Unit 10 - Business Practice

Question 1

Good business practice

Answer 1

Requirements for DPB (Designated Professional Body) set out in IFOAs DPB handbook

Question 2

GBP - Skill care & diligence

Answer 2

Must conduct business with:

• honesty and integrity
• knowledge skill and care
• show respect for others

Question 3

GBP - Best interests of client

Answer 3

Carry out regulated activities in the best interests of client

Question 4

GBP - Confirmation of advice

Answer 4

Advice presented in writing - showing understanding of client’s objectives and reasons why advice given

Question 5

GBP - Record keeping

Answer 5

Ensure appropriate records of work kept

• Evidence work undertaken
• Good audit trail
• 6 year retention

Question 6

GBP - Accounting for rewards

Answer 6

Must account for any commission received

Question 7

GBP - Safekeeping of property

Answer 7

Keep details of receipt and location of property

Question 8

Handling client money

Answer 8

FCA Handbook - ensures proper accounting and handling, and that client money kept separate
Any interest owed or payments made to client bank are client money.
Records maintained for 3 years

Question 9

Disclosure of charges

Answer 9

Firm must provide retail client with info on costs/charges in good time before provision of services.
Jan 2013 - FCA introduced adviser charging rules which ban providers offering commission.
Fees must not be based on product, instead on services

Question 10

IFOA rules on charges

Answer 10

In DPB handbook

Question 11

Equities costs

Answer 11

Bid offer spread (20-30 BP)
Stamp duty (0.5%)
Agency commission (0.3%)