LLQP Ethics key terms

A legal obligation to act solely in another party's best interest, placing the client's welfare above the adviser's own. It demands loyalty, good faith, full disclosure of conflicts, and avoidance of self-dealing.

A conduct requirement that an adviser recommend or act only in ways that put the client's interests first, considering the client's circumstances. It is broader than mere suitability and requires justification of the advice given.

The requirement that a recommendation or transaction fit the client's financial situation, objectives, risk tolerance, time horizon, and knowledge. Advice unsuitable for the particular client breaches the duty of care owed to them.

The ongoing process of collecting and updating facts about a client's finances, goals, risk tolerance, and experience so that advice can be tailored. Incomplete or stale information undermines every later suitability judgement.

The duty to understand a product's features, costs, risks, liquidity, and tax treatment before recommending it. Advisers cannot assess suitability for a client without first understanding what they are selling.

A situation where an adviser's personal, financial, or professional interest could improperly influence advice given to a client. Conflicts must be identified, avoided where possible, or disclosed and managed.

A conflict significant enough that a reasonable client would want to know about it before acting on advice. Material conflicts demand prominent disclosure and, in some cases, withdrawal from the engagement.

The duty to give clients complete, timely, and plain-language information about products, costs, conflicts, and the adviser's capacity. Disclosure must be understandable and given before the client commits, not buried afterwards.

A client's agreement to a recommendation or conflict after receiving and understanding all material facts. Consent obtained without adequate explanation, or under pressure, is not valid and does not cure the underlying conflict.

Facts that a reasonable client or investor would consider important when making a decision. Withholding or misstating such facts is misleading conduct, whether done deliberately or through carelessness.

A false or misleading statement, or a failure to state a material fact, that induces someone to act. It may be fraudulent, negligent, or entirely innocent, yet each form can trigger liability and discipline.

The principle that markets should operate fairly, transparently, and free from deception or manipulation. Advisers support it by refusing to trade on improper information and by reporting suspicious conduct.

Material, non-public information about an issuer that could affect its security's price. Trading on it, or tipping others who trade, is prohibited because it undermines fair access to markets.

Passing material non-public information to another person who may trade on it. The tipper can be liable even without personal profit, because the disclosure itself breaches a duty of confidence.

Conduct intended to distort a security's price or trading volume, such as wash trades or spreading false rumours. It harms investors and erodes confidence, so regulators treat it as serious misconduct.

The process of disguising the origins of criminally obtained funds so they appear legitimate. Advisers must know their clients, watch for unusual transactions, and report suspicions to the authorities.

Providing or collecting funds, from lawful or unlawful sources, to support terrorist activity. Reporting obligations mirror anti-money-laundering duties and apply even to small or seemingly charitable transfers.

A transaction with no apparent economic purpose or one inconsistent with the client's known profile. It must be escalated internally and, where required, reported to the financial intelligence unit without tipping off the client.

A legal or regulatory duty to notify a supervisor, compliance officer, or intelligence unit about specified events. Personal loyalty to a colleague or client never overrides a mandatory report.

Reporting wrongdoing inside or outside an organisation, often protected by law when done in good faith. Advisers should use internal channels first unless delay would cause harm or retaliation is likely.

The duty to keep client information private and use it only for legitimate purposes. It survives the end of the relationship and yields only to legal compulsion, client authorisation, or a clear public-interest exception.

A client's right to control how their personal information is collected, used, stored, and shared. Privacy laws impose consent, purpose-limitation, and security requirements that advisers must build into their practices.

Any data about an identifiable individual, including financial details, health information, and identifiers. It may only be gathered for stated purposes and must be protected with safeguards proportionate to its sensitivity.

The administrative, technical, and physical safeguards used to protect information from loss, theft, or unauthorised access. Weak security, such as unencrypted email or shared passwords, can breach both privacy law and professional duty.

Consistently acting honestly and ethically even when no rule directly governs the situation and no one is watching. It underpins public trust and requires resisting incentives that reward shortcuts or concealment.

The formal set of standards a licensee must follow, covering competence, honesty, confidentiality, and handling of conflicts. Breaching it can lead to discipline regardless of whether any client suffered loss.

Adhering to statutes, regulations, and regulator guidance that govern licensed activity. Compliance is a minimum floor, not a substitute for ethical judgement when rules are silent or ambiguous.

An industry body recognised by government to set and enforce rules for its members, such as a securities or insurance council. Its rules bind licensees alongside statutory requirements and may be stricter.

The regulator's formal authorisation to conduct regulated activity within a defined scope. Acting outside that scope, or after a licence lapses, is an offence even if the work is done competently.

Mandatory ongoing training that keeps a licensee's knowledge current and demonstrates competence. Failing to complete required hours can suspend a licence, reflecting that competence is a continuing duty.

Possessing the knowledge, skill, and judgement needed to perform a task to professional standards. An adviser must decline work beyond their competence and refer the client rather than improvise.

A structured process of identifying stakeholders, relevant duties, and options, then choosing and justifying the most defensible course. Documenting the reasoning helps demonstrate good faith if the choice is later questioned.

A situation where two legitimate duties pull in opposite directions, so any choice sacrifices something of value. Resolution requires weighing the duties, considering foreseeable harm, and seeking guidance before acting.

A shift in a client's circumstances, such as job loss, divorce, or inheritance, that could alter suitable advice. Advisers must refresh client information periodically and whenever such a change is disclosed.

The documented review an adviser performs before offering a product, covering issuer strength, fees, and risk. It provides evidence that a recommendation was researched rather than driven by commission.

Explicit permission from a client to share information or act on their behalf, ideally written and limited in scope. It must be obtained without pressure and may be withdrawn at any time.

The obligation to protect the integrity of the financial system and treat all participants fairly, beyond duties owed to any single client. It justifies reporting misconduct even at commercial cost.