BCP Ethics and Professional Conduct 2 — Questions and Answers
Question 1: What continuing professional development (CPD) requirements apply to insurance agents in Singapore?
- No CPD is required
- Agents must complete a minimum number of CPD hours annually to maintain their licence (Correct answer)
- CPD is optional but recommended
- CPD is only required in the first year
Correct answer: Agents must complete a minimum number of CPD hours annually to maintain their licence
Licensed insurance representatives must complete mandatory CPD hours each year to stay current with industry developments, regulatory changes, and best practices.
Question 2: What is 'rebating' in the context of Singapore insurance regulations?
- Offering a legitimate group discount
- Returning part of the commission to the client as an inducement to purchase insurance, which is prohibited (Correct answer)
- Providing a no-claims bonus
- Offering a multi-policy discount
Correct answer: Returning part of the commission to the client as an inducement to purchase insurance, which is prohibited
Rebating — giving back part of the agent's commission to the client to induce a sale — is prohibited under the FAA as it undermines fair competition and may compromise the quality of advice.
Question 3: What must an insurance agent in Singapore do when they discover a client has been sold an unsuitable product?
- Ignore it as it is not their responsibility
- Inform the client, review the policy, and recommend appropriate corrective action (Correct answer)
- Tell the client to file a police report
- Cancel the policy without the client's consent
Correct answer: Inform the client, review the policy, and recommend appropriate corrective action
Agents have a professional duty to act in the client's best interest. If they discover an unsuitable product, they must inform the client transparently and help explore better alternatives.
Question 4: Under the Personal Data Protection Act (PDPA) in Singapore, what obligation does an insurance company have regarding client data?
- They can share data freely with any third party
- They must obtain consent for collecting, using, and disclosing personal data, and protect it with reasonable security measures (Correct answer)
- They only need to protect financial data
- PDPA does not apply to insurance companies
Correct answer: They must obtain consent for collecting, using, and disclosing personal data, and protect it with reasonable security measures
Under the PDPA, insurance companies must obtain consent before collecting personal data, use it only for stated purposes, and implement adequate security arrangements to protect it.
Question 5: What is the duty of an insurance agent when a client's circumstances change significantly?
- No duty exists once the policy is sold
- The agent should review the client's coverage to ensure it remains appropriate and recommend adjustments if needed (Correct answer)
- The agent should wait for the client to contact them
- The agent should cancel the existing policy immediately
Correct answer: The agent should review the client's coverage to ensure it remains appropriate and recommend adjustments if needed
Good professional practice requires agents to proactively review client portfolios when they become aware of significant life changes (marriage, children, job change) to ensure coverage remains adequate.
Question 6: What is 'tied agency' versus 'independent financial adviser' (IFA) in Singapore?
- There is no difference
- A tied agent represents only one insurer while an IFA can recommend products from multiple insurers (Correct answer)
- An IFA only sells general insurance
- A tied agent earns higher commissions
Correct answer: A tied agent represents only one insurer while an IFA can recommend products from multiple insurers
A tied agent is contracted to sell products of one insurance company only, while an IFA operates independently and can recommend products from the full range of insurers in the market.
BCP Ethics and Professional Conduct 2
What continuing professional development (CPD) requirements apply to insurance agents in Singapore?