CMFAS Financial Advisory Ethics 4

Question 1

What is the MAS Guidelines on Standards of Conduct for financial advisers?

Accepted Answer

Guidelines that set out expected standards of professional conduct and ethical behaviour

Answer

These guidelines establish the expected standards of conduct, integrity, and professionalism that financial advisers must maintain when dealing with clients.

Question 2

What is the consequence of providing misleading financial advice?

Accepted Answer

Regulatory sanctions, fines, licence revocation, and potential criminal charges

Answer

Providing misleading advice can result in serious consequences including regulatory sanctions, monetary penalties, loss of licence, and criminal prosecution.

Question 3

What is the adviser's obligation when recommending a product replacement?

Accepted Answer

Must demonstrate the replacement is in the client's best interest and explain any costs or losses

Answer

When recommending a product replacement, the adviser must show it genuinely benefits the client and explain any surrender charges, waiting periods, or benefits that may be lost.

Question 4

What is the role of the compliance function in a financial advisory firm?

Accepted Answer

To ensure adherence to regulations, laws, and ethical standards

Answer

The compliance function monitors and ensures that the firm and its representatives comply with all applicable laws, regulations, and internal policies.

Question 5

Why is documentation important in financial advisory?

Accepted Answer

It provides evidence of advice given, client decisions, and regulatory compliance

Answer

Documentation creates an audit trail of the advisory process, protects both the adviser and client, and demonstrates regulatory compliance.

CMFAS Practice Test

CMFAS Practice Test

CMFAS Financial Advisory Ethics 4