Financial Advisory Ethics Flashcards

What is the proper procedure when a client makes a complaint?

Answer: Acknowledge, investigate, and resolve the complaint fairly and promptly

Complaints must be acknowledged promptly, investigated thoroughly, and resolved fairly. The process should be documented and the client kept informed.

What is the ethical issue with receiving gifts from product providers?

Answer: Gifts may create a conflict of interest and bias recommendations

Accepting gifts from product providers can create a conflict of interest, potentially biasing the adviser's recommendations toward that provider's products.

What is the purpose of maintaining a client register?

Answer: To keep accurate records of all clients served and products recommended for regulatory compliance

A client register maintains accurate records of all clients, interactions, recommendations, and transactions for regulatory compliance and proper service.

What is the ethical obligation regarding ongoing client reviews?

Answer: To periodically review clients' financial situations and ensure products remain suitable

Financial advisers have an ongoing obligation to periodically review their clients' situations to ensure recommendations remain suitable as circumstances change.

What is whistleblowing in the context of financial advisory?

Answer: Reporting unethical or illegal conduct within the organisation to appropriate authorities

Whistleblowing is the act of reporting suspected illegal activities, fraud, or ethical violations within an organisation to management or regulatory authorities.

What is the prohibition against market timing abuse in financial advisory?

Answer: Advisers must not exploit time zone differences to gain unfair advantages in fund trading

Market timing abuse involves exploiting stale pricing or time zone differences in fund NAV calculations for unfair gains, which is prohibited.