Business Operations and Customer Relationships
The Client Lifecycle
Candidates should be able to walk through the full client lifecycle: onboarding and know-your-customer, suitability and appropriateness assessment, product disclosure, execution and best execution, ongoing servicing, complaints handling, and offboarding or exit. Key concepts include treating customers fairly, vulnerable customers, conflicts of interest in distribution, inducements and commissions, and the distinction between advised and non-advised sales.
Traps
Questions often test whether a firm may rely on information supplied by the client. The general answer: the firm may rely on it but must have reasonable grounds to do so and must have procedures to test it. Another trap is confusing suitability (advised sales, assessing whether the product meets the client's objectives) with appropriateness (non-advised sales, assessing whether the client understands the risk). Complaints handling traps centre on timelines and on whether a complaint must be recorded even if resolved informally the same day.
Rule of thumb
Match the standard to the service: advised means suitability, non-advised means appropriateness, and execution-only means no assessment but clear warnings. If the question describes a recommendation, use the suitability standard.
Worked example
A client instructs a firm to buy a complex product with no advice. The firm must assess appropriateness, warn if the client lacks knowledge, and document the warning. It does not need a full suitability report, but it cannot simply execute without the appropriateness check.