Professional Ethics and Conduct
The Professional Ethics and Conduct domain tests judgement, not recall. Scenarios put you under commercial pressure - a sales target, a generous gift, a client who wants to skip a step, a colleague behaving badly - and ask what a competent, honest professional does. The answer is usually the one that puts the client's interest first, discloses the conflict and creates a record.
Core duties
- Integrity and honesty: never mislead a client about a product, a charge or a performance figure; correct errors promptly.
- Client first: where the firm's interest and the client's conflict, the client's interest prevails under a fiduciary or best-interest standard; under a suitability standard, the recommendation must still be suitable.
- Competence: advise only within your knowledge; escalate or refer when a product or tax issue is outside your expertise.
- Confidentiality: client information is shared only with consent or where law requires, and the duty survives the end of the relationship.
- Fair dealing and market integrity: no preferential treatment through inside information, no front-running, no cherry-picking allocations; report suspicious orders or transactions.
Conflicts and pressure
Identify the conflict, disclose it in a form the client can understand, manage it (decline the benefit, remove the incentive, require independent review) and record the decision. If disclosure would not be enough to protect the client, decline. A sales target does not change the suitability obligation; a signed waiver does not cure a mis-sale.
Worked example
You learn that a colleague is buying shares for the firm's own book minutes before executing a large client buy order. This is front-running - market abuse and a breach of the duty owed to the client. Do not join it. Report through the compliance escalation route immediately, preserve the order records and tell no one outside the escalation. If the process is unclear, escalate above your manager rather than staying silent.
Traps
"Everyone does it" as a justification. Treating legality as the whole of ethics. Assuming disclosure always cures a conflict. Breaking confidentiality because a colleague asked. Believing a client's instruction removes your duty to warn. Failing to record the escalation.