All RE5 questions
Conflicts of Interest Code of Conduct
Which of the following would most likely be an impermissible conflicted incentive under the conflict-of-interest provisions?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) Standard commission permitted and capped under the applicable insurance legislation.
- b) A sign-on bonus or volume-based reward that could induce a representative to favour a particular product regardless of client suitability.Correct
- c) A reasonable, disclosed fee charged for the advice actually rendered.
- d) A training course on product features offered to all advisers in the industry.
Why this is the answer
Incentives that could sway a representative to recommend a product irrespective of the client's needs (such as certain sign-on bonuses or volume-driven rewards) are the kind of conflicted reward the rules restrict. Properly disclosed fees, lawfully capped commission, and generic training are not, by themselves, impermissible.
Want to test yourself on 700+ more questions like this?
Start your free RE5 simulator today — timed mock exams, full answer explanations and cloud-synced progress tracking.
More Conflicts of Interest questions
- Under the General Code, how must an FSP deal with a conflict of interest between itself…
- What is the purpose of requiring an FSP to keep a conflict-of-interest management policy?
- An FSP runs a competition where representatives who sell the most of a single insurer's…
- Which action by an FSP would breach the requirement to avoid or manage conflicts of int…