Standards of conduct
- 1. Know-your-client (KYC) & Suitability
- Calculators and Scratch Paper
- The Relationship the Rules Describe
- Clients Who Live Somewhere Else
- What KYC Has to Cover
- Tolerance, Capacity and Need
- Business Structures and Why They Change the Answer
- Writing It Down, and Having the Client Confirm It
- The Trusted Contact Person, and the Temporary Hold
- Who Owns KYC, and How Current It Has to Be
- What the Client File Holds
- Account Appropriateness
- The Account Types You Have to Compare
- What the Account-opening File Needs
- The Relationship Disclosure Document
- Keeping Confidential Information Contained
- The Welcome Package
- Product Due Diligence and Knowing the Product
- The Suitability Determination
- Unsolicited and Unsuitable Instructions
- Investment Actions
- Why Appropriateness and Suitability Are Separate Tests
- Monitoring, Triggering Events and Change
- Conflicts of Interest
- Outside Activities
- Personal Financial Dealings with Clients
- Standards of Conduct
- A Client, Worked End to End
- Twelve Ways to Lose Marks on This Element
- Fifteen Terms to Own
- One Item From CIRO's Practice Exam
Know-Your-Client (KYC) & suitability
Standards of conduct
The conduct standards sit underneath everything else in this element. They require honesty and fair dealing, they put the client's interest first, and they forbid misleading communication, including misleading a client about risk, cost or the nature of a product.
Three practical applications the exam likes.
Titles and designations. Use the ones you hold, spelled as the granting body spells them. An inflated title misleads a client about expertise, which is a conduct issue, not a branding choice.
Communication and records. Supervised, on approved channels, and kept. A recommendation made in a text message that the firm cannot retain is a compliance problem even when the advice was good.
Consequences. Failing to meet these duties exposes the representative and the firm to regulatory sanction, and the client to loss. The exam tests the standard, not the penalty schedule, but it does expect you to know that the standard is enforceable.