Chapter 10 (5 questions) Ethics And Professional Standard

Question 1

What are ethics?

Answer 1

Ethics relate to standards of behaviour

It is part of ALL financial services. For example, The APER Principles and SM&CR rules all help to encourage ethical behaviours.

Following rules only doesn’t necessarily make you ethical

Question 2

Answer 2

Question 3

Answer 3

Question 4

What did The Bribery Act 2010 introduce

Answer 4

The act is aimed at enhancing free and fair competition, and reducing bribery in all companies, not just financial services. (ie more ethical)

Introduced 3 new offences:

Offering, promising or giving a financial or other advantage, intending to bring about improper performance (‘Giving a bung’ basically).

Bribery of a foreign public official.

Failure of a firm to prevent bribery.

Question 5

What is whistleblowing?

Answer 5

‘a person who raises a concern about a wrongdoing in their workplace’.

There is more protection in place for whistle blowers and companies must have written policy. FCA actively encourages whistleblowing as part of its forward looking approach. More ethical

Question 6

Summary of 10.1

Answer 6

Question 7

What was the Aldermanbury Declaration?

Answer 7

Where the general insurance sector signed up to a common set of professional standards in relation to knowledge and conduct, therefore making them more ethical

Question 8

If ethics are embedded in a firm or a behaviour is embedded in the firm what does this mean?

Answer 8

‘Embedding’ means that the ethics/behaviour/whatever else it is, are practised at all levels of a business and are ‘business as usual’.

The ‘tone at the top’ and ‘walking the talk’ plays a major part in setting and reinforcing any of these behaviours

Question 9

Different levels of ethics

Answer 9

Question 10

QUESTION

Answer 10

A

Question 11

Why are disclaimers frowned upon by the FCA

Answer 11

They are an easy get out clause for individuals/firms/markets to display poor and unethical behaviour

Question 12

What is Dilemma Resolution?

How does it work

Answer 12

Its a process used to help staff resolve ethical issues that are proving difficult to resolve or understand.

For example, a staff member may not understand why its unethical to speak to customers in the way they do (THIS IS A BAD EXAMPLE)

It’s basically a series of questions that can help focus on solving the ethical dilemma.

Questions could be:
Are the outcomes ‘good’ ?
Would the decision stand up to public scrutiny in the light of day?
Would you be proud / happy to be associated with the decision?
and so on

Its up to firms to solve these kind of issues because there are not really any set rules if the individual is following the rules but still be unethical. Its outside the scope of the FCA handbook

Question 13

Summary of 10.2

Answer 13

Question 14

What is Dilemma Resolution Model

Answer 14

It helps resolve ethical issues

Question 15

Evaluating ethics is difficult, and often other factors need to be considered

What are some key measurable signs that a firm is showing unethical behaviour

Answer 15

The following MI could highlight issues

Question 16

The FSA issued a Guide to Management Information for Treating Customers Fairly in 2007 which then became known as the Fair Treatment of Customers in 2015 stating that, in order for the MI to be beneficial, it must show what:

Answer 16

Question 17

Firms often use maturity matrices. What are these also known as and what are they for?

Answer 17

Also known as competency frameworks,

They provide clarity of the expectations of their staff at different levels in relation to ethical behaviour

For example, within a bank, a cashier may need level 1 communication skills, but a head of customer service may need level 4.

Question 18

QUESTION

Answer 18

Question 19

QUESTION

Answer 19

Question 20

QUESTION

Answer 20

Question 21

Summary of 10.3

Answer 21

Question 22

Providing evidence that you are acting ethically is still evolving, with different bodies handling the subject in different ways, such as:

Gaining higher level qualifications such as Chartered Financial Planner Status

To keep pace with increased customer scepticism in our industry, there have been calls for a move from ‘Tell me’ to ‘Show me’ to ‘Prove to me’ initiatives. what is this?

Answer 22

Question 23

QUESTION

Answer 23

D

REMEMBER: Being compliant is one thing – but behaving ethically is another.

Question 24

QUESTION

Answer 24

A

Question 25

What is corporate social responsibility?

Answer 25

Engaging with stakeholders within a company to ensure ethical standards are at the heart of a business

Question 26

Corporate Social Responsibility is the act of engaging with stakeholders within a company to ensure ethical standards are at the heart of a business

There are 12 steps to implementing a CSR programme. What are they?

Answer 26

Question 27

for understanding

Answer 27

Working within a regulated industry means we must work with set rules and regulations and in an ethical way.

REMEMBER: Regulators such as the FCA do not use the word ‘ethics’. They prefer to use words such as honesty and integrity.

As previously mentioned, ethics are embedded across all 12 Principles for Business. They are also supported in this aim by the APER and COCON Principles, other conduct rules and the Fit and Proper requirement

Question 28

QUESTION

Answer 28

C

Question 29

QUESTION

Answer 29

A

(If it is a clear inducement then reporting may also be necessary)

Question 30

question

Answer 30

C

Question 31

Your client has told you he has been over-funding his ISA for the last couple of years. From an ethical standpoint, what should you advise him to do, in line with Principle 1?

Nothing, he was not advised by you so it’s not your issue.

Contact HMRC and advise them of this issue.

Decline to do any ISA business until the client sorts it out.

Advise him to return to the original adviser to put the matter right

Answer 31

Advise him to return to the original adviser to put the matter right

The question is about ethics rather than rules, and the ethical thing to do is not to turn a blind eye to this, and refer them back to the adviser who set up the arrangement. This means the adviser is acting with integrity, which is in line with Principle 1

Question 32

The basis for the FCA ethical view on financial services can be found in the…

FCA Objectives.

FCA Scope and Powers document.

FCA Principles for Businesses.

Financial Services Action Plan.

Answer 32

FCA Principles for Businesses.

Ethics is one of the FCAs core Principles.

Question 33

During an interview with your client, he informs you that he is going through a divorce and has not disclosed all his investments. His wife is not a client of yours and you have never met her. From an ethical point of view, you should…

do nothing, his estranged wife is not a client of yours, so you have no responsibilities to her

contact your MLRO, as this is technically money laundering.

contact the wife’s solicitor, you have a duty to ensure everything is declared.

strongly advise your client to declare the investments immediately.

Answer 33

strongly advise your client to declare the investments immediately.

Whilst it may be easy to turn a blind eye, ethically, you should advise him to do the right thing

Question 34

An accredited body must issue an adviser with a certificate confirming their membership, that they adhere to their code of ethics, and have completed appropriate qualifications to fulfil their role. This certificate is known as…

The Diploma in Regulated Financial Planning.

The Certificate in Financial Planning.

A Continued Professional Development (CPD) certificate.

A Statement of Professional Standing.

Answer 34

A Statement of Professional Standing.

The SPS was introduced by the Retail Distribution Review. The Diploma is needed, but is not the certificate required, and CPD relates to the ongoing retention and development of knowledge and skills.

Question 35

The Bribery Act 2010 introduced three new offences. Which of the following was not one of them?

Offering, promising or giving a financial or other advantage, intending to bring about improper performance.

Bribery of a foreign official.

‘Tipping off’ a potential money launderer.

Failure of a commercial organisation to prevent bribery.

Answer 35

‘Tipping off’ a potential money launderer.

Tipping off was not within the Bribery Act, the others were.