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In a brochure, an FSP compares its recommended fund with a competitor's fund. Which statement reflects the General Code?

RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.

  1. a) The comparison is allowed without restriction, because clients benefit from comparative information.
  2. b) The comparison is allowed if the differences are clear and it is correct and not defamatory.Correct
  3. c) The comparison is allowed only with the written consent of the competitor whose fund is mentioned.
  4. d) The comparison is prohibited, because a provider may not refer to the products of a competitor.

Why this is the answer

A provider may compare financial services or products with those of others, but the differing characteristics must be made clear, and the comparison must be factually correct and may not be defamatory or misleading. Comparisons are neither banned nor unrestricted, and no consent from the competitor is required.

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