CMFAS RES5 MAS Guidelines question: Knowledge Assessment (CKA)

CMFAS RES5MAS Guidelines

Under Notice FAA-N16, what distinguishes the Customer Knowledge Assessment (CKA) from the Customer Account Review (CAR)?

A The CKA is conducted only for accredited investors while the CAR is for retail clients
B The CKA and CAR are identical procedures used interchangeably at the adviser's discretion
C The CKA assesses affordability while the CAR assesses the client's credit standing
D A CKA is done before recommending an unlisted SIP; a CAR before recommending a listed SIP

Show the answer and explanation

Answer: D. A CKA is done before recommending an unlisted SIP; a CAR before recommending a listed SIP

FAA-N16 requires a CKA before recommending an unlisted SIP (assessing knowledge/experience in that product) and a CAR before recommending a listed SIP (assessing knowledge/experience in derivatives). Both draw on the client's educational qualifications, investment experience and work experience, but they apply to unlisted versus listed SIPs respectively.

Common mistake

Both assessments gauge product knowledge/experience — the split is unlisted SIP (CKA) versus listed SIP (CAR), not investor class or affordability.

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