Unit 4 Topic 9

Question 1

The FCA’s Fair Treatment of Customers initiative focuses on seven of the Principles for Businesses. Which of the following is not included? (9.6.1)

A. A firm must conduct its business with due skill, care and diligence

B. A firm must pay due regard to the interests of its customers and treat them fairly

C. A firm must pay due regard to the information needs of its clients

D. A firm must maintain adequate financial resources

Answer 1

D. A firm must maintain adequate financial resources

The FCA Principle that is missing in this question is that ‘a firm must take reasonable care to organise and control its affairs, with adequate risk management’

Question 2

The primary requirement of the advice process is that: (9.1)

A. The product recommended should be the best fit to the customer’s needs from the range available

B. The amount of time the adviser invests in the customer should be reflected in the commission earned

C. The customer should be sold the product they ask for

D. The recommendation should be suitable for the customer’s needs

Answer 2

D. The recommendation should be suitable for the customer’s needs

The primary requirement of the advice process is that any recommendation should be suitable for the customer’s needs. This is also essential for developing and maintaining the customer relationship and the adviser’s reputation.

Question 3

Which of the following is not one of the four stages of the advice process? (Fig.9.1)

A. Initial disclosure
B. Researching solutions
C. Presenting the recommendation
D. Implementing the recommendation

Answer 3

A. Initial disclosure

Initial disclosure will be the first stage of the sales process. The first step in the advice process will for the adviser to compile the fact find.

Question 4

The new Consumer Duty applies to products and services offered to: (9.6.3)

A. Institutional investors
B. Eligible counterparties
C. Professional clients
D. Retail clients

Answer 4

D. Retail clients

The Duty applies to products and services offered to ‘retail customers’. It does not apply to institutional investors, professional clients or eligible counterparties