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Conflicts of Interest Code of Conduct
An FSP could place a client's business with either of two suitable insurers. It owns part of one of them. It decides simply to disclose the ownership to the client and place all business there. Does this satisfy the General Code?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) Yes. Ownership of a product supplier is not a conflict of interest if the product is suitable.
- b) Yes. Disclosure in writing is all the Code requires where a conflict of interest exists.
- c) No. A provider must first avoid a conflict and, only if that is not possible, mitigate it.Correct
- d) No. A provider may never place business with a supplier in which it has an ownership interest.
Why this is the answer
The Code sets an order: avoid the conflict; where avoidance is not possible, mitigate it; and disclose it to the client. Disclosure is not a substitute for avoiding a conflict that could reasonably be avoided. Ownership of a supplier is a classic conflict, but the Code does not ban such business outright.
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