CMFAS RES5 Conduct of Business & Disclosure question: surplus cash in an unlisted Specified Investment Product

CMFAS RES5Conduct of Business & Disclosure

A private limited company approaches an adviser wishing to invest its surplus cash in an unlisted Specified Investment Product. Regarding the Customer Knowledge Assessment, the adviser should:

A still conduct a CKA on the company itself and deem it to lack knowledge if it declines to provide information
B not subject the company to the CKA, since the CKA and CAR apply only where the client is a natural person
C conduct a CKA on each of the company's directors before proceeding
D treat the company as automatically failing the CKA because it is not an individual

Show the answer and explanation

Answer: B. not subject the company to the CKA, since the CKA and CAR apply only where the client is a natural person

FAA-N16 states that, for the purpose of conducting the CKA (paras 15-26/27D) and the CAR (paras 27E-27U), any reference to a 'client' refers only to a natural person. A corporate client therefore falls outside the CKA/CAR assessment regime, though the adviser's other suitability and disclosure duties still apply.

Common mistake

The CKA/CAR gate is designed for individual investors; it neither applies to the company as an entity nor requires assessing its directors.

Practise more RES5 Conduct of Business & Disclosure questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Study note: Conduct of Business & Disclosure CMFAS RES5practice questions & mock exams

Related CMFAS RES5 questions

An adviser proposes that a client surrender an existing endowment policy — incurring a surrender penalty — to buy a new plan that offers the same level of benefit but at a higher total cost. Under FAA-N16 and the switching guidelines, the adviser should Nadia pays a S$30,000 single premium into an investment-linked policy. During the 14-day free-look period the underlying investment falls 10%. When she exercises her free-look right, she is refunded approximately For an investment-linked policy (ILP), what must the adviser disclose about the free-look period?

Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.

Start practising →

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.