Advice Matters Vol. 7

Complete this short quiz to test your knowledge on the 7th volume of Advice Matters.
Answer all the questions and hit the done button to see how you have performed. If you have any wrong it is certainly worth revisiting the relevant article from this edition.

Question Title

* According to the introduction, what is the theme linking the three articles in this month’s Advice Matters and what you should be taking away after reading it?

How disgruntled individuals and groups had been on the receiving end of less than professional and ethical treatment by firms that aren’t compliant or don’t act in the spirit of FS regulation.

How to avoid being scammed – whether that be for pensions or other financial products.

How to put the customer at the heart of what you do and doing it, and that includes the FCA.

The importance of receiving professional advice.

Question Title

* What is the main theme of the first article on product oversight and governance and what you should be taking away after reading it?

A discussion on the benefits of product oversight and governance

A historical review of product oversight and governance

An outline of the steps firms should take when adopting the FCA’s Product Intervention and Product Governance Sourcebook and a look at the phases within the product lifecycle

The FCA rules and guidance relating to product oversight and guidance

Question Title

* What is meant by the term ‘product oversight and governance’ according to the first article?

An overview of products’ features and benefits alongside the regulatory requirements for each particular product.

The systems and controls that a firm has in place to design, approve, market and manage a product throughout its lifecycle to ensure that it meets legal and regulatory requirements.

The firm’s hierarchical structure for individual and corporate responsibilities for design, distribution, marketing and ongoing reviews of products.

The FCA rules with regard to how product development is supervised and who decides whether a product is ‘fit for purpose’.

Question Title

* According to the FCA what should good product governance result in? Select all that apply.

Products that are sold to clients in the target markets by appropriate distribution channels.

Products that deliver appropriate client outcomes.

Products that make a good profit.

Products that meet the needs of one or more identifiable target market.

Question Title

* When addressing their approach to PROD compliance, which steps should firms take? Select all that apply.

Allocate Board-level accountability for product governance and compliance oversight.

Ensure that staff possess relevant knowledge and experience of products and services.

Establish a product oversight and governance process, that reflects what actually happens in practice and can be audited.

Maintain transparent escalation procedures for taking action as and when issues are identified.

Monitor performance and suitability of existing products.

Select appropriate distribution channels.

Question Title

* The first phase of the basic product lifecycle is ‘idea generation’. In what order do the other four phases come?

Design, marketing and distribution, ongoing review, maturity/withdrawing

Design, ongoing review, marketing and distribution, maturity/withdrawing

Marketing and distribution, design, maturity/withdrawing, ongoing review

Ongoing review, design, marketing and distribution, maturity/withdrawing

Question Title

* Which of the following are factors when identifying the target market for a product? Select all that apply.

Financial situation of the end customer

Knowledge and experience of the adviser

Risk tolerance of the end customer

Type of customer (e.g. retail, professional, etc.)

Question Title

* Which of these statements about the design phase are true? Select all that apply.

The costs and charges are appropriate, kept confidential as part of best development practice and never shared with third-party distributors.

Product design is driven by features that benefit the end customers.

The design phase should only start when there is sufficient and appropriate evidence of the proper construction of the target market.

The design phase usually runs in parallel to the idea generation phase to speed up the process.

Question Title

* Within manufacturer/distributor communication, which of the following could be discussed? Select all that apply.

Appropriate distribution channels

Costs and charges

Details of product/service being offered

Materials approval process (if appropriate)

Target market description

Question Title

* According to the first article which of the following could be reasons for conducting an ongoing review within the product lifecycle? Select all that apply.

To confirm the products/services remain in line with the target market’s needs

To identify the target market in preparation for the design phase

To prepare justifications and explanations for any awkward questions asked by the FCA

To provide feedback of potential issues identified distributors and end customers

Question Title

* What is the main thrust of the second article on the FCA Annual Report and what you should be taking away after reading it?

The article analyses the roll out of the Senior Managers Regime.

The article identifies the issues found throughout the previous year and gives hints of where the FCA will be looking next.

The article provides a review of the year from the Chair’s perspective – a year in the life of the FCA Chair.

The article provides the bald figures around how the regulator is paid and where the money is spent.

Question Title

* The article on the FCA Annual Report mentions some areas that have not gone so smoothly last year – what are they? Select all that apply.

A bad year for enforcement with very limited success in fining companies that have breached the regulations

Around 140,000 mortgage customers were disadvantaged by the FCA’s own current regulation

The introduction of restrictions to charges for high-cost credit activities

The transition of around 1000 firms from the Claims Management Regulator to the FCA

Question Title

* In the article on the FCA Annual Report, what has the FCA claimed credit for in relation to PPI claims?

Devising the catch phrase of the Cyberdyne Systems Series T-800 – ‘I’ll be back’

Helping Arnold Schwarzenegger become the 38th Governor of California

Increasing the number of PPI enquiries to 8.4 million in the past ten months

Increasing the number of PPI enquiries to 10 million in the past eight months

Question Title

* In March 2019, the FCA introduced plans for the ‘Directory’. What is this?

A new industry resource listing details of all FCA regulated firms.

A new internal resource for documenting the details of people working in financial services who perform either Senior Management Functions or Certification Functions within their firm.

A new public guide for accessing the various Sourcebooks and specific sections within the FCA Handbook.

A new public resource for checking the details of a wider group of people working in financial services, it will include certified staff and non-executive directors

Question Title

* The FCA Annul Report identifies two of the fastest moving areas with potential for customer harm (through crime or misrepresentation). What are they?

Continued growth in crypto assets

Continued growth in crowdfunding

Increased use of dark web app – SmartScam

Recent growth in online games with hidden internal purchases

Question Title

* The FCA has been pushing awareness of the increasing numbers of technology and cyber incidents affecting UK financial services. What were the figures given in the article?

200% increase over the last five years

350% increase since 2016

Nearly a 200% increase in 2018

Nearly a 2,000% increase in 2018

Question Title

* The FCA Annual Report mentions some issues in the area of pensions and retirement. What are they? Select all that apply.

Part of the vision for the medium to long term is how the FCA can drive value for money for pension scheme members.

Part of the vision for the medium to long term is the strategic review of the entire consumer pension’s journey.

The FCA continues in its work to produce a joint regulatory strategy with The Pensions Regulator (TPR).

The number of people concerned about pensions and retirement income scams has soared over recent months.

There has been a dramatic increase in the percentage of people seeking professional advice in the area of pension and retirement income scams.

Question Title

* According to the article on the FCA Annual Report which of these sector specific statements are true? Select all that apply.

The FCA’s investigation into the wholesale insurance broker market did not seem to pose significant levels of harm to consumers.

The investment management sector has remained largely stable with no significant changes to regulations.

The mortgage market is still seen as a difficult area to compare products and the FCA is pushing for innovation here.

The motor finance sector can expect increased scrutiny following investigation into the use of commission models and the incorrect use of pre-contract disclosure.

Weaknesses identified in operational resilience reviews throughout wholesale financial markets last year mean that this will remain a priority for the foreseeable future.

Question Title

* What is the main message of the third article on the GDPR and what you should be taking away after reading it?

After one year, what do we know about the GDPR and what should we be thinking about now?

How to implement the GDPR in your firm if you haven’t already done so.

The Information Commissioner’s review of 2018 and how it will affect you.

Why the GDPR had to be introduced and the impact it could have on your firm.

Question Title

* The third article on the GDPR focuses on a number of areas. What are these areas? Select all that apply.

Data breaches

Complaint handling

Enforcement action

Ongoing GDPR compliance

Requests from data subjects

Transparency and consent

Question Title

* According to the article, how many data breach notifications has the Information Commissioner’s Office received since the end of May 2018?

182

2,565

3,311

Over 8,000

Question Title

* According to the article, there are two types of data subject access requests (DSAR) that are particularly problematic to firms. What are they?

Random requests by politically motivated groups or lobbying organisations designed to bog down firms and cause administrative disruption.

Requests asking lots of complicated questions about data processing, some which fall within scope of Article 15 of the GDPR and others which do not. These requests are manageable but time consuming and often require experienced data protection professionals to avoid response pitfalls.

Requests by customers for data concerning purchases, invoices and payments, sometimes going back over many months or years. These are time-consuming and expensive exercises that businesses need to conduct.

Requests by employees and former employees for data contained during work activities, usually emails. These are time-consuming and expensive exercises that businesses need to conduct.

Question Title

* According to the article, in 2018 which organisation(s), if any, were subject to a maximum fine issued of £500,000 by the Information Commissioner’s Office?

Equifax and Facebook

No firms were issued a maximum fine of £500,000 in 2018

Only Equifax

Only Facebook

Question Title

* Under the GDPR, companies can now expect fines of up to what amount for lesser and significant data breaches? Select two options.

Lesser data breach – €5,000,000 (£4.4 million) or 2% of total global annual turnover (whichever is higher)

Lesser data breach – €10,000,000 (£8.8 million) or 2% of total global annual turnover (whichever is higher)

Significant data breach – €15,000,000 (£13.2 million) or 6% of total global annual turnover (whichever is higher)

Significant data breach – €20,000,000 (£17.6 million) or 4% of total global annual turnover (whichever is higher)

Question Title

* In the article on the GDPR, the author recommends a number of things to consider now and on an ongoing basis. Select all that apply.

Customer/supplier relationships

GDPR training

Policies and procedures

Privacy impact assessments

Protecting your firm’s reputation

Security breaches

Techniques for avoiding fines

Question Title

* According to the FCA Annual Report article, what impact, if at all, did technology and the internet have last year? Select all that apply.

Technology and the internet have impacted on customers through financial scams.

Technology and the internet were not mentioned in the article.

The FCA seeks to develop its own use of technology to respond to financial scams through more sophisticated supervision and enforcement.

The internet has led to customers using mobile devices increasingly to access their accounts and investments online.

Question Title

* In the article on the FCA Annual Report, what was the overall message on expansion or contraction?

In these times of uncertainty over Brexit, it would be prudent not to expand the FCA.

The 110% increase last year in cases of whistleblowing has led to an increase in staffing of the dedicated whistleblowing team to 3500 staff.

The FCA needs to halve its presence in Scotland due to a reduction in retail lending and investments.

With increasing areas of responsibility for regulatory oversight, the FCA has recognised current staffing levels and premises are inadequate.

Question Title

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