LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
An agent in financial difficulty asks a long-standing client for a personal loan. This is:
- a serious conflict of interest that regulators treat as misconduct
- Bacceptable if the agent discloses the loan to the insurer and the managing agency
- Cacceptable between friends provided the loan is documented and interest is charged
- Dacceptable where the client is wealthy and the amount is modest in proportion
Correct answer: A) a serious conflict of interest that regulators treat as misconduct
Borrowing from a client exploits the trust the relationship creates and compromises the agent's independence. Lending to a client raises the same concern, and both are commonly the subject of discipline.
Why the other options are wrong
- BDisclosure does not make a prohibited borrowing acceptable.
- CDocumentation does not remove the conflict created by the relationship.
- DThe client's means and the amount do not change the nature of the conflict.
Exam tip
Borrowing from or lending to a client is misconduct, not a private arrangement.
Common mistake
Treating a loan from a friendly client as a personal matter.
What this tests
CISRO competency component 2.2 — 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.