Topic 4: Industry Obligations To The Customer Flashcards
A staff member who provides focused advice to a customer does not need to meet normal adviser requirements to hold an appropriate qualification and be an approved person in a controlled function. True or False?
False - An Adviser providing focused advice would still need to meet the normal adviser requirements.
Focused Advice occurs when the adviser decides which areas of the Client’s financial planning to focus on. True or False?
False - Focused Advice is the term used when an adviser provides advice and a recommendation on a limited area or type of product - At the Customers request.
Explain the difference between a Retail Client, Professional Client, and an Eligible Counter-party.
Eligible Counter-party - Provides the lowest level of investor protection. Usually banks, insurance companies, and governments. The counter-party requires a limited service such as an execution of transaction.
Professional Client - Requires advise in addition to execution of transactions. Assumes an adequate level of knowledge and experience.
Retail Client - Highest Level of Investor Protection. “The Person in the Street”
What type of customer is Basic Advice aimed at?
Basic Advice is aimed at those with low to medium earnings and low financial awareness.
What is meant by ‘Generic Advice’?
There is a distinction between Regulated advice and Generic advice. Regulated advice is when a personal recommendation is made in accordance with the Market in Financial Instruments Directive. (MiFID)
Any advice that does not meet the MiFID definition is termed ‘Generic Advice’.
Detail the types of regulated advice.
- Focused Advice - Adviser gives advise on a limited area at the CUSTOMERS request.
- Simplified Advice - The PROVIDER decides the level of advise to be offered.
- Basic Advice - Pre-scripted questions to assess suitability.
- Robo Advice - Automated advice based upon algorithms.
