LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
A regulator's 'consumer alert' or public warning about an individual or firm is:
- ADefamation of the person named, who may sue the regulator for damage to their reputation and business
- BIrrelevant to a licensed agent, since alerts concern only unlicensed operators outside the regulated industry
- CIllegal, since the regulator may not name an individual before misconduct has been proven at a hearing
- A protective tool used when the public may be harmed, which agents should heed about entities they deal with
Correct answer: D) A protective tool used when the public may be harmed, which agents should heed about entities they deal with
Public warnings are within regulators' statutory powers to protect consumers; agents should check such alerts before dealing with unfamiliar firms and never refer clients to a warned entity.
Why the other options are wrong
- AAn alert is a lawful exercise of regulatory power.
- BAlerts are relevant to agents' due diligence.
- CConsumer alerts are lawful.
Exam tip
Heed regulator alerts about entities you deal with.
Common mistake
Referring clients to a firm under a regulator warning.
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.