FASEA Professional Ethics and Standards 2

Question 1

Under the FASEA Code of Ethics, Standard 2 requires financial advisers to act with integrity. Which scenario BEST illustrates a breach of this standard?

Accepted Answer

An adviser recommends a product knowing it is inferior but does not disclose this to the client

Answer

Recommending a product known to be inferior without disclosure is a direct breach of integrity under FASEA Standard 2.

Question 2

The FASEA Code of Ethics Standard 3 addresses fairness. An adviser is MOST likely breaching Standard 3 when they:

Accepted Answer

Charge one client a significantly higher fee for identical advice without justification

Answer

Charging unjustifiably different fees for identical services violates the fairness obligation in FASEA Standard 3.

Question 3

Which of the following BEST describes the concept of a 'fiduciary duty' as it applies to financial advisers under the FASEA framework?

Accepted Answer

A duty to act in the client's best interests above the adviser's own interests

Answer

Fiduciary duty requires financial advisers to prioritise the client's interests over their own financial or personal interests.

Question 4

Standard 6 of the FASEA Code of Ethics requires advisers to take reasonable steps to ensure clients understand advice. Which action BEST fulfills this obligation?

Accepted Answer

Verbally summarising key recommendations in plain language and confirming client comprehension

Answer

Actively confirming comprehension in plain language fulfils the adviser's duty to ensure meaningful client understanding.

Question 5

An adviser becomes aware that a colleague is providing advice that is not in clients' best interests. Under the FASEA ethical framework, the adviser should PRIMARILY:

Accepted Answer

Report the concern through appropriate internal or regulatory channels

Answer

Professional ethical standards require advisers to raise misconduct concerns through appropriate channels rather than remaining silent.

(FASEA) Financial Adviser Standards and Ethics Authority Practice Test

(FASEA) Financial Adviser Standards and Ethics Authority Practice Test

FASEA Professional Ethics and Standards 2