ITC Compliance Policies & Procedures Manual – Version Two

Welcome to ITC Compliance Network Welcome to our Appointed Representative Network. We know as a new Member to the Network, you may have many questions that you need answering. These questions could be concerning the exact requirements of the Financial Services Authority (FSA) or be more specific to the ITC Compliance Network and the way it works. We would like to introduce our ITC Compliance Policies and Procedures Manual. This is your guide to our Network which will support you and your business. Moving forward it will be used as a reference tool and will hold a number of simple and supported systems and controls that will ensure that you are getting the very best from our AR Network. We are always looking at ways to develop the products and service that we offer. This will mean from time to time you will receive updates together with instructions on how to integrate them into your business. Please ensure that they are inserted into the relevant sections of the manual immediately and referred to on a regular basis.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network The Concept From 14th January 2005, any business engaging in General Insurance activity must be regulated by the Financial Services Authority (FSA). General Insurance activity is not limited to sales and includes other areas such as administration and claims handling. There maybe a number of employees within your business that will be subject to the FSA rules and regulations. Our AR Network provides an alternative to full FSA authorisation, where a fully authorised Firm (ITC Compliance Ltd) takes responsibility for the regulated activities of Network Members. The sole purpose of the Network is to provide you with all of the administration tools, training resources; professional indemnity insurance and processes you need to enable you to carry on selling the same General Insurance products without the burden of being directly authorised by the FSA.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network The Network Charter In allowing Network Members to operate under its authorised regulatory status, ITC Compliance Ltd is obliged to provide them with tools, processes and procedures to enable them to trade within regulation. The following Charter outlines the main commitments that ITC Compliance Ltd and you, the Network Member, agree to undertake. (For full terms and conditions of business please refer to chapter five – Additional Information).

Between ITC Compliance Ltd and the Members of the Appointed Representative Network ITC Compliance Ltd commit to: 1. 2. 3. 4. 5. 6. 7.

Supplying Network Members with AR status to allow them to engage in General Insurance activity Providing Professional Indemnity cover to the Network Members Providing and updating as necessary the ITC Compliance Network Policies and Procedures Manual Providing an on-line Training and Competence solution for all relevant Network staff Members Providing and hosting a web-based portal for mandatory monthly returns from all Network Members Giving 28 days notice of any changes that will affect Network Members Undertaking a field base audit of each Network Member at least once a year

ITC Compliance Network Members commit to: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Treat customers fairly in line with FSA and ITC requirements Following the policies and procedures outlined within this manual in good faith Submitting the required monthly return in a timely and accurate manner Notifying ITC Compliance Ltd of any changes to staff members that engage in regulated activity Notifying ITC Compliance Ltd of any future changes in insurance product supplier Providing and maintaining a web-enabled PC in order to submit their monthly return Notifying ITC Compliance Ltd of any changes in Approved Person status Notify ITC Compliance Ltd when any insurance related customer complaint is received Providing assistance and support at any audit Nominating one individual to act as the Supervisor/Assessor of individual regulated staff

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Sales Processes & Paperwork (Examples shown within the Sales Processes & Paperwork section refer to the Automotive Industry)

The sales process section of this manual is of particular importance as it deals with what happens when the customer meets the Network Member, and how the other elements of this Policies and Procedures Manual come together. Remember it is crucial that information that has to be given to customers is given at the correct time. The timelines for this are detailed in the training and competence programme that is completed annually by each of the staff that are conducting regulated activity. These timelines are also revisited during the supervisor’s observation reports. Overleaf are two examples of sales processes that should be generic to each Network Member. They fall into two categories: 1. If you do not have a Business Manager 2. If you do have a Business Manager The sales process steps, at a very high level, are listed on the left, while the FSA related actions (including the information that needs to be provided to the customer) are highlighted on the right. The processes are designed to fit in with your current sales processes, and simply to ensure that they are compliant, as opposed to having to totally re-invent them just for the sake of change. As a result, there should still be ample opportunity for you to brand the process in a manner that fits with the way you sell. Unfair Inducements to Salespeople Every Network Member must make sure that they do not breach the Duty of Care they have to each customer with regard to only recommending suitable insurance products (as a result, no offers of incentives from product providers or Finance Houses should be accepted or sought without prior approval of that incentive scheme by ITC Compliance Ltd). The unfair inducements rule (ICOBS 2.3.2R) prohibits firms from offering or accepting inducements if they are likely to conflict to a material extent with the duty that the firm providing the inducement, or the recipient firm, owes its customers.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

1. Without a Business Manager PROCESS STEPS

FSA CONSIDERATIONS AND ACTIONS

1. Introduction / Meet and Greet - welcome the customer(s) - personal introduction 2. Qualification - establish customer needs - establish customer usage of vehicle (e.g. mileage) - part exchange vehicle appraisal (if applicable)

Provide the customer with the (Initial Disclosure Document) Start to gather Demands & Needs eligibility information (Document any information gathered on the Demands & Needs form)

3. Demonstration - demonstrate the vehicle - align vehicle characteristics with customer needs - gain commitment to the vehicle 4. Negotiation - Discuss figures - Provide finance figures (if necessary) - Present initial offer and any other suitable offers - Overcome objections - Gain commitment to vehicle purchase 5. Agree to Deal - sign order - agree funding method (convert customer to Dealer finance if possible) - Sell any other products (e.g. insurance)

Go through Demands & Needs questions with the customer and recommend any eligible insurance products. For selected products provide the customer with: (A policy summary document and draw their attention orally to the major benefits and exclusions) (Statement of price)

6a. Handover of vehicle (Immediate)

Customer and Dealer to sign Demands & Needs Form. Customer to be given a copy and dealer to retain original.

6b. Handover of vehicle (after a wait e.g. for a new car)

Reconfirm the customers eligibility for Insurance products using the Demands & Needs Form then: Customer and dealer to sign Demands & Needs Form. Customer to be given a copy and dealer to retain original.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

2. With a Business Manager PROCESS STEPS

FSA CONSIDERATIONS AND ACTIONS

1. Introduction / Meet and Greet - welcome the customer(s) - personal introduction 2. Qualification - establish customer needs - establish customer usage of vehicle (e.g. mileage) - part exchange vehicle appraisal (if applicable)

Provide the customer with the (Initial Disclosure Document) Start to gather Demands & Needs eligibility information (Document any information gathered on the Demands & Needs form) ready to pass on to BM later

3. Demonstration - demonstrate the vehicle - align vehicle characteristics with customer needs - gain commitment to the vehicle 4. Negotiation - Discuss figures - Include Business Manager to provide finance figures (if figures requested) - Present initial offer and any other suitable offers - Overcome objections (with BM if necessary) - Gain commitment to vehicle purchase 5. Agree to Deal - sign order - agree funding method (unless previously agreed) - Introduce to BM to attempt to convert customer to Dealer finance if possible - BM to sell any other products (e.g. insurance)

BM to go through Demands & Needs questions with the customer and recommend any eligible insurance products. For selected products provide the customer with: (A policy summary document and draw their attention orally to major benefits and exclusions) (Statement of price)

6a. Handover of vehicle (Immediate)

Customer and dealer to sign Demands & Needs Form. Customer to be given a copy and dealer to retain original.

6b. Handover of vehicle (after a wait e.g. for a new car)

Reconfirm the customers eligibility for insurance products using the Demands & Needs statement then: Customer and Dealer to sign Demands & Needs Form. Customer to be given a copy and dealer to retain original.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Distance Marketing This section applies to a firm that carries out any distance marketing activity from an establishment in the United Kingdom, with or for a consumer in the United Kingdom or another EEA State. If that is what you do it is important first to establish if your activity is in fact distant marketing. The following criteria must be applied: To be a distance contract, a contract must be concluded under an 'organised distance sales or service-provision scheme' run by the contractual provider of the service who, for the purpose of the contract, makes exclusive use (directly or otherwise) of one or more means of distance communication up to and including the time at which the contract is concluded. The firm must have put in place facilities designed to enable a consumer to deal with it exclusively at a distance; and there must have been no simultaneous physical presence of the firm and the consumer throughout the offer, negotiation and conclusion of the contract. So, for example, contracts offered, negotiated and concluded over the internet, through a telemarketing operation or by post, will normally be distance contracts. It is very unlikely even if you satisfy the above, that you will be providing a distance contract BECAUSE: The FSA expects the Distance Marketing Directive to apply to insurance intermediaries' services only in the small minority of cases where: • the firm concludes a distance contract with a consumer covering its insurance mediation activities which is additional to any insurance contract which it is marketing; and • that distance contract is concluded other than merely as a stage in the effecting or carrying out of an insurance contract by the firm or another person: in other words it has some continuity independent of an insurance contract, as opposed, for example, to being concluded as part of marketing an insurance contract.

Can you give examples of when the Directive would and would not apply to insurance intermediaries’ services? The rules implementing the Distance Marketing Directive will not apply in the typical case where an insurance intermediary sells an insurance contract to a consumer on a one-off basis, even if the insurance intermediary is involved in the renewal of that contract and handling claims under it.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Nor will the Directive apply if an insurance intermediary, in its terms of business, makes clear that it does not, in conducting insurance mediation activities; act contractually on behalf of, or for, the consumer. An example of when the Distance Marketing Directive would apply would be a distance contract under which an insurance intermediary agrees to provide advice on a consumer's insurance needs as and when they arise. If your contract is not distance marketing all standard FSA criteria; Initial Disclosure documentation, Demands & Needs all apply. If your contact with the customer is classified as a distant contract then there are set criteria that MUST be followed: For Telephone Distance Marketing (1) In the case of a voice telephony communication, and subject to the explicit consent of the consumer, only the abbreviated distance marketing information (ICOBS 3 Annex 3 R) needs to be provided during that communication. This information is:

Abbreviated distance marketing information

(1) The identity of the person in contact with the consumer and his link with the firm. (2) A description of the main characteristics of the financial service. (3) The total price to be paid by the consumer to the firm for the financial service including all taxes paid through the firm or, when an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it.

(4) Notice of the possibility that other taxes or costs may exist that are not paid through the firm or imposed by it.

(5) The existence or absence of a right to cancel in accordance with the cancellation rules (ICOBS 7)

and, where the right to cancel exists, its duration and the conditions for exercising it, including information on the amount the consumer may be required to pay (or which may not be returned to the consumer) on the basis of those rules.

(6) That other information is available on request and what the nature of that information is. (2) However, unless another exemption applies (such as the exemption for means of distance communication not enabling disclosure) a firm must still provide the distance marketing information (detailed overleaf) in writing or another durable medium available and accessible to the consumer in good time before conclusion of any distance contract. © ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Distance marketing information The firm (1)

The name and the main business of the firm, the address at which it is established.

(2)

If the sale is outside of the UK but within the EEA and the organisation has a representative within that state, the name of that representative and the geographical address relevant for the consumer's relations with the representative.

(3)

An appropriate statutory status disclosure statement (Initial Disclosure Document).

The financial service (4)

A description of the main characteristics of the service the firm will provide.

(5)

The total price to be paid by the consumer to the firm for the financial service, including all related fees, charges and expenses, and all taxes paid through the firm or, when an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it.

(6)

Notice of the possibility that other taxes or costs may exist that are not paid through the firm or imposed by it.

(7)

Any limitations on the period for which the information provided is valid, including a clear explanation as to how long a firm's offer applies as it stands.

(8)

The arrangements for payment and for performance.

(9)

Details of any specific additional cost for the consumer for using a means of distance communication. E.g. credit card fees etc.

The distance contract (10) The existence or absence of a right to cancel under the cancellation rules (ICOBS 7) and, where there is such a right, its duration and the conditions for exercising it, including information on the amount which the consumer may be required to pay (or which may not be returned to the consumer) in accordance with those rules, as well as the consequences of not exercising the right to cancel. (11)

The minimum duration of the contract, in the case of services to be performed permanently or recurrently.

(12)

Information on any rights the parties may have to terminate the contract early or unilaterally under its terms, including any penalties imposed by the contract in such cases.

(13) Practical instructions for exercising any right to cancel, including the address to which any cancellation notice should be sent. (14) The EEA State or States whose laws are taken by the firm as a basis for the establishment of relations with the consumer prior to the conclusion of the contract. In most cases this will simply mean stating that the contract is governed by UK law. (15) Any contractual clause on law applicable to the contract or on the competent court, or both. (16) In which language, or languages, the contractual terms and conditions and the other information in this Annex will be supplied, and in which language, or languages, the firm, with the agreement © ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Distance marketing information of the consumer, undertakes to communicate during the duration of the contract. Redress (16) How to complain to the firm, whether complaints may subsequently be referred to the Financial Ombudsman Service and, if so, the methods for having access to it, together with equivalent information about any other applicable named complaints scheme. (17)

Whether compensation may be available from the compensation scheme, or any other named compensation scheme, if the firm is unable to meet its liabilities, and information about any other applicable named compensation scheme.

A firm may provide the distance marketing information (above) and the contractual terms and conditions in writing or another durable medium immediately after the conclusion of a distance contract, if the contract has been concluded at a consumer's request using a means of distance communication that does not enable the provision of that information in that form in good time before conclusion of any distance contract. Examples of this may include telephone (hence the ability to give limited information at the customer’s request). IMPORTANT NOTE: At any time during the contractual relationship the consumer is entitled, at his request, to receive the contractual terms and conditions on paper. The consumer is also entitled to change the means of distance communication used unless this is incompatible with the contract concluded or the nature of the service provided. For E – Commerce (sales over the Internet) Distance Marketing This section applies to a firm carrying on an electronic commerce activity from an establishment in the United Kingdom, with or for a person in the United Kingdom or another EEA State. A firm must make at least the following information easily, directly and permanently accessible to the recipients of the information services it provides: (1) Its name; (2) The geographic address at which it is established; (3) The details of the firm, including its e-mail address, which allow it to be contacted and communicated with in a direct and effective manner; (4) An appropriate statutory status disclosure statement (Initial Disclosure Document), together with a statement which explains that it is on the FSA register and includes its FSA register number; (5) Where the firm undertakes an activity that is subject to VAT, its VAT number. [Note: article 5(1) of the E-Commerce Directive] © ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

If a firm refers to price, it must do so clearly and unambiguously, indicating whether the price is inclusive of tax and any delivery costs. [Note: article 5(2) of the E-Commerce Directive] A firm must ensure that commercial communications (advertisements on the internet or by email) which are part of, or constitute, a service, comply with the following conditions: (1) The commercial communication (advertisement) must be clearly identifiable as such; (2) The person on whose behalf the commercial communication (advertisement) is made must be clearly identifiable; (3) Promotional offers must be clearly identifiable as such, and the conditions that must be met to qualify for them must be easily accessible and presented clearly and unambiguously; and (4) Promotional competitions or games must be clearly identifiable as such, and the conditions for participation must be easily accessible and presented clearly and unambiguously. [Note: article 6 of the E-Commerce Directive] An unsolicited commercial communication sent by e-mail by a firm established in the United Kingdom must be identifiable clearly and unambiguously as an unsolicited commercial communication (advertisement) as soon as it is received by the recipient. [Note: article 7(1) of the E-Commerce Directive] Requirements relating to the placing and receipt of orders A firm must (except when otherwise agreed by parties who are not consumers (commercial clients) : (1) Give an ECA (a person who is a user of an electronic commerce activity) recipient the following information, clearly, comprehensibly and unambiguously, and prior to the order being placed by the recipient of the service: (a) The different technical steps to follow to conclude the contract; (b) Whether or not the concluded contract will be filed by the firm and whether it will be accessible; (c) The technical means for identifying and correcting input errors prior to the placing of the order; and (d) The languages offered for the conclusion of the contract; (2) Indicate any relevant codes of conduct to which it subscribes and provide information on how those codes can be consulted electronically; (3) When an ECA recipient places an order through technological means, acknowledge the receipt of the recipient's order without undue delay and by electronic means (an order and an acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them); and © ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

(4) Make available to an ECA recipient appropriate, effective and accessible technical means allowing the recipient to identify and correct input errors prior to the placing of an order. [Note: articles 10(1) and (2) and 11(1) and (2) of the E-Commerce Directive] Contractual terms and conditions provided by a firm to an ECA recipient must be made available in a way that allows the recipient to store and reproduce them. [Note: article 10(3) of the E-Commerce Directive] IMPORTANT NOTE: The requirements relating to the placing and receipt of orders do not apply to contracts concluded exclusively by exchange of e-mail or by equivalent individual communications. [Note: article 10(4) and 11(3) of the E-Commerce Directive] Exporting Goods – is this a distant contract for FSA purpose? In most cases this will be NO as the sale of the goods and the provision of associated contracts are undertaken on a ONE OFF basis and are therefore excluded from the Distance Marketing Directive. This means that any sale should be treated as a standard sale and all Insurance Mediation Directive Information should be provided to the customer. (Initial Disclosure Document, Demands & Needs Document, Statement of price, Policy summary (where required) etc).

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Treating Customers Fairly – What it means to your site Treating Customers Fairly (TCF) is one of the FSA’s biggest priorities for businesses. The concept is about placing responsibility on firms’ management to deliver fair outcomes for consumers whilst offering the flexibility to deliver the outcomes in a way that suits the business. TCF is a continuous process – it is not something that you put in place and then forget about. TCF needs to be included in all relevant business decisions going forward and be regularly reviewed. TCF is wider than compliance with FSA rules. Rules cannot cover every possible situation so it is about firms working within the spirit of the rules and asking themselves whether compliance with specific rules is always sufficient to deliver the fair treatment of customers. Management Information It is of high importance that you have appropriate processes in place to satisfy yourself that you are treating your customers fairly. One way of achieving this is by the use of records or Management Information. Management Information is collected during the course of day-today business. It may consist of a variety of information from customers, staff, calls or visits; this may provide an on-going record of key aspects of the business. You should be able to clearly describe how TCF fits within your business and what behavioral action is taken to ensure the needs, acceptance of risk, level of understanding and rights of your customers are central to your business objectives. Treating Customers Fairly Consumer Outcome (These key principles are also included on the poster you MUST display) 1. Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture. 2. Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly. 3. Consumers are provided with clear information and are kept appropriately informed before, during, and after the point of sale. 4. Where consumers receive advice, the advice is suitable and takes account of their circumstances. 5. Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and also as they have been led to expect. 6. Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint. © ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Fairness There is currently no definition of fairness. This is due to the fact that fairness means different things to different people. Customers may also have different values, experiences and expectations through which they interpret what they believe as being fair. Treating Customers Fairly is not just about customer satisfaction. TCF should cover every aspect of your business and include: providing training for your staff that ensures quality of advice; by regularly completing the ITC Training programme and undertaking regular observations; providing information for customers that is clear and easy to understand; through the use of our Demands & Needs and Initial Disclosure Documents; ensuring the customer gets the right advice/product; not only by completing the Demands & Needs document but by paying attention to what the customer has said; meeting customers' expectations; putting things right if they go wrong and understanding why something went wrong to stop it happening to other customers; and not taking advantage of your customer by understanding our complaints procedure. Treating Customers Fairly Self Assessment Tool To help your firm identify risks that might have an impact on your ability to treat customers fairly the FSA have developed a set of questions relating to organisational structure, the sales process and after-sales care. The Treating Customers Fairly Self Assessment Tool is not a checklist and is not intended as an exhaustive list. It is designed to prompt your firm on some of the areas on which they should focus in order to be satisfied that they are treating their customers fairly.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

These questions will be asked of you at your ITC client support visit; Management Responsibilities, Strategy & Reporting How have you included TCF into the way you run your business and your firm's values? How do you assess whether you are treating your customers fairly, and how is this reported to management? What gaps are there against TCF and how are these being filled? What changes could you make to your organisational structure or to services/products offered to support TCF? How are you engaging, motivating and training all of your staff on TCF? How does your firm measure the understanding of TCF by staff? How does your firm's management indicate their support of TCF? How is the requirement to treat customers fairly included in performance measures, objective setting and rewards for staff? How does your firm's record keeping enable you to demonstrate whether you have met your TCF obligations? How is that information shared with others in your firm? AN

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Sales & Marketing How do you ensure you understand the product you are offering to your customers? How are your promotions targeted to make sure they are aimed at the right customers? What process do you have for approving a financial promotion? How are customer queries and complaints used to improve or stop financial promotions? How do sales people ensure customers understand the risk and limitations of a product as well as its benefits? What processes and checks are in place to ensure records are kept of discussion and communication with customers? How have your training and competency requirements developed to implement TCF? After Sales Customer Care What steps do you take to understand, manage and, where appropriate, fulfill your customers' expectations of your firm after the point of sale? What do you do to ensure that service issues and claims are processed in a timely manner? How do you ensure that an effective flow of information to customers is maintained and recorded (including verbal discussions)? How does your firm identify trends and remedy issues arising from your handling of customer complaints that may indicate a wider or recurring problem? What targets do you set for people handling complaints? How are lessons from complaints shared between different business areas? What is done to ensure the outcome offered to customers is full and fair?

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Training & Competence (Examples shown within the Training & Competence section refer to the Automotive Industry)

Training staff and assessing their competence on the job is absolutely critical to compliance with FSA regulation and to ensure that you treat customers fairly. This policy statement is designed to make sure that Network Members have the processes in place to ensure every member of regulated staff has the relevant training and assessment to allow them to continue to engage in regulated activities. Each member of staff that is engaging in General Insurance activity MUST complete the ITC Compliance Ltd on-line training and competence programme, up to and including Certification to ITC approved standard. Regulated activity includes selling, advising and recommending on General Insurance products. Those who are assisting in the administration and performance of a contract of Insurance are also carrying out regulated activity. Each learner will be issued their own unique User ID and Password. completed by visiting and selecting the training (green) login button.

Training is to be

www.itccompliance.co.uk This must be completed BEFORE any regulated activity can be undertaken. No other Training and Competence solution will be accepted or authorised for use by any Network Member. Issuing Training ID’s In order to issue training licences to your staff you should go to www.itccompliance.co.uk and login with your Network Members Username and Password and select compliance (blue) login button. Once logged in you should select the ‘training’ tab from the top menu. From this screen you will be able to manage all of your learners and see their training progress. Displayed on the next page is a screenshot on how to allocate and manage your training ID’s.

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To add a new member of staff into the system simply click the ‘Click Here to Add New Staff Member’ link and you will be presented with a simple form to fill in, you will be required to enter the users’ name, job role and whether they are sales or service staff. IMPORTANT: It is vital that anyone involved with advising or selling insurance products take the Sales course, the Service course is only intended for those staff not directly involved with the selling of Insurance products. If your service department sell products they MUST take the sales course. Training Firstly, training needs must be recognised for all staff conducting General Insurance activity. When logging into the training programme you will be asked to complete a CV where you will input personal and employment information as well as selecting those areas included within your job role, this will determine the areas of assessment relevant for you. NOTE: When completing the CV section, the nominated Supervisor should tick the box confirming that they are responsible for monitoring or observing individuals. The first stage of the training course is to complete the initial assessments; these will assess your understanding of insurance principles, products and regulatory aspects prior to training. The following pages display example screenshots of the training programme.

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Following the completion of the initial assessment, each staff member will have a bespoke action plan created according to his or her needs.

Study material for each development area will then be presented in either on-line or printed format.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

This will then lead to a final assessment in the development areas ONLY. The member of staff can take this final assessment any number of times (Note: the number of attempts is logged by the system). Following successful completion, the learner is awarded ITC Certification.

© ITC Compliance Ltd 2008

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Attaining Competence Simply completing the training online is NOT enough. It is also essential that any regulated members of staff be assessed as competent in their role. Observations need to be completed within three months of a member of staff joining your team. No member of staff should be allowed to conduct any General Insurance activity unless their supervisor has assessed them as competent. The observation assessment is accessed through the following process: a. The supervisor of the regulated staff member needs to access the “Observations” section of the Supervisors’ menu: This can be accessed by clicking ‘NEW Report Manager’ on the course selection screen; you will be given an option to either access sales or service staff (dependant upon staff structure). After selecting your team you will be able to choose your report, you should select ‘Observation Report’. The screenshots below are displayed to guide you through the observation process.

You will be given a list of available filters, click ‘Produce Report’ to list all learners within the selected team as well as all previous observations by those learners.

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In order to carry out an observation on the selected learner click the ‘add new observation’ button. b. The supervisor should print off the relevant observation reports for the staff member by following the on-screen instructions and selecting the type of observation they wish to conduct.

c. The supervisor will complete the observation report with the staff member, ensuring that all observations are logged. Any sections that are NOT demonstrated by the staff member will result in a NON-COMPLIANT observation. If this happens, then remedial training needs to be carried out, followed by another observation to ensure compliance.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

d. The results of the observation should be immediately recorded in the online observation database for the member of staff. From the observation report menu select the type of observation required and click ‘Input Question Responses’. Input the responses recorded on the observation question form and click ‘Submit Reponses’.

Maintaining Competence Once a member of staff has been trained and has proven to be competent (via use of the observation reports highlighted above) it is important that this level of competence is maintained and not allowed to diminish. For Network Members, this is done by going through the Supervisors’ observation report process on a regular basis. Observations need to be completed within three months of the employee starting. Therefore, each member of staff engaging in General Insurance activity will be re-assessed on an annual basis. The procedure for this re-assessment mirrors the procedure for using observation reports as highlighted above. In particular, the records of the observation reports MUST be input into the ITC Training and Competence system as the reports are completed. In addition to the above observation reports, the re-assessment process also includes any updates and refresher materials for each learner. These updates will be accessed by the learner through the ITC Training and Competence programme. They will need to use their User ID and Password for this initiative.

© ITC Compliance Ltd 2008

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Supervision of Staff It is essential that during an observation, the member of staff demonstrates competence within their job role. If this is not the case then the member of staff in question MUST NOT be allowed to engage in General Insurance activity unsupervised. They need to be supervised in that activity until they are assessed as competent. This will involve further use of the Observation reports, probably in a one-to-one role-play type environment. Once the member of staff has shown themselves to be competent, the Supervisor should enter the staff member’s success into the Training and Competence system. The member of staff must also enter any remedial training or guidance given into their Continuing Professional Development Log (CPD). The member of staff accesses this by using their User ID and Password to log on to the ITC Compliance Ltd Training and Competence programme, and then clicking ‘My Calendar’ from the on screen menu, from the calendar they can then add any CPD entries. The member of staff will then be permitted to engage in their regulated activity unsupervised.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Human Resources & Recruitment Following FSA regulation of General Insurance activity, it is extremely important to ensure that any staff involved in General Insurance activity are made aware of their responsibilities. This policy statement is designed to support Network Members to fulfil their duties to staff, and to act as a policy on recruiting new staff to engage in General Insurance activity. Role Profiles for staff Staff engaging in General Insurance activity need to have an up to date Role Profile. You are expected to keep written HR records for your staff, which will include this document. This is important because staff need to know how FSA regulation will affect their day-to-day duties. This enables you, their employer, to make sure that their expectations of the job are established in advance. If you currently do NOT have any role profiles for your staff, then there is a document available in a printable form on the ITC Compliance website (under ‘FSA documents’) Contracts of Employment for staff Another important document for your staff and your business is the Contract of Employment. By law, every employee has to have a contract of employment, which should be signed by both employer and employee. You are expected to keep this document in the HR file of every employee. The contract of employment is important because if an individual member of staff engaged in General Insurance activity is guilty of mis-selling, or fails to adopt correct policies and procedures, there needs to be a signed acknowledgement that this may lead to disciplinary action/dismissal.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Appraisals for staff Appraisals for staff allow them to be targeted and measured on key objectives and Treating Customers Fairly, documenting the support and assistance provided to the employee. As with the other HR documents outlined above, it is an example of something that the FSA would expect to see being used within a business that is serious about the development and competence of its staff. The staff appraisal is concerned with documenting specific objectives and goals and ensuring that support and assistance is provided to ensure that the individual succeeds. Although there are no hard and fast rules as to how often appraisals should be carried out, it is recommended that at least one full appraisal per year is considered. It may also be prudent to conduct smaller review meetings to appraise progress towards annual objectives on a quarterly basis. An example of an appraisal document is available in the ‘FSA documents’ section of the ITC Compliance website. Recruitment of new staff It is likely that staff turnover will be experienced by Members of the Network. When recruiting new staff, the FSA’s rulebook on recruitment states that you must take reasonable steps to obtain information about the new starters’ relevant experience and training. In practice this means that you should make best efforts to do the following with any new starter involved in General Insurance activity: Obtain information regarding examination passes, professional qualifications or experience from: (a) a suitable source (e.g. exam boards or previous employers) (b) in a reasonable time This regime is necessary to demonstrate to the FSA that a robust recruitment policy means that the new recruits have the necessary skills to be able to do the job, and that you have assessed these skills against what the role demands. UNDER NO CIRCUMSTANCES MUST A NEW STARTER ENGAGE IN ANY GENERAL INSURANCE ACTIVITY (WHETHER SALES ACTIVITY OR NOT) UNTIL THEY HAVE BEEN TRAINED AND ASSESSED AS COMPETENT, USING THE ITC COMPLIANCE ON-LINE TRAINING PROGRAMME. THE ONLY EXCEPTION HERE IS IF A NEW STARTER CAN ALREADY DEMONSTRATE THEY HAVE PREVIOUSLY PASSED THE ITC QUALIFICATION. © ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

The following procedure is to be followed when new staff are recruited or current staff leave: 1. Inform ITC Compliance Ltd of any new starters or leavers via the next monthly return. There is a dedicated section of the return that captures this information (see section on monthly return submissions via the website). 2. Using the ‘training’ tab on the ITC Compliance website you will be able to deactivate and archive leavers and issue new login details for new members of staff. 3. The new starter should then complete the on-line training programme and be assessed as competent in the normal way. 4. Then the new starter will be given authorisation by ITC Compliance Ltd to begin engaging in General Insurance activity. 5. Don’t forget to issue the new starter with their role profile and contract of employment, as mentioned previously.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Approved Persons An Approved Person is the term used by the FSA to describe an individual that performs a controlled function. A controlled function is a role or responsibility that has particular regulatory significance. For the purposes of the Network, this means being responsible for implementing the rules and processes outlined in this policies and procedures manual. Every Network Member requires one Approved Person, with the exception of a Sole Trader, where the individual IS the Business. As part of the application to join the Network, an individual will already have been nominated to ITC Compliance Ltd and have been through the Approved Person test to ensure their suitability for this role. The following points must be acted upon with reference to the Approved Person regime: 1. Any changes in the Approved Person arrangements within any Network Member must be advised to ITC Compliance Ltd IMMEDIATELY. This includes (but is not limited to): (a) changing your Approved Person to another individual (b) any changes in the status of the existing Approved Person (such as incurring a criminal conviction) 2. If the Approved Person does leave or is removed from this position, the Network Member only has a limited time to make sure that a replacement completes the application and passes the FSA ‘fit and proper test’. If a replacement is not found (and installed) within this timescale, the Network Member will lose their Network Membership status. This will result in all regulated activity having to cease with immediate effect. In these circumstances it is therefore essential that you inform ITC Compliance Ltd immediately. ITC Compliance Ltd will then provide the relevant paperwork for completion by the new Approved Person. 3. Each Network Member will, in any event, submit data monthly to refresh the Approved Person details held by ITC Compliance Ltd. The ITC Compliance website will prompt the user to submit the information when required.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Cancellations by Customers If any customer approaches a Network Member to cancel an insurance policy sold, then this MUST be completed within the FSA specific timescales: -

14 days for General Insurance products 30 days for pure protection contracts (including Payment Protection Policies)

The Network Member must contact the product provider directly with details of the customer’s request. The product provider or insurer will then arrange for the cancellation to be effected, and provide any refund of premiums that may be due to the customer. The standard debit back terms that each Network Member has with his or her product providers will apply. THE NETWORK MEMBER SHOULD NOT DIRECT SUCH REQUESTS FOR CANCELLATION TO ITC COMPLIANCE LTD.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Handling & Management of Complaints It is possible that a customer may wish to complain or express dissatisfaction about the standard of recommendation they have been given or the appropriateness of insurance products to their particular needs. If this is the case, there must be a robust complaints handling mechanism in place to ensure that complaints are dealt with in a professional and consistent manner. Complaints Handling Process In order to comply with ITC Compliance's Appointed Representative Network Terms & Conditions all complaints received with regards to General Insurance Products, whilst you are a member of our Network, must be submitted to ITC Compliance Limited IMMEDIATELY. We will deal with the complaint on your behalf within the agreed timescales described in the Complaint’s Handling Procedure document whilst ensuring that you are made aware of all communications that are sent to the complainant. The Network Member must provide ITC Compliance Ltd with any information, assistance or clarification as required to investigate the complaint fully and thoroughly. If you receive a complaint with regards to General Insurance Products prior to you becoming an ITC Compliance Network member, it should be dealt with directly by you. The complaints must be registered whether or not the complainant appears to be justified in his/her actions. You should register the complaint through the ITC Compliance website. Select the ‘add a complaint’ option from the navigation page and follow the onscreen instructions. Once you have submitted your complaint you will be presented with a Complaint ID for your reference. From the complaints submission you will also be able to access active and archived complaints, simply follow the onscreen instructions. In the event of a serious complaint being upheld against the Network Member, ITC Compliance Ltd reserves the right to amend or revoke Membership of the Network. Should the customer complaint be upheld and compensation payable in line with ITC Compliance Ltd Terms & Conditions of Business, this will be the responsibility of the Network Member and NOT ITC Compliance Ltd.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Financial Ombudsman Poster It is a requirement of the ITC Compliance Network that a Financial Ombudsman’s Service poster is prominently displayed in each site of a Network Member. ITC Compliance has provided one poster for each Network Member site. This poster MUST be displayed prominently with immediate effect. NOTE: PROMINENT DISPLAY does not mean in a side office or out of sight of the general public. Suggested display points include service reception, or in a general reception area.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Use of the FSA Logo and Statement

You may only use the FSA logo on letters or electronic equivalents Websites, business cards, compliment slips, text messages, account statements and other similar documents are not letters (or electronic equivalents). Therefore, the licence to use the FSA logo does not extend to documents such as these.

Copies of the logo may be downloaded from http://www.fsa.gov.uk/Pages/Library/Other_publications/Logos_and_Photos/copies_of_the_FSA_logo.shtml

The text to accompany the logo MUST read as follows: [Your Name] is an Appointed Representative of ITC Compliance Limited which is Authorised and Regulated by the Financial Services Authority You may not use the FSA logo alone it must always be followed with the above words however you may use the words on their own. The permission to use the FSA Logo and Statement is subject to the following conditions; the regulatory mark ® is attached to the FSA logo; the FSA logo and regulatory mark appear in black type, or reversed out white on a coloured background; the FSA letters appear in type which is not more than three times the size of the accompanying script; version B of the FSA logo is used only at sizes below 10mm in overall height; and if the FSA logo is reproduced electronically, no hyperlink is incorporated.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Approval of Financial Promotions This policy statement concerns some of the ways that Network Members may promote insurance products to customers. Some of these promotional activities could come under the heading of ‘Financial Promotions’. If they do, then this policy statement must be acted upon. Examples of ‘Financial Promotions’ include: - General advertising (newspapers, radio, TV, magazines, websites) for insurance products - Mail shots (by letter or by e-mail) that promote insurance products - Sales aids within your business that promote insurance products NOTE: Telephone promotions (where customers are contacted direct) do NOT count as ‘Financial Promotions’ for the purposes of this policy, as they are in ‘real-time’ (i.e. they allow for the customer to respond immediately to your call) whereas all of the above are ‘non realtime’ (i.e. no dialogue takes place). The FSA require ITC Compliance Ltd, as the company in charge of the Network, to approve any financial promotions (for insurance products) that a Network Member may wish to use. In practice, this means that if a Network Member were to advertise (for example) Warranty Products, Credit Protection Insurance, or GAP Insurance, then the financial promotion would need to be approved by ITC Compliance Ltd BEFORE it is used. Another example would be where a customer is being sent a mail shot regarding an insurance offer. If you wish to include insurance products within your advertising or promotions ITC Compliance Ltd need to be informed by following the steps. 1. Forward a copy of the promotion you wish to use by e-mail to [email protected] or by fax to 0117 953 9071. Be sure to include your organisations name on the submission, together with information on where the promotion or advert will be appearing, and how long you wish to run the promotion or advert for. 2. ITC Compliance will check the promotion, and ensure that it is compliant. You will be contacted with a decision within two working days. 3. If it is compliant, we will contact you and you may then use it. 4. If amendments need to be made, we will contact you and let you know what needs to be changed and why. You must then make those changes, and RE-SUBMIT the amended promotion for us to see that the changes have indeed been made. We will then contact you and let you know if the promotion is OK to use. © ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

We will always try to approve any material sent to us; however on occasions we may have reason not to approve your advertisement/promotion. Approving these promotions is part of our commitment as the firm in charge of the Compliance Network. We take these responsibilities very seriously. If promotions are not submitted to ITC Compliance Ltd for prior approval, we will write to the Network Member concerned and warn them that any further non-submission of promotions may result in termination of Network Membership. REMEMBER – ONLY PROMOTIONS THAT CONTAIN INFORMATION ON INSURANCE PRODUCTS NEED TO BE APPROVED BY ITC COMPLIANCE LTD. THERE IS NO NEED TO SUBMIT ANY PROMOTIONS THAT SIMPLY DEAL WITH THE GOODS THAT YOU MAY SELL.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Client Support Activities ITC Compliance shall conduct a client support visit of each Network Member at least once a year. If the Network Member has more than one site, EACH site will receive a visit. The client support visits are designed to check that Network policies and procedures are being complied with. The Network Member will receive a letter advising them of their client support visit date, and will be expected to attend in case further assistance is needed. If the client support visit is successful, then the Network Member can carry on with their regulated activities. If the client support visit is not successful, then a follow up report will be sent advising the Network Member of the remedial action necessary. In addition, a further visit may be arranged to ensure any remedial actions have been addressed.

NOTE: IF THE CLIENT SUPPORT VISIT IS SERIOUSLY NON-COMPLIANT. THE NETWORK MEMBER MAY BE STOPPED FROM CONDUCTING REGULATED ACTIVITY WITH IMMEDIATE EFFECT FOLLOWING SUCCESSFUL REMEDIAL ACTION, PERMISSION TO CONDUCT REGULATED ACTIVITY MAY THEN BE REINSTATED

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Example AR Client Support Form Site Name

ITC

Site Address

Charnwood House, Marsh Road, Ashton, Bristol, BS3 2NA

Type of Visit

Annual

Return Visit

Requested

Site Representative Is the site on E-DaN?

Yes / No

If No (reason):

Do ALL products sold match ITC Records

Yes / No

Product Name

Supplier Name

Level Name

Price

Commission

Credit Protection Insurance

Supplier One

123

VARIABLE

VARIABLE

Extended Warranty

Supplier One

5*

£100.00

£0.00

Back to Invoice GAP

Supplier One

rti

£300.00

£150.00

Does site information on regulated employees (below) match ITC Records Sales Staff User ID CKATQUUO TRHTIHWU XXUDXRFQ LGLD9DVN GYPPZNKL BVAPVFXP

Name Employee One Employee Two Employee Three Employee Four Employee Five Employee Six

Job Role Sales Consultant Administrator Manager IT Development Manager Sales Finance

Yes / No Last Trained

Last Observed

17th May 2007 21st Dec 2007

Service Staff This team is currently empty Total Number of Regulated Employees:

6

Total Number of Regulated Employees (Sales):

6

Total Number of Regulated Employees (Service):

0

Have ALL regulated employees undertaken required training?

Yes / No

Have ALL regulated employees been observed undertaking sales?

Yes / No

Do observation records show compliance with ITC required standards?

Yes / No

Is the site using the correct IDD?

Yes / No

Is the site displaying the new FOS/TCF poster?

Yes / No

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ITC Compliance Policies & Procedures Manual – Version Two

Is the site promotional material (including letterhead, advertising material and website etc) compliant?

Yes / No

Has the site sufficient supplies of / or do they know where to obtain: Initial Disclosure Documents

Yes / No

Demands & Needs Documents

Yes / No

Policy Summary Documents for all products supplied

Yes / No

From discussion with site representative is there clear evidence of a systematic approach to providing regulated paperwork to customers? Please detail:

From discussions with site representative is there a clear understanding of the integration of the TCF principles within the business? (please answer Y/N for each statement, where there is insufficient understanding or evidence please create a follow up action point) Products and services available at the site are designed to meet the needs of identified consumer groups Yes / No and are targeted accordingly Customers are provided with clear information and kept appropriately informed before, during, and after Yes / No the point of sale Where they give advice, the advice is suitable and takes account of the customers circumstances

Yes / No

When they provide insurance products, those products and the associated service are of an appropriate Yes / No standard and perform as we have / they have led the customer to expect The customer does not face unreasonable post-sale barriers imposed by the site to change products, Yes / No switch providers, submit a claim or make a complaint Having reviewed the companies’ sales commission structures and policy offering are you satisfied that Yes / No there are no unfair inducements that may adversely effect the customers' buying options? If No please explain:

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Identified Action Points Internal audit required actions

Actions identified at visit

Recommendation for Site Representative (please tick) Satisfactory Visit - No action required

☐

Minor Elements Required - Agree a date for completion and check on this by telephone

☐

Major Visit Issues - Agree a date for completion and arrange a follow up visit as early as possible after that ☐ date Notes:

Signed (Site Representative) Signed (Client Support Advisor)

© ITC Compliance Ltd 2008

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ITC Compliance Policies & Procedures Manual – Version Two

Example Internal Audit Document As well as conducting annual client support visits, our internal teams will conduct monthly desk based audits. This audit will look at your monthly Demands & Needs submissions. It is essential that a Network Member can accurately provide us with this information in the given timescales. Please find below an example of our Internal Audits. Demands & Needs Report This report has been produced as a result of an internal audit of your Demands & Needs documents submitted for the month commencing 1st January 2008. The audit has highlighted one or more issues that need to be resolved by the dealership within the given timescales. Specific Issues Please find below a specific list of discrepancies that have been highlighted as a result of the internal audit. This checklist shows the issues noted as well as the Demands & Needs document that they specifically apply to; Discrepancy Checklist Demands & Needs

Action (Example)

Issue

Customer/Registration Number

Eligibility questions not completed or answered negatively and product sold

Customer/Registration Number

Eligibility questions not completed or answered negatively and product sold

Customer/Registration Number

Products sold where answers to questions indicate that this should not have happened

Organisation to contact customer, obtain information, ensure customer eligibility for the product and send customer a copy of completed form (obtaining proof of posting). Proof of posting to be retained within the organisation as evidence that the customer is in receipt of an accurate version of the Demands & Needs document. If customer is not eligible for the product, the customer should be offered a full refund. Organisation to contact customer, obtain information, ensure customer eligibility for the product and send customer a copy of completed form (obtaining proof of posting). Proof of posting to be retained within the organisation as evidence that the customer is in receipt of an accurate version of the Demands & Needs document. If customer is not eligible for the product, the customer should be offered a full refund. Organisation to contact the customer, explain that there has been an administrative error on their Demands & Needs form, re-complete negative sections on the Demands & Needs form and send it to the customer (obtaining proof of posting). Proof of posting to be retained within the organisation as evidence that the customer is in receipt of an accurate version of the Demands & Needs document. If the completion of the Demands & Needs was not an administrative error the customer should not have been offered or sold the product the customer should be offered a full refund of the policy.

Tick Complete

☐

☐

☐

By signing this you confirm that all required actions detailed above have been undertaken fully and in line with ITC requirements; further you understand that the completion of these actions will be checked by ITC at your forthcoming client support visit. Should a complaint be received from one of the above named clients and it transpires that the required remedial action has not been undertaken fully, ITC reserve the right to require you to compensate the customer without recourse to the protection of ITC professional Indemnity Insurance. Signed Name (PRINT)

© ITC Compliance Ltd 2008

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ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Data Protection Policy Data Protection is not covered as such by the FSA regulation, but there is a legal requirement that it be integrated into every aspect of a Network Members’ business in any case (via the Data Protection Act 1998). This is because much of what you do with regard to Finance and Insurance products, and even the sale of goods, involves handling, processing and storing the personal data of customers. Many Network Members will already have well documented policies and procedures when it comes to dealing with customers’ data. If this is the case, this section of the manual is simply designed to act as a refresher and reminder. For those Members that do NOT have such a policy in place, the following points will be invaluable. This is crucial, as the integrity of the Network can be made stronger by all parties subscribing to good practice here. Data Protection – the key points to remember 1. Clear desk policy – ensuring no information can be viewed or removed by others. 2. Ensure that PC’s that hold customer information (especially in a showroom environment) are Password protected, and the Password is not disclosed to others. 3. Embrace the Data Protection Principles – these eight principles form the main thrust of the Data Protection Act. 4. Personal data shall be processed fairly and lawfully 5. Personal data shall be obtained only for one or more specified and lawful purposes, and shall not be further processed in any manner incompatible with that purpose or those purposes. 6. Personal data shall be adequate, relevant and not excessive in relation to the purpose or purposes for which they are processed. 7. Personal data shall be accurate and, where necessary, kept up to date. 8. Personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes. 9. Personal data shall be processed in accordance with the rights of data subjects under the Act. 10. Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data. 11. Personal data shall not be transferred to a country or territory outside the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Policy Statement Financial Information Each Network Member will have to provide certain financial information to ITC Compliance Ltd. Aside from ensuring that Members are satisfying certain FSA criteria regarding financially sound businesses, it is also important to assist in maintaining the ongoing integrity of the Network. ITC Compliance Ltd will undertake a Credit Check on each application. This report will be used to establish your suitability to join our Network and ensure that as a potential Network Member you have provided ITC Compliance Ltd with satisfactory financial information. WITHOLDING OR PROVIDING FALSE INFORMATION WILL RESULT IN IMMEDIATE TERMINATION FROM THE NETWORK

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

The ITC Compliance Website All Network Members will be expected to use the ITC Compliance website to submit their monthly return. No returns in any other media or format can be accepted. In addition, there are other sections of the website that deal with training and news updates that will be relevant to Network Members, as well as links to other sites that can provide further information and assistance. Logging on to the Website Logging on is simple. After turning on your PC and opening up your web browser, just go to the following address

www.itccompliance.co.uk You will be prompted to enter your Username and Password and then select the compliance (blue) login button. These will have been supplied to you by ITC Compliance Ltd, and should not be disclosed to anyone else.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Navigating the Website You have now logged into the site, and can start to navigate following the instructions below. You will be presented with the Network Members Front Screen. We have designed this screen to provide you with vital Network information. Please ensure that you read ALL sections, complete any actions required and confirm to proceed to your monthly return. IT IS IMPORTANT THAT YOU READ AND COMPLETE THIS SECTION ON EVERY OCCASION IT IS PRESENTED TO YOU

1. To get in touch with ITC Compliance Ltd, click on the ‘contact’ tab. This will provide you with the contact details required. 2. To access and print copies of document templates, such as your Demands & Needs or Initial Disclosure Documents, click on ‘FSA documents’. 3. To submit your mandatory monthly return, click on ‘monthly return’. There are more detailed instructions on this overleaf. 4. To view previous monthly returns, click on the ‘monthly return’ tab, and scroll down to the bottom of the page where you will be presented with all previous monthly returns for you to select and access. 5. To access training and observation records, click on ‘training’ tab. There are more detailed instructions on how to navigate this page further on in the manual.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Submitting your Monthly Return The Monthly Return to ITC Compliance Ltd is of PARAMOUNT IMPORTANCE. It maintains the integrity of the Network, and has to be submitted in accordance with the agreed timescales. BE AWARE THAT LOSS OF MEMBERSHIP OF THE NETWORK WILL RESULT FROM A FAILURE TO OBSERVE THE RULES REGARDING MONTHLY RETURN SUBMISSIONS. Timescales for submission The monthly return must be submitted NO LATER THAN FIVE WORKING DAYS following a calendar month end. ALL fields must be completed – even if the information required is unchanged from the previous month. The monthly return must be submitted through the ‘monthly return’ tab on the ITC Compliance website. Under NO CIRCUMSTANCES will any other method of submission be acceptable. As a result, it is essential that you maintain your PC and ensure that it is web enabled to allow submission of the monthly return. Procedure for submitting the monthly return 1. Log on to the ITC Compliance website – www.itccompliance.co.uk 2. Click on the ‘monthly return’ tab. 3. You will be presented with the monthly return screen – follow the onscreen instructions. 4. Insert the information required into the fields of the monthly return. When completing your monthly return, please make sure that the following points are accurately input as any discrepancies will be sent back to you to rectify immediately. Step 1 For Step 1 simply select the month the returns will correspond to. Select the month. Step 2 In Step 2 you will need to select those products that your site sells or administers, click the ‘yes’ button to select. When done, click ‘Proceed’ to move on. Click ‘yes’ for all products you sell in your site, NOT just those you have sold this month. Add any products you sell that aren’t listed by entering the name in the box and clicking ‘Add Product’.

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ITC Compliance Policies & Procedures Manual – Version Two

Step 3 For each insurance product you sell you will need to select all suppliers who provide that product to your site. To add a supplier click on the ‘Click here to add a New Supplier for (insurance product)’, a box will appear with the name of the product and a drop-down list of providers. You can also enter any suppliers not on the list by selecting ‘Other’ at the bottom of the list and entering the name of the supplier in the box that appears. Next time you enter a return this information will be stored so you will simply need to check the information and add or remove any suppliers you may have by selecting the following. Click here to confirm this supplier no longer provides insurance products to your site. Click here to add a new supplier for this product Step 4 For this step you will need to go through a few statements for each insurance product you sell or provide free of charge, we strongly recommend you read through these statements thoroughly the first time you carry out a return. After you have checked these statements are answered ‘yes’ or ‘no’, click ‘Proceed’. Step 5 If you have already entered your policy level information this step will require you to simply confirm that these policy levels are still correct for your site. If these prices and commissions are still correct then you should just click the ‘Confirm’ button. Otherwise you will need to click ‘Alter or edit products’. Step 5 – Modifying Products For this step you will need to enter a little more detail about the products you sell, this step requires you to enter the policy levels, for example, bronze, silver, gold. All the products you sell will be listed with options to add or edit the policy levels. If no policy levels are listed, click on the ‘Add New Policy Levels’ button, a box will then appear where you can input the policy level name, retail price and commission. Once you have entered a policy level, click ‘Add More Policy Levels’ to add another or ‘Save Policy Levels’ to return to the original screen. When you’re back to the original screen you can edit policy levels by clicking on the ‘Edit Level’ button, or remove them by clicking on the ‘Remove Level’ button. You need to enter at least one policy level for each insurance product you sell. When you have entered all of the policy levels available within your site, click on the ‘Confirm’ button. This will confirm that the information you have entered is correct. © ITC Compliance Ltd 2008

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Step 6 For this step you need to enter the number of products you have sold or provided free of charge for the month, including total commission (total difference between price charged to the customer for the policy, less IPT and price paid by the site) and total premium (total charged to the customer or total paid by the site for policies given away free of charge). Example

Charged for Policy Premium: 200.00 (the premium should include Insurance Premium Tax) Commission: 87.50 Free of Charge Policy Premium: 165.00 (the premium should include Insurance Premium Tax) Commission: 0.00 You will also need to enter the total number of goods sold for the month. You will then have to answer the following question; Have any customers cancelled their policies within the FSA cancellation period of; 14 days for general insurance policies or 30 days for credit protection/payment protection policies Yes:

No:

If you click ‘yes’ you will be required to enter the quantity of policies cancelled. Step 7 This step covers the claims your site has administered in the selected month. For this you should input the total number of claims administered, this information should be available from your service department (where applicable) and should include all policies regardless of where they were sold. If you have an in-house sales management system, please provide details here.

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Step 8 In this step you will need to enter four pieces of information:

Have any regulated members of staff left the organisation? If you click yes you should select those leavers from the list; hold down the ‘ctrl’ key to select multiple leavers.

Do you have any new members of staff selling or dealing with regulated products? For this you should enter the new starters name as well as whether they deal with sales or service activities, they will then be issued with Training ID’s on the following screen and training should be carried out no more than two weeks after starting with the organisation. (Training ID’s are always accessible after completing your return from the ‘training’ tab.)

Have there been any changes to the company’s Approved Person? If the answer to this is yes then you must complete the notification form in full. You should also answer whether or not you have had any complaints regarding General Insurance activities or products.

Have you had any complaints regarding General Insurance activities and/or products this month? If you click ‘yes’ then you will be required to input details of each complaint received. After proceeding with this step you will be shown a copy of the completed return this should be signed, printed and submitted along with your paper returns to ITC Compliance Ltd. Should you require any further assistance you can call ITC Compliance Ltd on 0117 953 9068 Option 2.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Systems E-DaN – Electronic Demands & Needs As an alternative to the paper based Demands & Needs process an electronic version of the Demands & Needs is also available. Once registered for E-DaN, the system should be used to produce an Initial Disclosure Document and Demands & Needs statement online in the presence of the customer. The system has a range of benefits including; No more audit reports from ITC on errors made by sales staff The provision of figures for your monthly return (once all staff use the system), therefore saving you time when submitting your return to us on a monthly basis The ability to alter and amend documentation at any point during the sale A customer facing system showing your corporate colours and graphics including your company logo Significant management information on how your staff perform on General Insurance sales Less paperwork – saving you more time and money A number of web based ‘how to’ movies and guides are available to provide an overview of the E-DaN system, including how to register and complete an online sale. These can be found at:

www.itccompliance.co.uk/e-dan/help The movies walk you through the registration process for E-DaN and how to complete a sale online. The Sales how-to guide provides step-by-step instructions on how to fill in the Demands & Needs online, along with details of how to navigate the system. The Admin how-to guide is for those staff granted ‘Administrators’ access and gives information on managing products within the system, amending access levels and customising the settings within your dealership for the sales process.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

IMPORTANT: In addition to registering online you must also advise us that you wish to use the E-DaN system so that we can make the necessary amendments to our in-house administration system. Please call us on 0117 953 9068 option 2 for assistance. Logging In The E-DaN system web address is: www.itccompliance.co.uk/e-dan All staff will access the system initially using the log-ins they use for our online training system, so please make sure all staff are aware of their User IDs and passwords. Each staff member will need to click ‘New User? Already have a training ID? Click here to register for e-DaN’ and enter their username and password on the subsequent screen. You will need to enter your e-mail address and provide a password; this will generate a new username which should be used for all future logins to the E-Dan system.

The main menu is shown above, from here you can: 1. View sales options (start a new sale, view incomplete or archived sales and customer information); 2. View your training and product competency information (when training was last completed / product training completed); 3. View your observation information (when last observed); 4. Register an insurance complaint; 5. View sales reports (if you have the required access). Full details of each option are contained in the ‘How-to Guides’.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Completing a Sale You should work through all the questions on the system with the customer and record their responses on the system. You will have an opportunity to print an Initial Disclosure Document during the sale; this should be printed and passed to the customer. The questions will be tailored towards the products offered by your dealership and depending on the answers to the eligibility questions the system will show the products that should be recommended and those that should not. At the end of the process, the system will print off a full statement of Demands & Needs which should be signed by the dealer and the customer, and retained by the customer. You will need to tick a box online to indicate that a copy has been passed to the customer. A further two summary sheets will be printed off, which should also be signed by you and the customer. One copy should be retained for your dealer file, and the 2nd copy should be forwarded to ITC Compliance with your monthly returns.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Network Systems Record Keeping FSA regulation of General Insurance demands rigorous record keeping in certain areas. This is to ensure that where regulated activity has taken place (such as sales of General Insurance products) that there is documented evidence of recommendations made and products sold. In addition, record keeping is required to show staff training and competence levels and ongoing monitoring of the same. The FSA can demand that the written records of the activities regarding Network Members be made available within 48 hours. This makes the need for a rigorous record keeping regime even more important! The following procedures highlight what records should be kept, and for how long: Training and Competence Records Training and Competence records include the CV and assessments sections from the ITC Compliance on-line learning system. Observation reports that assess staff as competent will also be included in this area. These records will need to be kept for a period of at least three years following the person ceasing to conduct General Insurance Activities. All Training and Competence records are kept within the ITC Compliance on-line learning system. A Network Member can access his or her own information through this system at any time. Policy Materials Examples of this information include policy summaries (such as product brochures) and full policy documents for all products sold. Copies will need to be kept as this will mean that any dispute over the cover that is provided by a product can be resolved. Network Members must make sure that they have allocated sufficient space and storage for these policies. Network Members must also advise ITC Compliance Ltd immediately if there are any changes to policy materials or their terms and conditions.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Demands & Needs Statements The Demands & Needs statement is written evidence that the customer has been recommended or sold products that are suitable for their needs, and that reflect the customers’ attitude to insurance risk. Demands & Needs statements are tailored to each Network Member, and are available to be downloaded and printed from the ‘FSA documents’ tab of the ITC Compliance website. A Demands & Needs statement needs to be completed for every customer that purchases goods if regulated products are discussed, recommended or sold. The Demands & Needs statement should be completed and signed by the customer and sales person. The three copies are then administered as follows: THE FORM SHOULD BE PHOTOCOPIED TWICE AND ISSUED AS STATED BELOW

- Original copy – to be retained by Site Representative - Second copy – presented to the customer - Third copy – forwarded ITC Compliance Ltd Charnwood House Marsh Road Bristol BS3 2NA The ITC Compliance Ltd copies of the Demands & Needs statements for the month are absolutely essential. Without these copies as well as the electronic monthly return, the submission of information to ITC Compliance Ltd is not complete. The dealer MUST keep ALL copies of the Demands & Needs for THREE years.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Guidance notes - completion of the Demands & Needs Documentation (Examples shown within the D&N’s Guidance section refer to the Automotive Industry)

Section 1: Dealership and customer contact information 1. Dealership Name:

3.

2.

ITC 2

Customer Name:

Internal Reference No:

Customer Address: Customer Date of Birth:

4. 5.

Vehicle Registration No:

6.

1. Complete the dealership name. If you are part of a group, put both the group and dealership name. 2. Insert the name of the customer. Please Print. 3. Insert your internal reference number, if you have one, if not please put N/A. 4. Insert the Customers’ address and postcode. 5. Insert the customers’ date of birth. If the customer is unwilling to give you this information please put Not Provided. 6. Insert the vehicle registration number. If the vehicle is new and there is no registration number please put TBA.

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ITC Compliance Policies & Procedures Manual – Version Two

Section 2: General Eligibility Questions 1.

2.

Use of vehicle:

Is the vehicle to be used within the restrictions placed on it by its policies available (e.g. for warranty: no racing, rallying, commercial uses, etc)?

Yes

No

Eligibility of vehicle:

Is the vehicle eligible for cover (age and mileage)?

Yes

No

Yes

No

Yes

No

Length of ownership: Is the customer likely to keep the vehicle long enough to benefit from any policies sold?

Existing policies:

Is the customer able to confirm that there is no insurance policy that he/she holds that may already provide suitable cover? (if alternative cover is in place this must be highlighted to the customer and noted below e.g. rescue recovery which may be covered within a warranty policy). Existing policy details (where applicable):

4.

3. 1. Use of vehicle – from conversation with the customer seek assurance that the vehicle will be used in conjunction with any restrictions that may apply within any policies you are likely to recommend. Particularly here think about restrictions to any warranty. If the customer advises you that the vehicle may be used for restricted purposes you must have further discussions with the customer about the merits of any policy where restrictions will apply. 2. Eligibility of vehicle – not all vehicles will be eligible for particular types of products. The vehicle may be too old, have done too many miles or may be of a restricted make or model. As a dealer you should be able to complete this question without referring to the customer. If the vehicle is ineligible you should not supply restricted products on it. 3. Length of ownership – Part of ensuring that you are treating your customer fairly is to ensure that any policy recommended will be suitable for the customer. If the customer advises you that they only ever keep their vehicle a maximum of 2 years then a 24 month warranty rather than a 36 month warranty may be a better option for that particular customer. 4. Existing Policies– If the customer has any existing insurance policies should be detailed here.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Section 3: Product specific questions Within this section only the products that you offer at your dealership should be showing (in the example case, Payment Protection, MBI and Finance GAP). All questions for all products must be asked to all customers. If you have a product to offer you should make the customer aware of it. Failure to do so could result in legal action from a customer at a future point where they could have benefited from a product but were not made aware of it. Payment Protection (below) – within this question set, the first question is a statement of whether finance has been take out on the vehicle. If it has, all applicable questions should be answered, if it has NOT tick the box and move to the next product set. Payment Protection Insurance:

No finance taken and therefore Payment Protection questions N/A

please tick

Age of customer:

Is the customer of an age that makes them suitable for this type of cover?

Yes

No

Pre-existing conditions: Is the customer free from any pre-existing conditions that may make them (only for Payment Protection with Life Accident ineligible to benefit from any Life, Accident or Sickness cover? and Sickness Cover)

Yes

No

Knowledge of impending redundancy:

Is the customer totally unaware of an impending redundancy?

Yes

No

Is the customer employed and have they been employed for a qualifying period? If self employed note restrictions on Payment Protection.

Yes

No

Employment status:

1. Have you been made aware that taking Payment Protection Insurance is optional?

Yes

No

2. If you suffered a partial loss of pay, would you like a third party to make payments on your behalf? (subject to a maximum specified claim limit)

Yes

No

3. If you were to die, would you prefer a third party to pay off any outstanding finance balance rather than burden your family or beneficiaries with the debt? (subject to a maximum specified claim limit)

Yes

No

4. If you were made redundant, would you prefer a third party to make the repayments on your behalf? (subject to a maximum specified claim limit)

Yes

No

(only answer if self employed) 5. If you were made financially insolvent or bankrupt would you prefer a third party to make the repayments on your behalf? (subject to a maximum specified claim limit)

Yes

No

Do you have any other type of insurance that would meet your repayments if your circumstances were to change? (If yes please answer question below)

Yes

No

If you have any other Life Insurance or Payment Protection Insurance will any payment that may be made to you under that policy be adversely affected if you were to purchase an additional Payment Protection policy?

Yes

No

If 'No' to questions 1-5 above, Do Not recommend Payment Protection Insurance to the customer. If 'Yes' to questions 1-5 above (if cover available for self employed), you may recommend Payment Protection Insurance to the customer. If a mix of 'Yes' and 'No' answers discuss with the customer their feelings about Payment Protection Insurance and its merits in their particular circumstances

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

For all other question sets (below – example shows Return to Invoice Gap Insurance), simply ask the question and record the response. Return to Invoice GAP Insurance If your vehicle were to be written off in an accident or stolen your insurance company would inevitably pay you less than the price Yes you originally paid for your vehicle. In this event would you like to be put back in the same financial position as you were when you first bought your vehicle? If 'No' do NOT recommend Return to invoice GAP Insurance If 'Yes' you MAY recommend Return to invoice GAP Insurance

No

Section 4 Summary of recommendations Policy Name/Level and Price Which of the following policies were recommended to the customer, not recommended and which were purchased? (Provider Name, Level and Price (inc. IPT and any interest) must be inserted for any products recommended) Not Recommended Purchased Recommended Credit Protection Insurance

Product Provider and Level

Price £

Reason for recommended product not being purchased: Extended Warranty

£

Reason for recommended product not being purchased: Back to Invoice GAP

£

Reason for recommended product not being purchased:

Within this section (above) tick all products recommended, all products not recommended and products purchased. For all products where recommended, whether purchased or not the policy name and level recommended and the price (inc. IPT and any interest) must be recorded. If a customer does not purchase a particular product that has been recommended you should record the reason why e.g. price, level of cover etc.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

Section 5 Declarations and Signatures Dealer Declaration The above Demands & Needs document has been completed fully with all applicable questions asked and answers recorded. Where the customer has been recommended relevant products, the name of the product and the price quoted has been inserted into the Demands & Needs form, he/she has been provided with a policy summary for each recommendation and any unusual exclusions/exceptions have been drawn orally to his/her attention. Signed on behalf of dealer: Dealer Signature:

Print Name:

Customer Declaration I can confirm that all questions on the above Demands & Needs document have been completed fully and to my satisfaction and represent a true reflection of my circumstances, Demands & Needs. Where a product has been recommended to me I confirm that I have received a summary of the policy and a statement of the price and that any unusual exclusions/exceptions to the policy have been drawn to my attention orally. I am also aware that should any of the answers to the above questions change prior to the delivery of my vehicle and or the start of any insurance contract, it is my duty to inform the dealership in writing, as any change(s) may affect the product recommendations made. Customer Signature:

Date:

THE FORM SHOULD BE PHOTOCOPIED TWICE AND ISSUED AS STATED BELOW 1. Original Retained by Dealer 2. Customer Copy 3. Copy to ITC Compliance

ITC Compliance 1 Charnwood House Marsh Road Bristol BS3 2NA

Ensure you have undertaken all tasks required by you; the dealer and sign your declaration. It is vital that you also print your name. Ask the customer to read all sections of his/her declaration, sign and date. Finally, give a fully completed copy to the customer, retain the original for your files and keep a copy to send to ITC Compliance Ltd at the end of the month. IMPORTANT Failure to complete this documentation correctly will result in it being returned to you. This may mean that you have to go back to the customer for further information, signatures etc.

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ITC Compliance Policies & Procedures Manual – Version Two

Example Demands & Needs Document (Examples shown within the D&N’s Document section refer to the Automotive Industry) Dealership Name:

ITC Internal Reference No:

Customer Name: Customer Address: Customer Date of Birth:

Vehicle Registration No:

Use of vehicle:

Is the vehicle to be used within the restrictions placed on it by its policies available (e.g. for warranty: no racing, rallying, commercial uses, etc)?

Yes

No

Eligibility of vehicle:

Is the vehicle eligible for cover (age and mileage)?

Yes

No

Length of ownership:

Is the customer likely to keep the vehicle long enough to benefit from any policies sold?

Yes

No

Yes

No

Existing policies:

Is the customer able to confirm that there is no insurance policy that he/she holds that may already provide suitable cover? (If alternative cover is in place this must be highlighted to the customer and noted below e.g. rescue recovery which may be covered within a warranty policy).

Existing policy details (where applicable):

Payment Protection Insurance:

No finance taken and therefore Payment Protection questions N/A

please tick

Age of customer:

Is the customer of an age that makes them suitable for this type of cover?

Yes

No

Pre-existing conditions: Is the customer free from any pre-existing (only for Payment Protection with Life Accident conditions that may make them ineligible to and Sickness Cover) benefit from any Life, Accident or Sickness cover?

Yes

No

Knowledge of impending redundancy:

Is the customer totally unaware of an impending redundancy?

Yes

No

Yes

No

Employment status:

Is the customer employed and have they been employed for a qualifying period? If self employed note restrictions on Payment Protection.

Yes

No

2. If you suffered a partial loss of pay, would you like a third party to make payments on your behalf? Yes (subject to a maximum specified claim limit)

No

3. If you were to die, would you prefer a third party to pay off any outstanding finance balance rather Yes than burden your family or beneficiaries with the debt? (subject to a maximum specified claim limit)

No

1. Have you been made aware that taking Payment Protection Insurance is optional?

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ITC Compliance Policies & Procedures Manual – Version Two

4. If you were made redundant, would you prefer a third party to make the repayments on your behalf? (subject to a maximum specified claim limit)

Yes

No

(only answer if self employed) 5. If you were made financially insolvent or bankrupt would you prefer a third party to make the repayments on your behalf? (subject to a maximum specified claim limit)

Yes

No

Do you have any other type of insurance that would meet your repayments if your circumstances were to change? (If yes please answer question below)

Yes

No

If you have any other Life Insurance or Payment Protection Insurance will any payment that may be made to you under that policy be adversely affected if you were to purchase an additional payment protection policy?

Yes

No

If 'No' to questions 1-5 above, Do Not recommend Payment Protection Insurance to the customer. If 'Yes' to questions 1-5 above (if cover available for self employed), you may recommend Payment Protection Insurance to the customer. If a mix of 'Yes' and 'No' answers discuss with the customer their feelings about Payment Protection Insurance and its merits in their particular circumstances Regulated MBI Warranty If your vehicle were to develop a mechanical defect after your initial warranty had expired, would you prefer a third party to pay for the repair, including parts and labour? (subject to a maximum specified claim limit) If 'No' do NOT recommend Extended Warranty Insurance to the customer If 'Yes' you MAY recommend Extended Warranty Insurance to the customer

Yes

No

Yes

No

Return to Invoice GAP Insurance If your vehicle were to be written off in an accident or stolen your insurance company would inevitably pay you less than the price you originally paid for your vehicle. In this event would you like to be put back in the same financial position as you were when you first bought your vehicle? If 'No' do NOT recommend Return to invoice GAP Insurance If 'Yes' you MAY recommend Return to invoice GAP Insurance

Which of the following policies were recommended to the customer, not recommended and which were purchased? (Provider Name, Level and Price (inc. IPT and any interest) must be inserted for any products recommended) Not Recommended Purchased Product Provider and Level Recommended Credit Protection Insurance

Price £

Reason for recommended product not being purchased: Extended Warranty Reason for recommended product not being purchased: © ITC Compliance Ltd 2008

£

ITC Compliance Policies & Procedures Manual – Version Two

Back to Invoice GAP

£

Reason for recommended product not being purchased: Dealer Declaration The above Demands & Needs document has been completed fully with all applicable questions asked and answers recorded. Where the customer has been recommended relevant products, the name of the product and the price quoted has been inserted into the Demands & Needs form, he/she has been provided with a policy summary for each recommendation and any unusual exclusions/exceptions have been drawn orally to his/her attention. Signed on behalf of dealer: Dealer Signature:

Print Name:

Customer Declaration I can confirm that all questions on the above Demands & Needs document have been completed fully and to my satisfaction and represent a true reflection of my circumstances, Demands & Needs. Where a product has been recommended to me I confirm that I have received a summary of the policy and a statement of the price and that any unusual exclusions/exceptions to the policy have been drawn to my attention orally. I am also aware that should any of the answers to the above questions change prior to the delivery of my vehicle and or the start of any insurance contract, it is my duty to inform the dealership in writing, as any change(s) may affect the product recommendations made. Customer Signature:

THE FORM SHOULD BE PHOTOCOPIED TWICE AND ISSUED AS STATED BELOW 1. Original Retained by Dealer 2. Customer Copy 3. Copy to ITC Compliance

© ITC Compliance Ltd 2008

Date: ITC Compliance 1 Charnwood House Marsh Road Bristol BS3 2NA

ITC Compliance Policies & Procedures Manual – Version Two

Example Initial Disclosure Document

ITC Charnwood House Marsh Road Ashton Bristol BS3 2NA The Financial Services Authority (FSA) is the independent watchdog that regulates financial services. It requires us to give you this document. Use this information to decide if any of our services are right for you. We are an appointed representative of ITC Compliance Limited which is authorised and regulated by the FSA (their registration number is 313486) and which is permitted to advise on and arrange general insurance contracts and therefore to offer a range of non-investment insurance policies to customers. We have taken steps to ensure that if, in the course of advising you, we make a recommendation; such recommendation will be suitable for your Demands & Needs at the time the recommendation is made. In assessing your Demands & Needs we may seek such information about your personal circumstances and objectives as might be relevant in order to enable us to identify your requirements. It is important that you provide us with accurate and relevant information. ITC Compliance Limited is authorised to provide non-investment insurance contracts and is contracted to do so by a select number of insurance providers. (A list of these insurers will be provided on request.) No additional fees will be charged for this service. We always aim to provide a first class service, however if you have any cause for complaint any enquiry in the first instance should be addressed in writing to The Compliance Officer, ITC Compliance Limited, at Charnwood House, Marsh Road, Bristol, BS3 2NA. Should you remain dissatisfied you have the right to ask the Financial Ombudsman Service to review your case. You should write to the Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR. Telephone 0845 080 1800. You may be entitled to compensation should we be unable to meet our liabilities as an insurance intermediary under the Financial Services Compensation Scheme. Your entitlement to compensation will depend upon the type of business and the circumstances of your claim. Details of ITC Compliance Limited’s authorisation can be confirmed by contacting the FSA on 0845 606 1234 or by visiting the FSA’s website http://www.fsa.gov.uk/register.

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

ITC Compliance Terms & Conditions 1.PARTIES

ITC Compliance Limited (t/a “ITC Compliance”) whose registered office is at Charnwood House, Marsh Road, Bristol, BS3 2NA (“ITC COMPLIANCE LTD”); and 2. RECITALS You or your limited company, (the “AR”). ITC COMPLIANCE LTD is authorised by the FSA and as such is regulated by the FSA in the conduct of general insurance sales and administration. ITC Compliance Limited wishes to appoint the AR as its non-exclusive representative to provide certain general insurance sales and administration services and the AR, who is not authorised by the FSA, has agreed to do so on the terms and subject to the conditions of this Agreement. AGREED TERMS 1.INTERPRETATION In this Agreement:Definitions: Including the recitals the following words and expressions shall have the following meanings: “Appointed Representative” a person so appointed by an Authorised Firm in accordance with the FSMA who is thereby exempt from the general prohibition against carrying out general insurance sales and administration under the FSMA; Approved Person” a person in relation to whom the FSA has given its approval under the FSMA for the performance of the Controlled Functions; “Authorised Firm” a firm with permission from the FSA to carry out general insurance sales and administration activities as referred to in the FSMA; “Business Day” any day which is not a Saturday, a Sunday or a Public Holiday “Commencement Date” The agreement date (above); “Complaint” any oral or written expression of dissatisfaction about any insurance activity provided or withheld by the AR or ITC COMPLIANCE LTD whether justified or not; “Compliance Manual” that issued by ITC COMPLIANCE LTD to the AR from time to time; “Confidential Information” information of a confidential nature (including trade secrets and information of commercial value) known to and concerning ITC COMPLIANCE LTD and the Products and communicated to the AR by ITC COMPLIANCE LTD; “Customer” a customer for the Products, and includes, where appropriate, a potential customer; “Controlled Functions” those prescribed by the Regulations; “Dealer Principal” any employee including a general manager of the AR other than a Director who has day to day control and supervision of the management of the AR; “FSA” the Financial Services Authority; “FSMA” the Financial Services and Markets Act 2000 ; “Intellectual Property” any patent, copyright, registered design, unregistered design right, trademark or other industrial or intellectual property owned or used by ITC COMPLIANCE LTD together with any current applications for any registerable items of the foregoing; “Products” any insurance products provided by a Product Provider which ITC COMPLIANCE LTD may permit the AR by express notice in writing to promote and sell; “Product Provider” an insurer authorised by the FSA to provide a Product; “Regulated Activities” those activities set out in Part IV of FSMA; and “Regulations” laws and regulations applicable to the Products, including, but not limited to the FSMA and the rules and regulations made thereunder by the FSA from time to time, including, but not limited to the FSA’s Handbook, and any amendments thereto or replacements thereof. 1.2 1.3 1.4

2. 2.1 2.2

Subordinate Legislation Any references to a statutory provision shall include any subordinate legislation made from time to time under that provision. Modifications etc of Statutes. Any reference to a statutory provision or regulation or to the FSA rules shall include that provision, regulation or rule as from time to time modified or re-enacted. General References to Clauses and Schedules are to clauses and schedules of this Agreement. The Schedules to this Agreement shall form part of this Agreement. Headings are for convenience only and shall be ignored in interpreting this Agreement. APPOINTMENT ITC COMPLIANCE LTD hereby appoints the AR as its non-exclusive Authorised Representative to promote and sell the Products on the terms of this Agreement and the AR hereby accepts the appointment on those terms. During the term of this Agreement the AR shall at all times: (i) generally carry out its responsibilities under this Agreement in such manner to best promote the interest of ITC COMPLIANCE LTD;

© ITC Compliance Ltd 2008

ITC Compliance Policies & Procedures Manual – Version Two

(ii)

2.3 2.4 3. 3.1

4. 4.1

5. 5.1

5.2 5.3 5.4 5.5

6. 6.1

describe itself in all dealings with or relating to the Products (including, for the avoidance of doubt, the issuance of promotional materials) and at its premises as the Appointed Representative of ITC COMPLIANCE LTD; (iii) not become an Authorised Firm; (iv) not be appointed as the Appointed Representative of another Authorised Firm other than ITC COMPLIANCE LTD or any other Company nominated by ITC COMPLIANCE LTD from time to time. (v) not act in a way which will incur any liabilities on behalf of ITC COMPLIANCE LTD nor shall the AR pledge the credit of ITC COMPLIANCE LTD. ITC COMPLIANCE LTD may at any time by notice prohibit, suspend or restrict the AR from some or all of such things as may be specified in the notice. The AR is not permitted to undertake the promotion and sale of the Products until it is included on the FSA register as appointed for that purpose ITC COMPLIANCE LTD’s UNDERTAKINGS During the term of this Agreement ITC COMPLIANCE LTD undertakes and agrees with the AR that it shall: (i) from the Commencement Date, be authorised to carry on the Regulated Activities permitted by the FSA. (A copy of ITC COMPLIANCE LTD’s authorisation by the FSA shall be made available if requested by the AR); (ii) act within the scope and limitations of its authorisation; (iii) issue the Compliance Manual to the AR to assist the AR to comply with its obligations under this Agreement; APPOINTED REPRESENTATIVE'S WARRANTIES During the term of this Agreement, the AR warrants to ITC COMPLIANCE LTD that it shall: (a) be solvent as assessed, amongst other things, in accordance with the Regulations; (b) be suitable to act for ITC COMPLIANCE LTD in the capacity of Appointed Representative in accordance with the Regulations; (c) have no “close links” (as defined in the FSA Handbook) which would be likely to prevent the effective supervision of the AR by ITC COMPLIANCE LTD; (d) be able to deliver the same level of protection to Customers as if they had dealt with ITC COMPLIANCE LTD itself; (e) maintain adequate controls over the Regulated Activities it carries on under this Agreement for which ITC COMPLIANCE LTD has responsibility under FSMA; (f) have adequate resources to monitor compliance with this Agreement; (g) have an Approved Person who meets the FSA’s criteria for approval, and who shall carry out their Controlled Functions in accordance with the FSA’s standards published from time to time; (h) have controllers, directors, proprietors and managers of the AR that are of good character, are competent, and are of sufficient financial standing to enable them to undertake their responsibilities under this Agreement; (i) not have, prior to the commencement of this Agreement, made an unsuccessful application to the FSA to become an Authorised Firm; (j) disclose any application to the FSA to become an Authorised Firm and any documents relating to an unsuccessful application that is made by the AR. RESPONSIBILITIES OF APPOINTED REPRESENTATIVE The AR shall act towards ITC COMPLIANCE LTD conscientiously and in good faith and in such way as to enable ITC COMPLIANCE LTD to comply properly with any limitations or requirements on its own permission to carry out Regulated Activities, and shall not allow its own interests to conflict with the duties that it owes to ITC COMPLIANCE LTD under this Agreement and the general law. The AR shall maintain at its own expense appropriate offices, display, administration facilities and systems as may be necessary for the effective performance of its duties under this Agreement, and shall take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems. The AR hereby undertakes and agrees that it shall not accept (and it shall procure that none of its staff or other representatives accept) any secret profit, income or other benefit or inducement (in whatever form the same may be offered or provided) from any Product Provider (or any other person, firm or company) which does or may provide an incentive or reason for the AR (or any member of its staff or other representative) to promote or recommend any one Product or Products in preference to or more prominently than another Product or Products (including, by way of example only, any gifts or vouchers or other like incentive). In the event that ITC COMPLIANCE LTD suffers or becomes liable to pay any levy or contribution to or at the direction of the FSA on behalf of or in relation to the AR (or any activity undertaken by the AR), then the AR will forthwith upon demand from ITC COMPLIANCE LTD, pay such levy or contribution (or such part thereof as relates to or is attributable to the AR or its business) to ITC. Notwithstanding any other provision of this Agreement, the AR hereby undertakes and agrees to indemnify ITC COMPLIANCE LTD (including all of its officers, employees and other representatives) and keep it (and them) indemnified at all times against all claims, costs, losses, liabilities, fines, expenses, demands and/or proceedings which ITC COMPLIANCE LTD (and/or any of its officers, employees or other representatives ) may suffer or incur or which may be made or brought against it (or any such person) arising out of or as a result of any breach by the AR of its obligations under this Agreement including (without prejudice to the generality of the forgoing) any fines, fees or other form of award or compensation which may be made or levied against ITC COMPLIANCE LTD (by whatever Court or regulatory authority) as a result of any complaint or allegation made by a Customer of the AR or as a result of any breach (or alleged breach) by the AR (or anyone for whom the AR is responsible) of any rules or regulations made by or with the authority of the FSA (including the Regulations). This indemnity shall also extend to any costs or expenses incurred by ITC COMPLIANCE LTD in investigating and defending and any payment (whether of compensation or a fine or otherwise) made or required to be made by ITC COMPLIANCE LTD as a result of any claim, complaint, arbitration, regulatory investigation or disciplinary or enforcement action taken, levied or incurred as a result of or arising out of any activity or omission on the part of the AR. APPROVED PERSONS OF THE APPOINTED REPRESENTATIVE During the term of this Agreement the AR shall ensure that one of its directors is approved under Section 59 of the FSMA for the performance of certain Controlled Functions in relation to a Regulated Activity. If the director proposed to be approved does not have day to day control and supervision of the management of the AR then the AR shall ensure that the Dealer Principal is also approved as aforesaid.

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ITC Compliance Policies & Procedures Manual – Version Two

6.2 6.3 6.4 7. 7.1

7.2

7.3

8. 8.1

8.2

8.3

8.4

8.5

9. 9.1

9.2

9.3

9.4

10. 10.1 10.2

The AR shall inform ITC COMPLIANCE LTD in writing of a proposed change of the Approved Person no less than 90 days before the change of Approved Person is due to come into effect. The Approved Person shall act at all times in accordance with the Regulations and the FSA’s Statements of Principle for Approved Persons as amended or replaced from time to time. The AR shall advise ITC COMPLIANCE LTD in writing immediately of any factors that may affect the continued suitability of its Approved Person to perform the function of an Approved Person. TRAINING, COMPETENCE AND RECRUITMENT The AR shall comply at all times with the FSA’s rules on training and competence including the rules on recruitment and shall ensure that any employees of the AR in respect of whom the relevant rules apply, (including the Approved Person of the AR), are appropriately trained in accordance with the reasonable requirements of ITC COMPLIANCE LTD, and undertake annual retraining as required by ITC COMPLIANCE LTD. If the AR intends to recruit an individual employee with a view to that individual engaging in the sale and administration of Products as well as compliance to the Regulations, the AR shall, as part of its recruitment procedures: (i) take into account the knowledge and skills of the individual in relation to the knowledge and skills required for the role; and (ii) take reasonable steps to obtain sufficient information about the individual’s previous relevant activities and training, including any approved examination passes, from a suitable source within a reasonable time. To the extent that the individual recruited has not undertaken training specific to the Products, the AR shall ensure that the individual undergoes such training before engaging in the sale of the Products. If the AR engages an employee engaging in the sale and administration of Products, the AR shall maintain with each such employee at all times an effective contract of employment or for services which incorporate an Agreement to observe and perform this Agreement. The AR shall provide to ITC COMPLIANCE LTD upon reasonable request a copy of its standard contract of employment or for services of such employees and provide details of all variations thereto within three business days of such variation. 7.4 ITC COMPLIANCE LTD will provide training to the AR in the form of its on-line Training and Competence programme. INFORMATION, REPORTING AND NOTIFICATION REQUIREMENTS ITC COMPLIANCE LTD is responsible for notifying the FSA of any change to the initial notification of the appointment of an Appointed Representative not more than 10 business days after the date the appointment takes effect. The notification includes the following details: (i) the registered name of the Appointed Representative; (ii) a trading name under which the Appointed Representative carries on a regulated activity in that capacity. The AR shall supply ITC COMPLIANCE LTD with such information within 3 business days as it may reasonably require from time to time to enable ITC COMPLIANCE LTD to monitor continuing compliance with the warranties contained in Clause 4 of this Agreement and the terms of this Agreement. The AR shall co-operate with the FSA when gathering information on its own initiative which require the co-operation of the AR and shall when requested give immediate access to its premises, documents, and personnel and the AR shall take reasonable steps to ensure that its employees, agents and any other members of its group and their employees and agents also co-operate with the FSA. The AR shall give to the duly authorised employees and agents of ITC COMPLIANCE LTD, including its auditors, a right of access at all times to the AR’s accounting and other records, in whatever form they are held, and documents relating to its obligations under this Agreement. The AR shall allow ITC COMPLIANCE LTD’s auditors to copy documents or other material on its premises and to remove copies or hold them elsewhere, or give to the auditors such copies on request. The AR’s officers shall provide to ITC COMPLIANCE LTD’s auditors such information and explanations as they reasonably consider necessary for the performance of their duties as auditors. If any compliance deficiencies are identified as a result of the audits performed pursuant to this clause, such deficiencies shall be addressed and rectified by the AR within such period as shall be reasonably stipulated by or on behalf of ITC COMPLIANCE LTD and the costs thereof shall be borne by the AR. If any such compliance deficiencies are not rectified within agreed timescales to the satisfaction of ITC COMPLIANCE LTD, the agreement herein shall be terminated with immediate effect. Such notification will be provided in writing by ITC COMPLIANCE LTD SALE OF PRODUCTS The AR shall comply with all reasonable and lawful instructions of ITC COMPLIANCE LTD from time to time concerning the marketing and sale of the Products and shall generally carry out its responsibilities under this Agreement in such manner as shall best to promote the interests of ITC COMPLIANCE LTD. The AR shall, in the course of dealing with Customers and prospective Customers for the Products, bring to their notice ITC COMPLIANCE LTD’s terms and conditions (and those of the relevant Product Provider) and shall provide to the Customers such precontractual information (including an initial disclosure document and a demands and needs statement) as ITC COMPLIANCE LTD may require from time to time (and in a format approved by ITC COMPLIANCE LIMITED). The AR shall not make or give any representations, warranties or other promises concerning the Products beyond those contained in ITC COMPLIANCE LTD’s standard terms and conditions and in the advertising and promotional material provided to the AR by either ITC COMPLIANCE LTD or the relevant Product Provider. The AR shall bae allowed to offer general insurance products from any supplier, with the following provisions: (i) the product provider is FSA Authorised (ii) the AR provides ITC COMPLIANCE LTD with documented evidence that risk transfer has been granted to the AR by the Product Provider. (see also clause 30.1). (iii) ITC COMPLIANCE LTD allow the AR to enter into any agency agreement with a product provider on the provision that the product provider is aware of (and acknowledges) ITC COMPLIANCE's principal status, and agrees to afford ITC access to record information relating to the AR's regulated activity whilst a member of the network. COMPLAINTS HANDLING All complaints related to business governed by this Agreement (written or otherwise) received by the AR shall be reported immediately to ITC COMPLIANCE LTD and copies of any written complaint shall be forwarded to ITC COMPLIANCE LTD within three business days. Complaints shall be handled, recorded and reported by the AR and ITC COMPLIANCE LTD strictly in accordance with the Compliance

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Manual. 10.3 The AR shall provide such access, information, records and documents as ITC COMPLIANCE LTD or the FSA may request in investigating any matter or complaint related to business governed by this Agreement made to about or in any wayinvolving the AR whether before or after the termination of this Agreement and shall procure that its employees are available at all reasonable times to answer questions in relation to such matters. 11. FEES AND CHARGES The fees and charges payable by the AR to ITC COMPLIANCE LTD in relation to the appointment of the AR as ITC COMPLIANCE LTD’s representative pursuant to the terms of this Agreement, including the basis of their calculation and how frequently they are to be paid, are set out in the Schedule to this Agreement. 12. INDEMNITY 12.1 The AR covenants with ITC COMPLIANCE LTD to indemnify ITC COMPLIANCE LTD against all claims, proceedings, liabilities, costs, charges and expenses which ITC COMPLIANCE LTD may incur: (i) in consequence of anything done or purported to be done by the AR underthis Agreement; (ii) any failure by the AR to comply with the AR’s obligations hereunder; and (iii) in consequence of anything done or purported to be done outside the terms of this Agreement and outside its respective authority. 13. ADVERTISING AND PROMOTION 13.1 ITC COMPLIANCE LTD shall provide the AR with information on advertising and promotional requirements. All advertising and promotions referring to Insurance must be approved by ITC (not to be unreasonably withheld) prior to presentation to the customer 13.2 The AR shall be responsible for the advertising and promotion of the Products in its organisation, and on its website and in other publications in which it advertises and the costs associated therewith. 13.3 The AR shall withdraw any advertising and promotional materials when requested to do so by ITC COMPLIANCE LTD. 14. COMPLIANCE WITH LAWS AND REGULATIONS 14.1 ITC COMPLIANCE LTD and the AR shall comply at all times with: (i) the Regulations and with the general law; (ii) the FSA Principles for Approved Persons and the FSA Code of Practice for Approved Persons; (iii) best market practice in relation to its business; and (iv) the Compliance Manual. 14.2 ITC COMPLIANCE LTD shall give the AR as much advance notice as possible of any prospective or actual changes in the Regulations or any prospective or actual change in any condition or limitation on its authorisation by the FSA by the date of implementation of that change or as soon as is reasonably practicable thereafter. 14.3 The Compliance Manual shall be governed by the terms of this Agreement and in the event of inconsistency with this Agreement, the terms of the this Agreement shall prevail. 15. INTELLECTUAL PROPERTY 15.1 The AR acknowledges that the Intellectual Property (including the goodwill connected with ITC COMPLIANCE LTD’s name and business) belong solely to and shall at all times remain vested solely in ITC COMPLIANCE LTD. 15.2 The AR accepts that: (i) it is only permitted to use the Intellectual Property for the purposes of and during the term of this Agreement and only as authorised by ITC COMPLIANCE LTD hereunder; (ii) other than to the extent detailed in (i) above, it has and shall have no right to use or allow others to use the Intellectual Property or any part of it. It shall not seek to register any Intellectual Property on behalf of ITC COMPLIANCE LTD without ITC COMPLIANCE LTD’s express consent; (iii) it shall not use any trademark or trade names or similar devices which resemble the ITC COMPLIANCE LTD’s trademarks or trade names or similar devices and which would therefore be likely to confuse or mislead the public or any section of the public; (iv) it shall not remove, alter or otherwise tamper with any trademarks, trade names, logos or other of identification on the Products which come into its possession or control, and shall not place any trademark or trade name of its own upon the Products or any other materials used in connection therewith; (v) it shall not do or omit to do or authorise any third party to do or omit to do anything which would invalidate or be inconsistent with the Intellectual Property; (vi) it shall make a statement in any advertising material and promotional literature produced by or for it in connection with the Products as to the ownership as to any relevant Intellectual Property used or referred to therein. 16. DURATION AND TERMINATION 16.1 This Agreement shall come into effect on the Commencement Date and shall continue in force until terminated as hereinafter provided. 16.2 ITC COMPLIANCE LTD and the AR may terminate this Agreement by giving not less than 6 calendar month’s notice in writing provided that the FSA and ITC COMPLIANCE LTD or either of them does not require this Agreement to continue for the purposes of investigating potential breaches of Clause 14 hereof. 16.3 ITC COMPLIANCE LTD may give notice in writing to the AR terminating this Agreement with immediate effect if: (a) at any time ITC COMPLIANCE LTD has reasonable grounds to believe that the conditions in Clause 4.1 are not satisfied or are likely not to be satisfied, and the AR is unable to take immediate steps to rectify the matter; (b) the AR commits any serious breach of any of the terms of this Agreement and that breach (if capable of remedy) is not remedied within 5 business days of notice being given by ITC COMPLIANCE LTD requiring it to be remedied; (c) the AR carries on or threatens to carry on any Regulated Activities in breach of the general prohibition in section 19 of the FSMA; (d) the AR becomes an Authorised Firm; (e) The AR becomes an Appointed Representative of another AR network; (f) ITC COMPLIANCE LTD receives notification that its permission from the FSA to carry out Regulated Activities has been or is to

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be withdrawn; ITC COMPLIANCE LTD is no longer able to comply properly with any limitations or requirements on its own permission or loses its permission to carry out Regulated Activities by the FSA; (g) the AR is in breach of any other agreement with ITC COMPLIANCE LTD; (h) an order is made or a resolution is passed for the winding-up of the AR or an order is made for the appointment of an administrator to manage the affairs, business and property of the AR, or such an administrator is appointed or documents are filed with the court for the appointment of an administrator or notice of intention to appoint an administrator is given by the AR or its directors or by a qualifying floating charge holder (as defined in paragraph 14 of Schedule B1 to the Insolvency Act 1986), or a receiver and/or manager or administrative receiver is appointed in respect of all or any of the AR’s assets or undertaking or circumstances arise which entitle the Court or a creditor to appoint a receiver and/or manager or administrative receiver or which entitle the Court to make a winding-up or bankruptcy order or the AR takes or suffers any similar or analogous action in consequence of debt; (i) the AR ceases, or threatens to cease, to carry on business; (j) the AR assigns or purports to assign its rights or obligations under this Agreement. 16.4 For the avoidance of doubt, a breach of any of Clauses 4.1, 5, 6, 7 , 8.4, 8.5, 9.3, 10 and 13.3 is a serious breach for the purposes of Clause 16.3 (b). 17. EFFECTS OF TERMINATION 17.1 Termination of this Agreement however caused shall be without prejudice to any rights or liabilities accrued at the date of termination. 17.2 Upon termination of this Agreement for any reason: (a) the AR shall cease to promote, market, advertise or sell the Products; (b) the AR shall immediately cease to describe itself as an “Appointed Representative” of ITC COMPLIANCE LTD and cease to use all trademarks or trade or brand names of ITC COMPLIANCE LTD; (c) the AR shall at its own expense within 30 days return to ITC COMPLIANCE LTD all advertising, promotional or sales material relating to the Products then in the possession of the AR or otherwise dispose of the same as ITC COMPLIANCE LTD may instruct. 17.3 For the avoidance of doubt, the provisions of Clause 5 shall, notwithstanding termination, continue in force in relation to all sales of the Products where the sale has been concluded before the date of termination. 17.4 Termination shall not affect the operation of those clauses of this Agreement which are, by their nature, intended to survive and continue in force notwithstanding the termination of this Agreement. 17.5 Subject as herein provided and to any rights or obligations accrued prior to termination, neither party shall have any further obligation to the other under this Agreement. 17.6 In the event of termination of this agreement by either ITC COMPLIANCE LTD or the AR, no refund of any fees paid shall apply. 18. CONFIDENTIALITY 18.1 The AR agrees that it shall at all times (both during the term of this Agreement and after its termination) keep confidential, and shall not use (other than strictly for the purposes of this Agreement) and shall not without the prior written consent of ITC COMPLIANCE LTD disclose to any third party any Confidential Information, unless the information: (a) was public knowledge or already known to the AR at the time of disclosure; or (b) subsequently becomes public knowledge other than by breach of this Agreement; or (c) subsequently comes lawfully into the possession of the AR from a third party. 18.2 To the extent necessary to implement the provisions of this Agreement (but not further or otherwise), the AR may disclose the Confidential Information to any Customers or prospective Customers, to any relevant governmental or other authority or regulatory body including the FSA, and, and to any employees of the AR or of any of the above provided that before any such disclosure the AR shall make those persons aware of its obligations of confidentiality under this Agreement and shall obtain a binding undertaking as to confidentiality from all such persons. 18.3 All documents and other records (in whatever form) containing Confidential Information supplied to or acquired by the AR from ITC COMPLIANCE LTD shall be returned promptly to ITC COMPLIANCE LTD on termination, and no copies shall be kept. 19. DATA PROTECTION 19.1 The AR’s attention is hereby drawn to the Data Protection Act 1998 and to Directive 95/46/EC of the European Parliament and any regulations implementing it (all referred to together as the “Data Protection Requirements”). 19.2 The AR warrants that it shall duly observe all its obligations under Data Protection Requirements which arise in connection with this Agreement by the AR. In particular, the AR warrants that it holds up to date and adequate data protection notifications. The AR shall, if requested by ITC COMPLIANCE LTD, supply to ITC COMPLIANCE LTD copies of all such notifications and any other documentation relating to compliance with the Data Protection Requirements. 19.3 In particular, and without limitation, as required by Schedule 1, Part II of the Data Protection Act 1998, the AR shall: 19.3.1 only act on instructions from ITC COMPLIANCE LTD as data controller and only carry out processing (as defined by the Data Protection Act 1998); 19.3.2 take appropriate technical and organisational measures against unauthorised or unlawful processing of Personal Data (as defined in the Data Protection Act 1998) and against accidental loss or destruction of or damage to any Personal Data; 19.3.3 not transfer any Personal Data to any third parties, or outside the countries of the European Economic Area, without and only to the extent of any express written consent of ITC COMPLIANCE LTD, which may be refused at ITC COMPLIANCE LTD’s sole discretion; 19.3.4 ensure that all its relevant staff have received an adequate level of training in data protection; and 19.3.5 comply with the obligations set out in the Seventh Principle of Schedule 1 in respect of all processing carried out on behalf of ITC COMPLIANCE LTD. 20. FORCE MAJEURE 20.1 The obligations of each party under this Agreement shall be suspended during the period and to the extent that that party is prevented or hindered from complying with them by any cause beyond its reasonable control including (insofar as beyond such control but without prejudice to the generality of the foregoing expression) strikes, lock-outs, labour disputes, act of God, war, riot, civil commotion, (f)

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20.2

21.

22.

23.

24.

25.

26.

27. 28.

29 29.1

29.2

30. 30.1 31. 31.1

32

malicious damage, compliance with any law or governmental order, rule, regulation or direction, accident, breakdown of plant or machinery, fire, flood, storm, difficulty or increased expense in obtaining workmen, materials, goods or raw materials in connection with the performance of this Agreement. In the event of either party being so hindered or prevented, the party concerned shall give notice of suspension as soon as reasonably possible to the other party stating the date and extent of the suspension and its cause and the omission to give such notice shall forfeit the rights of that party to claim suspension. Any party whose obligations have been suspended as aforesaid shall resume the performance of those obligations as soon as reasonably possible after the removal of the cause and shall so notify the other party. In the event that the cause continues for more than six months either party may terminate this Agreement by giving the other party 30 days’ notice. ENTIRE AGREEMENT This Agreement constitutes the entire understanding between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements, negotiations and discussions between the parties relating to it. AMENDMENTS Save as expressly provided in this Agreement, no amendment or variation of this Agreement shall be effective unless in writing and signed by a duly authorised representative of each of the parties to it. ASSIGNMENT The AR shall not assign, transfer, charge or deal in any other manner with this Agreement or its rights under it or part of it, or purport to do any of the same, nor sub-contract nor appoint sub-ARs or delegate any of its obligations under this Agreement. FREEDOM TO CONTRACT The parties declare that they each have the right, power and authority and have taken all action necessary to execute and deliver, and to exercise their rights and perform their obligations under this Agreement. WAIVER The failure of a party to exercise or enforce any right under this Agreement shall not be deemed to be a waiver of that right nor operate to bar the exercise or enforcement of it at any time or times thereafter. SEVERABILITY If any part of this Agreement becomes invalid, illegal or unenforceable the parties shall in such an event negotiate in good faith in order to agree the terms of a mutually satisfactory provision to be substituted for the invalid, illegal or unenforceable provision which as nearly as possible gives effect to their intentions as expressed in this Agreement. Failure to agree on such a provision within six months of commencement of those negotiations shall result in automatic termination of this Agreement. The obligations of the parties under any invalid, illegal or unenforceable provision of the Agreement shall be suspended during such a negotiation. RIGHTS OF THIRD PARTIES No term of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a third party. SET OFF The AR agrees that any claim by the AR under this Agreement or otherwise shall be the subject of a separate claim and action against ITC COMPLIANCE LTD. Accordingly the AR hereby waives any rights of set off and agrees to pay any amounts due hereunder regardless of any equity, set off or cross-claim relating to any payment made by the AR to ITC COMPLIANCE LTD or any credit owed by ITC COMPLIANCE LTD to the AR. INSURANCE ITC COMPLIANCE LTD will obtain Professional Indemnity Insurance (“PII”) on the AR’s behalf to the level required by the FSA from time to time and details of the cover as amended from time to time will be supplied by ITC COMPLIANCE LTD to the AR within 28 business days of its issuance. In the event that any claim is made under such policy as a result of any act or omission on the part of the AR, the AR shall pay to and otherwise indemnify and keep ITC COMPLIANCE LTD indemnified forthwith on demand in respect of any sum(s) payable by ITC COMPLIANCE LTD in relation to such claim (including, without prejudice to the generality of the foregoing, any policy excess payable by the insured party thereunder). The PII cover provided pursuant to this Clause is limited to those risks detailed therein and subject to excesses. The AR specifically acknowledges that the AR may require additional cover for risks not covered under the PII and may also require run off cover following termination . CLIENT MONEY The AR undertakes and agrees not to hold or receive any client money. NOTICES Any notice under this Agreement must be in writing and may be given by delivery, post, or fax addressed to the other party at the address stated on this Agreement. Notices sent by first class mail shall be treated as having been received 48 hours after posting, notices sent by second class post shall be treated as having been received 72 hours after posting and notices sent by fax on dispatch. GOVERNING LAW AND JURISDICTION English law is the law applicable to this Agreement.

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Disciplinary Procedure There are a number of issues that will involve an Appointed Representative (AR) being brought into the disciplinary procedure, the most common of which arises from a breach of clause 9.2 of the ITC Network Terms and Conditions.

The AR shall, in the course of dealing with Customers and prospective Customers for the Products, bring to their notice ITC COMPLIANCE LTD’s terms and conditions (and those of the relevant Product Provider) and shall provide to the Customers such pre-contractual information (including an initial disclosure document and a Demands & Needs statement) as ITC COMPLIANCE LTD may require from time to time (and in a format approved by ITC COMPLIANCE LIMITED). In this instance the following procedure will be followed: Internal co-ordinator will contact the AR to inform him/her that anomalies have been identified on Demands & Needs forms. Internal co-ordinator will send an audit report to the AR highlighting the audit issues and remedial actions required to rectify the issues The AR will be given a specified time or date (in the case of Demands & Needs anomalies 14 Days) from the date of sending the email by which to rectify the issues to the satisfaction of ITC Issue resolved, no further action Should the AR fail to rectify all issues within the allotted time or by the set date they will be contacted by telephone and sent a 14 day notice of suspension email. This notification will advise the dealer that due to a contractual breach ITC Compliance Limited are invoking clause 2.3 of its Terms and Conditions within the next 14 days and the AR will be suspended from the network until such issues are rectified. At this point ITC will inform relevant product providers of the notice to suspend and the date on which such notice will be served Issue resolved, no further action Seven days prior to suspension ITC will contact the AR by telephone and send a recorded delivery letter to the Approved Person (or for a sole trader, the Owner) signed by a Director of ITC informing the dealer of the date when their suspension will take place and advising the AR that it will be a criminal offence for them to advise on or sell regulated product during the time of suspension. Issue resolved Deadline date no response from the AR. ITC will contact the FSA to suspend the AR. All product providers and relevant ITC Account Managers will be informed of the suspension. © ITC Compliance Ltd 2008

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The AR will be written to with a log of the contact made by ITC to attempt to resolve the matter formally advising him/her of his/her suspension from the ITC Network. The AR will be advised that the FSA administration means that once a suspension is put through it may be up to six weeks before the AR is able to again sell/give away and or advise upon regulated products this suspension to last for at least 30 days regardless of whether issues are resolved within that time frame or not. Issue resolved AR rejoins the network after 30 days If the issue remains unresolved the AR will remain suspended for a period of 90 days after which ITC will terminate the AR and will provide the FSA with information as why the AR has been terminated.

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