FASEA Professional Ethics and Standards 5

Question 1

Under FASEA's ethical framework, an adviser who identifies that a client has been given poor advice by a previous adviser should FIRST:

Accepted Answer

Inform the client of the issue, provide corrective advice, and document the findings

Answer

The adviser's duty is to the client's best interests, which includes identifying and addressing prior poor advice transparently.

Question 2

FASEA Standard 12 requires advisers to support the profession's reputation. This is BEST demonstrated by:

Accepted Answer

Upholding ethical standards in daily practice and reporting breaches by peers

Answer

Supporting the profession means embodying ethical standards personally and taking responsibility to address misconduct that harms public trust.

Question 3

When a financial adviser is also a director of a company that issues financial products, which FASEA principle is MOST at risk?

Accepted Answer

Independence and management of conflicts of interest

Answer

Holding a directorship in a product issuer creates a direct conflict between the adviser's personal interests and their duty to clients.

Question 4

A client asks an adviser to recommend a product the adviser is not qualified to advise on. Under FASEA's competence standards, the adviser SHOULD:

Accepted Answer

Decline and refer the client to a qualified adviser for that product type

Answer

Competence requires operating within areas of genuine expertise; the ethical response is transparent referral, not uninformed advice.

Question 5

What distinguishes 'ethical' behaviour from merely 'legal' behaviour in the FASEA framework?

Accepted Answer

Ethical behaviour meets a higher standard of conduct than minimum legal compliance

Answer

FASEA was explicit that legality is a minimum baseline; ethical behaviour demands more, including acting with integrity and in good conscience.

(FASEA) Financial Adviser Standards and Ethics Authority Practice Test