BCP Ethics and Professional Conduct

Question 1

What is 'churning' in the Singapore insurance industry?

Accepted Answer

Encouraging a policyholder to replace an existing policy with a new one primarily to generate commission

Answer

Churning or twisting is an unethical practice where an adviser recommends unnecessary policy replacements primarily to earn fresh commissions, often to the detriment of the policyholder.

Question 2

What ethical obligation does an insurance agent in Singapore have regarding conflicts of interest?

Accepted Answer

The agent must disclose any conflicts of interest to the client and act in the client's best interest

Answer

Under the FAA and MAS guidelines, insurance agents must disclose any conflicts of interest to clients and prioritise the client's interests over their own financial gain.

Question 3

In Singapore, what is the consequence for an insurance agent who misrepresents policy benefits to a client?

Accepted Answer

The agent may face disciplinary action, licence revocation, and legal liability

Answer

Misrepresentation is a serious offence. The agent may face MAS enforcement action, licence revocation, civil liability for damages, and potential criminal charges for fraud.

Question 4

What is the 'needs-based advisory' approach required by MAS for insurance sales in Singapore?

Accepted Answer

Recommending products that match the client's actual financial needs, objectives, and risk profile

Answer

MAS mandates that financial advisers recommend products suited to the client's needs, assessed through the Financial Needs Analysis (FNA), rather than pushing products that maximise commissions.

Question 5

What record-keeping obligations do Singapore insurance agents have?

Accepted Answer

Agents must maintain records of client interactions, recommendations made, and the basis for those recommendations for at least 5 years

Answer

MAS requires financial advisers to maintain comprehensive records documenting client interactions, the FNA conducted, product recommendations, and the rationale behind them for a minimum of 5 years.

BCP Insurance Practice Test

BCP Insurance Practice Test

BCP Ethics and Professional Conduct