Ethical conduct, client care and professional standards
Domain focus
Ethical conduct, client care and professional standards tests whether you put the client's interests first, manage conflicts and deal fairly with vulnerable customers.
Core rules
- The Code of Professional Conduct for Financial Advice Services requires ethical behaviour, integrity, client care, competence and transparency.
- Conflicts of interest must be identified, disclosed and managed; commissions and incentives must not drive unsuitable recommendations.
- Client care includes clear communication, privacy, cultural awareness and recognising vulnerability such as illness, bereavement, low literacy or financial distress.
- Fair treatment includes avoiding pressure selling and giving the client time to decide.
- Advisers must work within their competence and seek help when a case is outside it.
- Complaints must be handled fairly and promptly.
Worked example
An adviser recommends a loan with a higher commission even though a cheaper product meets the client's need. Reasoning: the recommendation is not client-first; the adviser must disclose the conflict, compare suitable options and be able to justify the recommendation. A pattern of commission-driven advice can breach the Code and the FMCA conduct obligations.
Traps
- Treating disclosure of a conflict as enough; the advice must still be suitable.
- Ignoring signs of vulnerability.
- Giving advice outside your competence.
- Letting sales targets override client needs.
- Failing to record why a recommendation was made.