CMFAS RES5 Conflicts, Fair Dealing & Ethical Marketing question: fair-dealing outcomes in MAS's Guidelines on Fair Dealing

CMFAS RES5Conflicts, Fair Dealing & Ethical Marketing

Which of the following is NOT one of the five fair-dealing outcomes in MAS's Guidelines on Fair Dealing?

A Clients have confidence they deal with institutions where fair dealing is central to the corporate culture
B Institutions offer products and services that are suitable for their target clients
C Clients receive clear, relevant and timely information to make informed decisions
D Institutions guarantee that every recommended product will achieve a positive return

Show the answer and explanation

Answer: D. Institutions guarantee that every recommended product will achieve a positive return

The Guidelines on Fair Dealing [FSG-G04, formerly FAA-G11], last revised 30 May 2024, set five outcomes: fair dealing central to corporate culture; products and services suitable for target customer segments; customers served by competent representatives; clear, relevant and timely information; and independent, effective and prompt complaints handling. Guaranteeing a positive return on every product is not an outcome, and promising one would itself be a misrepresentation.

Common mistake

The corporate-culture, suitable-products and clear-information statements are genuine outcomes; the false one is the guaranteed-return statement.

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On Holley's continuum of disclosure strategies, the Maximal Information Rule is best described as The suitability standard is described as 'rules-based'. Under it, a representative must satisfy applicable rules such as Section 36 of the Financial Advisers Act, which requires that the representative Paragraph 16 of MAS Notice FAA-N03 requires a financial adviser to disclose in writing all remuneration (commission, fee and other benefits) directly related to a recommendation or to executing a purchase or sale. According to that paragraph, which remuneration is it NOT required to disclose?

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Original study material mapped to the public CMFAS RES5 syllabus. Unofficial, not endorsed by MAS or SCI. Verify figures and rules against current guidance before relying on them.