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The Rules of Conduct are specific standards that
shall apply to all classifications of membership, unless otherwise stated.
Every member shall adhere to the rules set out in this Article in their
professional activities and conduct, and the FPSB India may enforce the
observation of the following rules;
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A Member shall not solicit clients through false
or misleading communications or advertisements:
(a) Misleading Advertising: A Member shall not
make a false or misleading communication about the size, scope or areas of
competence of the Member’s practice or of any organization with which the
Member is associated; and
(b) Promotional Activities: In promotional
activities, a Member shall not make materially false or misleading
communications to the public or create unjustified expectations regarding
matters relating to Financial Planning or the professional activities and
competence of the Member. The term “promotional activities” includes, but is
not limited to, speeches, interviews, books, printed or electronic
publications, seminars, radio and television shows, and video cassettes; and
(c) Representation of Authority: A Member shall
not give the impression that a Member is representing the views of the FPSB
India or any other group unless the Member has been authorized to do
so.Personal opinions shall be clearly identified as such.
In the course of professional and business
activities, a Member shall not engage in conduct involving dishonesty, fraud,
deceit or misrepresentation, or knowingly make a false or misleading statement
to a client, employer, employee, professional colleague, governmental or other
regulatory body or official, or any other person or entity.
A Member has the following responsibilities
regarding funds and/or other property of clients:
(a) In exercising custody of or discretionary
authority over client funds or other property, a Member shall act only in
accordance with the authority set forth in the governing legal instrument
(e.g., special power of attorney, trust, letters testamentary, etc.); and
(b) A Member shall identify and keep complete
records of all funds or other property of a client in the custody of or under
the discretionary authority of the Member; and
(c) Upon receiving funds or other property of a
client, a Member shall promptly or as otherwise permitted by law or provided by
agreement with the client, deliver to the client or third party any funds or
other property which the client or third party is entitled to receive and, upon
request by the client, render a full accounting regarding such funds or other
property; and
(d) A Member shall not commingle client funds or
other property with a Member’s personal funds and/ or other property or the
funds and/or other property of a Member’s firm. Commingling one or more
client’s funds or other property together is permitted, subject to compliance
with applicable legal requirements and provided accurate records are maintained
for each client’s funds or other property; and
(e) A Member, who takes custody of all or any part
of a client’s assets for investment purposes, shall do so with the care
required of a fiduciary.
A Member shall not make any statements, orally or
in writing, that misrepresent the services they or their Company is capable of
providing, and the data or facts that are used to support any recommendation.
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A Member shall exercise reasonable and prudent
professional judgment in providing professional services.
A Financial Planning practitioner shall act in the
interest of the client.
At the earliest point in the relationship, a
Member shall disclose in writing to the client if the Member is only authorized
to sell or advise on a restricted range of products, and any other limitation
of their capacity to serve the client.
In the provision of any written recommendation
contained in a Financial Plan, a Financial Planning practitioner shall make
timely written disclosure of all material information relative to the
professional relationship. In all circumstances such disclosure shall include
conflict(s) of interest(s) and sources of compensation. Disclosures that
include the following information are considered to be in compliance with this
Rule:
(a) A statement of compensation, which in
reasonable detail discloses the source(s) and any contingencies or other
aspects material to the fee and/or commission arrangement. Any pecuniary or
non-pecuniary benefit whether direct or indirect, received or receivable by the
Member, the Member’s firm, or an associate in connection with the Financial
Planning service should be fully disclosed. The statement should include, any
benefit reasonable capable of influencing the making of recommendations; any
benefit that a third party may receive in connection with the recommendation;
and any other costs borne by the client should they accept all or part of the
recommendation. The disclosures of the particulars may be made either in
percentage terms or in monetary terms and any estimates made shall be clearly
identified as such and shall be based on reasonable assumptions. Referral fees,
if any, shall be fully disclosed; and
(b) A statement indicating whether the Member’s
compensation arrangements involve fee-only, commission-only, or fee and
commission. A Member shall not hold out as a fee-only Financial Planning
practitioner if the Member receives commissions or other forms of economic
benefit from related parties; and
(c) A statement describing the nature and extent
of any significant financial relationships or connections a Member has with
product suppliers and the fees or commissions resulting from such
relationships; and (d) A statement identifying any other conflict(s) of
interest(s).
If Financial Planning services are provided
orally, a Member must disclose orally to the client the particulars described
in Rule 204.
Should conflict(s) of interest(s) develop after a
professional relationship has been commenced a Member shall promptly disclose
in writing the conflict(s) of interest(s) to the client. The Member must be
able to demonstrate that the client was made aware of any actual or potential
conflict of interest.
In addition to the disclosure by Financial
Planning practitioners regarding sources of compensation required under Rule
204, such disclosure shall be made annually thereafter for ongoing clients. The
annual disclosure requirement may be satisfied by offering to provide clients
with the disclosure called for by Rule 204.
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A Member shall keep informed of developments in
the field of Financial Planning and participate in continuing education
throughout the Member’s professional career in order to improve professional
competence in all areas in which the Member is engaged. As a distinct part of
this requirement, a Member shall satisfy all continuing professional
development requirements established for Members by the FPSB India from time to
time.
A Member shall offer advice only in those areas in
which the Member has competence. In areas where the Member is not
professionally competent, the Member shall seek the counsel of qualified
individuals and/or refer clients to such parties.
A Member shall have reasonable and appropriate
standards for the appointment of Representatives.
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In rendering professional services, a Member shall
ensure that prospective clients are clearly informed in writing about:
(a) The identity of the Company responsible for
the advice and, if the advice is provided through a Representative, the
identity of the Representative;
(b) The nature of services offered;
(c) Material information relevant to the
professional relationship, including but not limited to changes in the Member’s
business affiliation, address, telephone numbers, credentials, qualifications,
certificates, compensation structure, etc.;
(d) The information required by all laws
applicable to the relationship in a manner complying with such laws;
(e) Access to internal and external complaint
handling mechanisms.
A Member’s compensation shall be fair and
reasonable.
Prior to establishing a client relationship, and
consistent with the confidentiality requirements of Rule
501, a Member may provide references which may
include recommendations from present and/or former clients.
A Member shall clearly disclose to all prospective
clients the capacity in which they are able to provide Financial Planning
services.
Whether a Member is employed by a Financial
Planning firm, an investment institution, or serves as an agent for such an
organization, or is self-employed, all Members shall adhere to the same
standards of disclosure and service.
A Member shall:
(a) Advise the Member’s employer of outside
affiliations which reasonably may compromise service to an employer; and
(b) Provide timely notice to the employer and
clients, unless precluded by contractual obligation, in the event of change of
employment or FPSB India licensing status.
A Member doing business as a partner or principal
of a financial services firm owes to the Member’s partners or co-owners a
responsibility to act in good faith. This includes, but is not limited to,
disclosure of relevant and material financial information while in business
together.
A Member shall join a Financial Planning firm as a
partner or principal only on the basis of mutual disclosure of relevant and
material information regarding credentials, competence, experience, licensing
and/or legal status, and financial stability of the parties involved.
A Member who is a partner or co-owner of a
financial services firm who elects to withdraw from the firm shall do so in
compliance with any applicable agreement, and shall deal with his or her
business interest in a fair and equitable manner.
A Member shall inform his or her employer,
partners or co-owners of compensation or other benefit arrangements in
connection with his or her services to clients, which are in addition to
compensation from the employer, partners or co-owners for such services.
If a Member enters into a business transaction
with a client, the transaction shall be on terms that are fair and reasonable
to the client.
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A Member shall not reveal - or use for his or her
own benefit - without the client’s consent, any personally identifiable
information relating to the client relationship or the affairs of the client,
except and to the extent disclosure or use is reasonably necessary:
(a) To establish an advisory or brokerage account,
to effect a transaction for the client, or as otherwise impliedly authorized in
order to carry out the client engagement; or
(b) To comply with legal requirements or legal
process; or
(c) To defend the Member against charges of
wrongdoing; or
(d) In connection with a civil dispute between the
Member and the client.
For purposes of this rule, the proscribed use of
client information is improper whether or not it actually causes harm to the
client.
A Member shall maintain the same standards of
confidentiality to employers as to clients.
A Member doing business as a partner or principal
of a financial services firm owes to the Member’s partners or co-owners a
responsibility to act in good faith. This includes, but is not limited to,
adherence to reasonable expectations of confidentiality both while in business
together and thereafter.
Unless compelled to by law, or as required to
fulfill a legal obligation, any Member who by reason of their membership in the
FPSB India is exposed to, learns of or has access to information and knowledge
concerning the FPSB India and/or Members must keep confidential all such
information and knowledge and is not entitled to communicate or divulge that
information or knowledge or any part thereof.
A Member must, when requested to do so by a
client, give to the client or another person authorized by the client, any
original document (not photocopies) related to the provision of Financial
Planning advice for which the client has paid or will pay for. This does not
include documents which have been prepared or received by the Member in
undertaking the advisory task, such as internal notes, memoranda, quotes or
other working documents.
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A Member shall show respect for other Financial
Planning professionals, and related occupational groups, by engaging in fair
and honorable competitive practices.
A Member shall not engage in any conduct that
reflects adversely on his or her integrity or fitness as a Member, upon the
marks, or upon the profession.
A Member shall not practice any other profession
or offer to provide such services unless the Member is qualified to practice in
those fields and is certificated as required by law.
A Member shall effect and maintain professional
indemnity insurance in accordance with the requirements prescribed by the FPSB
India from time to time. A Member must notify the FPSB India in writing
immediately of any material change to its professional indemnity insurance.
A Member shall not misrepresent the status of
their Membership of the FPSB India.
A Member shall not misstate their authority to
represent the FPSB India. Specifically, a Member shall not write, speak or act
in such a way as to lead another to believe that the Member is officially
representing the FPSB India, unless the Member has been duly informed to do so
by the officers, directors or rules of the FPSB India.
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A Member shall provide services diligently and on
a timely basis.
A Financial Planning practitioner shall enter into
an engagement only after securing sufficient information to satisfy the Member
that:
(a) The relationship is warranted by the
individual’s needs and objectives; and
(b) The Member has the ability to either provide
requisite competent services or to involve other professionals who can provide
such services.
In preparing oral or written recommendations to
clients, a Member shall collect sufficient information to ensure appropriate
advice can be given.
In preparing oral or written recommendations to
clients, a Member shall conduct or have access to, research on financial
strategies and products that may be appropriate to achieve the client’s
identified needs and objectives.
In preparing oral or written recommendations to
clients, a Member shall develop a suitable financial strategy or plan for the
client based on the relevant information collected and analyzed.
In preparing oral or written recommendations to
clients, a Member must take reasonable steps to place the client in a position
to comprehend the recommendations and the basis for the recommendations. A
Member should also take due care to explain the nature of the investment risks
involved in terms the client is likely to understand.
A Member must ensure all significant
recommendations are made in writing. If any significant recommendations are
given orally, then confirmation must be given in writing as soon as
practicable.
A Financial Planning practitioner shall make
and/or implement only recommendations that are suitable for the client and all
agreed recommendations must be implemented in an accurate, efficient and timely
manner.
In the appropriate circumstances, Rules 703 to 706
inclusive will not apply where there is an express documented instruction by a
client to limit or restrict the scope of the Financial Planning service
normally offered by the Member (e.g., an execution-only transaction service or
advice limited to a particular area or product or where a client refuses to
provide information sought). The client must be warned prior to implementing
the relevant transactions about the consequences of the Member following these
instructions.
A Member shall not move a client or cause a client
to move from an investment to another investment without explaining to the
client, in terms that the client is likely to understand, the reasons for the
move. The Member must demonstrate that the move is appropriate for the client.
A member shall confirm in writing to a client
where a subsequent instruction given by that client significantly alters the
financial strategy or balance of an existing portfolio under the supervision of
the Member.
A Member shall establish and maintain written
policies and procedures for the effective control and conduct of its business.
This rule does not apply to a Member with only one practicing Representative.
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In all professional activities a Member shall
perform services in accordance with:
(a) Applicable laws, rules, and regulations of
governmental agencies and other applicable authorities; and
(b) Applicable rules and other established
policies of the FPSB India.
In determining whether a Member has complied with
the FPSB India’s Professional Standards, any conduct by its Representatives or
employees that relates to conduct of the Member’s financial planning business
shall be treated as the conduct of the Member.
A Member shall use the marks in compliance with
the rules of the FPSB India, as established and amended from time to time.
A Member must co-operate with the FPSB India in
all aspects of any investigation or compliance review as authorized pursuant to
the Constitution of the FPSB India.
All Members must comply with the relevant FPSB
India Disciplinary Rules and Procedures concerning complaints handling, dispute
resolution and disciplinary procedures.
A Member who is an employee shall perform
professional services with dedication to the lawful objectives of the employer
and in accordance with these rules and all laws of India.
A Member shall comply with all applicable
post-certification requirements established by the FPSB India including, but
not limited to, payment of the annual Member fee as well as signing and
returning the certificant’s statement annually in connection with the
certificate renewal process.
A Member shall ensure that information and
relevant documents given to or gathered by the Member are securely stored to
establish at any time that it has complied with the FPSB India’s Professional
Standards and be available for inspection by the FPSB India when required. Such
records shall be retained for seven years from the date the document was last
acted upon.
A Member must maintain an effective system of
supervision of all Representatives’ activities, performance, training and
recommendations made to clients.
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