IFC Regulation and Ethical Responsibilities 2

Question 1

Under Canadian securities law, which regulatory body oversees mutual fund dealers at the national level?

Accepted Answer

MFDA

Answer

The Mutual Fund Dealers Association (MFDA) is the self-regulatory organization that oversees the distribution side of the mutual fund industry in Canada (outside Quebec).

Question 2

A registrant discovers a client has provided false information on their Know Your Client (KYC) form. The most appropriate first step is to:

Accepted Answer

Update the KYC form with correct information and reassess suitability

Answer

The registrant must update the KYC information and re-evaluate whether existing and proposed investments remain suitable for the client.

Question 3

Which document must a fund company deliver to an investor before or at the time of purchase under Canadian mutual fund regulations?

Accepted Answer

Fund Facts document

Answer

Fund Facts is a plain-language, two-page document that must be delivered to investors before or at point of sale under NI 81-101.

Question 4

The ethical principle requiring investment professionals to act in the client's best interest rather than their own is known as:

Accepted Answer

Fiduciary duty

Answer

Fiduciary duty is the highest standard of care, requiring the advisor to prioritize the client's interests above their own or the firm's.

Question 5

Under NI 31-103, registrants must update a client's KYC information:

Accepted Answer

When there is a significant change in the client's circumstances

Answer

Registrants must update KYC information whenever they become aware of a significant change in the client's financial situation, investment objectives, or risk tolerance.

IFC - Investment Funds in Canada Practice Test

IFC - Investment Funds in Canada Practice Test

IFC Regulation and Ethical Responsibilities 2