Ethics, conduct and treating customers fairly
What the exam tests
Conduct risk: FCA Principles, TCF six outcomes, Consumer Duty, vulnerable customers, conflicts, remuneration and financial crime in motor insurance.
Core rules
- FCA Principles include integrity, skill and care, fair treatment, clear information, suitable advice and treating customers fairly.
- TCF six outcomes: culture, products and services, clear information, suitable advice, performance and claims, and no unreasonable post-sale barriers.
- Consumer Duty requires good outcomes: products and services, price and value, consumer understanding, consumer support. It applies to retail motor customers.
- Vulnerable customers may need adjustments: communication, affordability, claims support. Conflicts and remuneration must not drive unsuitable sales.
- Financial crime controls: verify identity, watch for fronting and false claims, report suspicions.
Worked example
A renewal quote rises sharply. The firm must explain the change, offer equivalent cover and not rely on inertia. If a vulnerable customer cannot use the online portal, the firm should offer an alternative channel. If a broker earns higher commission on a more expensive add-on, the customer must still receive fair value and clear information.
Traps
TCF is not just complaint handling; it covers product design, sales and claims. Consumer Duty is not a one-off project. Disclosure of commission is not a substitute for fair value. Do not treat vulnerability as a tick-box; record adjustments and outcomes.