CMFAS RES 1A Ethics, Codes & Standards of Professional Conduct question: expensive overseas trip contingent

CMFAS RES 1AEthics, Codes & Standards of Professional Conduct

A product provider offers a representative an expensive overseas trip contingent on the representative steering a set volume of clients into the provider's products. This is best characterised as:

A A legitimate marketing token, acceptable once declared to compliance
B A confidentiality breach, as client volumes are shared with the provider
C An acceptable sales incentive, since no client pays for the overseas trip directly
D An improper inducement that could bias recommendations away from suitability

Show the answer and explanation

Answer: D. An improper inducement that could bias recommendations away from suitability

A benefit tied to directing client business is an improper inducement: it creates a conflict likely to bias recommendations away from the client's best interest and suitability, and must be controlled or refused, not merely disclosed.

Common mistake

A benefit conditional on steering client volume is not a harmless 'token' (A) — the volume linkage is precisely what makes it an improper inducement.

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CMFAS RES 1A Ethics, Codes & Standards of Professional Conduct question: expensive overseas trip contingent

Answer: D. An improper inducement that could bias recommendations away from suitability

Common mistake

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CMFAS RES 1A Ethics, Codes & Standards of Professional Conduct question: expensive overseas trip contingent

Answer: D. An improper inducement that could bias recommendations away from suitability

Common mistake

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