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An FSP holds share certificates in safe custody for a client. The client's estranged husband arrives and asks for them, saying his wife has agreed. What must the FSP do?

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

  1. a) Hand them over, because spouses are entitled to deal with each other's assets.
  2. b) Refuse, and sell the shares so that the proceeds can be held until the dispute ends.
  3. c) Hand them over, provided he signs a receipt and produces his identity document.
  4. d) Refuse to hand them over without the client's written instruction or authority.Correct

Why this is the answer

A provider that holds client assets must take reasonable steps to safeguard them and may not part with them except on the client's written instruction or authority. A third party's say-so, even a spouse's, is not enough, and a receipt does not replace authority. Selling the shares would itself be dealing without authority.

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