LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
A client asks whether the insurance council can order an agent to repay the money she lost. The agent should explain that a council:
- Ahas no powers of any kind and can only pass complaints to the insurer for handling
- acts on the licence and may impose penalties, while compensation is pursued separately
- Cwill award compensation provided the client files the complaint within thirty days
- Droutinely orders compensation to clients as part of every disciplinary decision it issues
Correct answer: B) acts on the licence and may impose penalties, while compensation is pursued separately
Disciplinary bodies suspend, revoke or condition licences and impose administrative penalties payable to the regulator. A client seeking money pursues a civil claim or a claim under the agent's professional liability coverage.
Why the other options are wrong
- ACouncils have real powers over licences and can impose penalties.
- CNo thirty-day deadline creates a right to compensation.
- DCompensation orders are not a routine part of disciplinary decisions.
Exam tip
Discipline addresses the licence; compensation comes from a civil claim.
Common mistake
Promising a client that a regulatory complaint will recover their money.
What this tests
CISRO competency component 2.1 — Integrate into practice the rules governing the activities of life insurance agents — which is weighted at 40% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 2
- A prospective client wants to confirm that an agent is properly licensed before meeting him. She should:
- A dual-licensed agent's mutual fund business is reviewed following a client complaint. The review will be conducted by:
- Assuris coverage applies to:
- OLHI's services are available to:
- Complaints about an agent's conduct (as opposed to an insurer's claim decision) should be directed to:
- The best summary of an agent's ethical obligations is to:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.