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Client Onboarding Best Practices FAIS Act
Why does the General Code require a representative to perform a financial needs analysis before recommending a product?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) To gather enough information to ensure the advice is suitable for the client’s needs, objectives and circumstances.Correct
- b) To work out the maximum commission the representative can earn on the sale.
- c) To satisfy the FIC Act’s identity-verification (CDD) requirement.
- d) To rank clients according to who is the wealthiest.
Why this is the answer
The needs analysis under section 8 of the Code exists so that any recommendation can be shown to be suitable for this particular client. It is not about commission, it is separate from FIC identity verification, and it is not a wealth-ranking exercise.
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