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Vusi is a representative who, under his FSP's agreement with one insurer, may recommend only that insurer's products. After analysing a client's needs he finds that none of them is appropriate. What should he do?

RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.

  1. a) Recommend the closest product and have the client sign that he was told about the restriction.
  2. b) Tell the client that he is restricted to one supplier and that none of its products suits the client's needs.Correct
  3. c) Recommend the product that comes closest to the needs of the client, since he may recommend nothing else.
  4. d) Recommend a suitable product from another insurer and place the business through his own FSP.

Why this is the answer

A provider must identify a product that is appropriate to the client's needs, subject to the limitations imposed by its licence or contractual arrangements, and must disclose any restrictions a supplier places on what it may offer. A restriction limits what he may sell; it does not permit recommending an unsuitable product. He also may not sell products for which he holds no mandate.

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