All RE5 questions
Financial Products Apply knowledge of the financial products and services environment
A discretionary FSP makes investment decisions for clients. Which extra obligation distinguishes it from an advice-only FSP?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) It must hold the appropriate Category II authorisation and meet the additional requirements for managing client assets on a discretionary basis.Correct
- b) It needs no authorisation at all.
- c) It may ignore client mandates entirely.
- d) It is exempt from financial-soundness requirements.
Why this is the answer
Exercising discretion over client investments requires a Category II licence and additional prudential and operational requirements, because the FSP controls client assets. It is not exempt from authorisation, mandates or soundness rules.
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