LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
A regulator announces a market conduct examination of an agency. The agency must expect the examination to review:
- sales practices, supervision, disclosure and complaint handling across the business
- Bnothing beyond the licences held, since conduct is assessed only after a complaint
- Cthe agency's profitability and its commission arrangements with individual insurers
- Donly the files of clients who have already complained about the service they received
Correct answer: A) sales practices, supervision, disclosure and complaint handling across the business
Market conduct examinations look at how a business treats clients across its operations, sampling files and testing supervision, disclosure and complaint handling. They are proactive and do not depend on a complaint being made.
Why the other options are wrong
- BConduct supervision is proactive rather than complaint driven.
- CProfitability is not the focus of a conduct examination.
- DExaminations sample files broadly rather than only complaint files.
Exam tip
Market conduct examinations are proactive and test how clients are treated.
Common mistake
Assuming regulators act only when a client complains.
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.