Market Conduct, Client Assets and Business Standards
Conduct expectations
Regulated firms must act with integrity, due skill, care and diligence, deal with clients openly and co-operatively, and organise themselves with adequate systems and controls. Know your customer and suitability obligations require firms to understand the client's circumstances, objectives and risk appetite before recommending a product. Communications must be fair, clear and not misleading; charges must be disclosed before the client commits.
Client money and assets
Where a firm holds client money or assets, segregation is fundamental: client assets must be held separately from the firm's own assets, in appropriately titled accounts, reconciled regularly, and protected on insolvency. Custody rules require safekeeping, accurate records, and controls over transfers and withdrawals. Firms must not use client assets for their own account or finance their own positions.
Conflicts, complaints and confidentiality
Conflicts of interest must be identified, managed and disclosed. Inducements that impair independence are restricted. Complaints must be handled promptly with a documented process and escalation route. Client information is confidential and may be disclosed only with consent or where law requires - for example, to the FIU.
Traps and worked example
Examiners often test whether a breach is one of suitability (wrong product for the client) or disclosure (right product, hidden cost). Another trap is assuming segregation alone protects clients; reconciliation failures defeat segregation.
Worked example: An adviser recommends a high-risk fund to a retiree seeking capital preservation. Even if all fees were disclosed, the recommendation is unsuitable. Suitability and disclosure are cumulative requirements, not alternatives.
Rule of thumb
Suitable, disclosed, segregated, reconciled, documented. If you cannot evidence it in writing, you cannot demonstrate compliance.