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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) A sign-on bonus or volume-based reward that could induce a representative to favour a particular product regardless of client suitability.Correct
- b) A reasonable, disclosed fee charged for the advice actually rendered.
- c) Standard commission permitted and capped under the applicable insurance legislation.
- 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.
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