Topic 23: Specialist advice

Question 1

What type of approach does the FCA take to enforcement and rule-making in the UK?

Answer 1

Principles-based rather than rules-based

Question 2

What is an ‘execution-only’ sale?

Answer 2

Where the customer decides on the purchase of a product or investment without seeking or receiving any advice from the firm’s representative. The firm has no responsibility for the suitability or the affordability of the sale.

Question 3

What is ‘generic advice’?

Answer 3

Providing retail customers with advice which does not meet MiFID (2004). So long as the information is balanced, and you do not express an opinion that can be seen as a recommendation, you can provide generic, factual information about a type of investment or product.

Question 4

What is the MiFID definition of investment advice?

Answer 4

Provision of personal recommendations to a customer, either upon the customer’s request or on the firm’s initiative, comprising:

1) must be a recommendation that is made to a person
2) the recommendation must be presented as suitable for the person to whom it is made or based on the investor’s circumstances
3) the recommendation must relate to taking certain steps in respect of a particular investment which is a MiFID financial instrument (e.g. buy/sell)