation

Question 8

What is the aim and focus of ICOBS?

Answer 8

Provides a means by which the FCA can reinforce its Principles through specific areas in the general insurance market.

Question 9

What is CPD?

Answer 9

Continuous Personal Development

Question 10

In relation to financial crime, what are the two key issues and their supporting legislation?

Answer 10

Money laundering and bribery & corruption. The legislation relating to money laundering is as follows:
- Criminal Justice Act 1993
- Proceeds of Crime Act 2002
- Serious Crime Act 2007
- Money Laundering Regulations Act 2017
The legislation relating to bribery and corruption is the Bribery Act 2010.