An agent recommends a home stylist to a vendor, calling the stylist 'completely independent'. The stylist pays the agent 10% of every fee she earns from referred clients. What does Schedule 1 require?
Correct Answer
A) She must not claim independence and must disclose the payment's nature and value.
Rule 12 of Schedule 1 says an agent who refers a person to a service provider must not falsely represent that the provider is independent. A provider is not independent if the agent receives a rebate, commission or benefit, and the agent must then disclose the nature of the relationship and the nature and value of the benefits.
Why This Is the Correct Answer
Because she is paid for referrals the stylist is not independent, so rule 12 requires disclosure of the benefit.
Why the Other Options Are Wrong
Background Knowledge for Ethics Compliance
Exam Tip for Ethics Compliance
Common Mistakes to Avoid on Ethics Compliance Questions
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