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Conflicts of Interest Code of Conduct
An insurer's subsidiary, a marketing company, offers a representative a weekend away worth R8 000. The representative argues that the conflict-of-interest rules do not apply, because the offer does not come from a product supplier. Which statement is correct?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) The rules do not apply, provided the subsidiary pays for the weekend from its own funds.
- b) The rules apply only if the weekend is linked to a stated sales target.
- c) The rules do not apply, because only product suppliers and other providers are third parties.
- d) The rules apply, because a 'third party' includes an associate of a product supplier.Correct
Why this is the answer
The financial interest rules apply to interests offered by a 'third party', which includes a product supplier, another provider, an associate of a product supplier or provider, a distribution channel, and anyone acting under an arrangement with them. Routing a benefit through a subsidiary does not avoid the rules, and R8 000 far exceeds the immaterial limit.
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