All RE5 questions
Ethics Misconduct Consumer Protection
A Representative convinces a client to cancel an existing investment policy and take out a new one, primarily so the Representative can earn a new commission, even though the switch is not in the client's best interest. This unethical practice is known as:
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) Churning.Correct
- b) Financial planning.
- c) Due diligence.
- d) Tipping off.
Why this is the answer
Churning is the unethical and illegal practice of encouraging a client to make unnecessary policy replacements (or transactions) for the main purpose of generating new commissions for the representative.
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