Ethics, Selling Practices and Customer Protection
What this domain tests
This domain tests judgement: how an intermediary should behave when commercial pressure, client vulnerability and regulatory rules collide. Questions often ask what to do first, what to disclose and what must never be done.
Ethical duties
Integrity, fair dealing, competence, confidentiality and putting the client's interest first are the core. Treat Customers Fairly means products are designed and sold with fair outcomes, not just disclosure. Conflicts of interest must be identified and managed; commission is a conflict that must not drive the recommendation. Vulnerable customers - elderly, bereaved, mentally impaired or financially distressed - need extra care, simpler explanations and consideration of a trusted person.
Selling practices
Suitability rests on a documented FNA, not on a signature. Explain the product in plain language, including downside scenarios. Replacement business requires a comparison and disclosure of disadvantages such as new surrender charges and fresh suicide or indisputability periods. Rebating, misrepresentation, blank forms and pressure selling are prohibited. Data must be collected and used under PDPO; AML/CFT checks apply to premiums and payouts.
Worked example
An agent closes a sale by offering to pay the client HKD 2,000 from her commission. The client accepts. This is rebating, an inducement not provided for in the policy. It is prohibited even if the client benefits, because it distorts competition and may indicate unsuitable advice. The agent should instead disclose remuneration in line with the insurer's policy and recommend the product on documented needs.
Traps
- Accepting 'I don't need the FNA, just sell me the product.'
- Letting a client sign a blank proposal or risk profile.
- Describing only upside scenarios for an ILAS.
- Treating a cooling-off right as waivable by a verbal statement.
- Assuming verbal disclosure is enough; it must be documented.
- Using an elderly client's signature as proof of suitability.
- Sharing client data with a third party without consent.