LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
The provincial regulator's power to conduct 'market conduct examinations' means:
- AIt audits clients' financial affairs to confirm that the products they bought were within their means and suited to their goals
- It can inspect insurers', MGAs' and agents' records and practices for compliance, and take enforcement action
- CIt underwrites a sample of policies each year to check that insurers are applying their own standards
- DIt sets the prices insurers may charge after examining their sales practices and claims experience
Correct answer: B) It can inspect insurers', MGAs' and agents' records and practices for compliance, and take enforcement action
Regulators can examine an agent's books and files as part of market conduct oversight, so agents must maintain complete records — needs analyses, disclosures, applications — that withstand examination.
Why the other options are wrong
- AThe regulator examines licensees, not clients.
- CRegulators do not underwrite policies.
- DMarket conduct examinations do not set prices.
Exam tip
Regulators can examine agent files; keep them complete.
Common mistake
Keeping incomplete client files.
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.