Consumer Protection, Ethics and Professional Conduct
Consumer Protection, Ethics and Professional Conduct tests the fair-treatment standards, ethical duties and market-conduct rules that apply when advising, selling and servicing policies.
Fair treatment outcomes
- Customers should receive clear information before, during and after sale: product features, costs, exclusions, risks and consequences of non-payment.
- Advice must be suitable for the customer's needs, objectives and circumstances, with a documented rationale.
- Conflicts of interest must be identified, disclosed and managed; commission and remuneration should be transparent.
- Complaints must be handled promptly, fairly and with a clear escalation route to an ombudsman or regulator.
- Cooling-off rights, cancellation and refund rules must be explained.
- Vulnerable customers - age, illness, bereavement, low financial capability - need extra care, clearer communication and appropriate safeguards.
- Data must be collected and used lawfully, kept secure and shared only with consent or lawful authority.
Ethical standards
- Integrity and honesty: no misrepresentation of benefits, no fabricated documents, no pressure tactics.
- Competence: work within your licence and knowledge; refer complex cases to a specialist.
- Confidentiality and objectivity: put the client's interest ahead of commission; no churning or unnecessary replacement of existing policies.
- Accountability: keep records of advice, disclose mistakes and cooperate with the regulator.
Worked example
An adviser replaces an existing endowment policy with a new one to earn a second commission, without comparing surrender penalties, lost bonuses and new exclusions. This is churning and mis-selling: the replacement is not demonstrably suitable, the costs were not disclosed and the advice record is missing. Remedies include cancellation, compensation, commission clawback and disciplinary action.
Traps
Giving investment advice beyond your authorisation. Promising guaranteed returns on a unit-linked product. Sharing client data without consent. Treating a signed proposal form as proof that advice was suitable.