Free CMFAS RES5 Practice Questions

Under the Financial Advisers Act 2001, a person may act as a financial adviser in Singapore in respect of a financial advisory service only if that person is:

• Aa Singapore-incorporated company with paid-up capital of at least $500,000
• Bregistered with the Accounting and Corporate Regulatory Authority
• Ca member of an industry association recognised by the Authority
• Dauthorised by a financial adviser's licence for that service, or is an exempt financial adviser

A person convicted of acting as a financial adviser without a licence is liable on conviction to a fine not exceeding:

• A$25,000
• B$50,000
• C$75,000
• D$150,000

A licensed financial adviser must disclose all material information relating to a designated investment product it recommends. To whom must that disclosure be made?

• AClients who request the information in writing
• BExisting clients only
• CRetail clients only
• DEvery client and prospective client

Under section 34(1), "designated investment product" means:

• Aa unit in a collective investment scheme, a life policy including a group life policy, or such other investment product as the Authority may prescribe
• Bany product listed on an approved exchange, whether or not it is a unit in a collective investment scheme or a life policy issued by a licensed insurer in Singapore
• Cany product with a minimum investment of $100,000, or such other amount as the Authority may prescribe
• Dany product sold to accredited investors, who are treated as requiring less protection under the Act

A licensed financial adviser must establish and maintain a remuneration framework for the purpose of:

• Areviewing and assessing the performance of its representatives and supervisors, and determining their remuneration
• Bsetting the fees charged to clients for the financial advisory services provided to them by its representatives in Singapore
• Callocating the adviser's annual training budget between its representatives and their supervisors for the year of account
• Ddetermining dividends payable to shareholders out of the profits of the business for each financial year of the adviser

For the purposes of section 47, "remuneration" includes:

• Amonetary commission, incentives, benefits or rewards only, non-monetary benefits being outside the definition
• Bpayments made to the firm by product providers only, and not payments made by the firm to its own people at all
• Cbasic salary only, all variable elements being excluded from the definition in the section for this purpose
• Dany monetary commission, incentive, benefit or reward, and any non-monetary incentive, benefit or reward

Under Notice FAA-N06, a financial adviser:

• Amay open an account in a fictitious name where the customer is a public figure
• Bshall not open or maintain an anonymous account or an account in a fictitious name
• Cmay maintain an anonymous account for an accredited investor
• Dmay open an anonymous account subject to senior management approval

Before establishing business relations, a financial adviser has reasonable grounds to suspect that a prospective customer's funds are proceeds of criminal conduct. The adviser must:

• Aproceed but apply enhanced monitoring to the relationship for as long as it continues
• Bnot establish business relations or undertake the transaction, and file a Suspicious Transaction Report, extending a copy to the Authority for information
• Crequest an explanation from the customer and proceed if satisfied with the answer given, recording that explanation and the reasons for proceeding in the file
• Drefer the customer to another financial adviser

The Policy Owners' Protection Scheme is established for the purposes of compensating or otherwise assisting or protecting insured policy owners and beneficiaries, and:

• Aguaranteeing investment returns on participating policies
• Bsecuring the continuity of insurance for insured policy owners as far as reasonably practicable
• Cunderwriting the reinsurance obligations of Singapore insurers
• Dcompensating shareholders of a failed insurer

Which insurers are PPF Scheme members?

• AOnly insurers incorporated in Singapore, foreign insurers operating in Singapore through branches being outside the Scheme and not required to contribute levies
• BEvery relevant insurer that is not exempted, for so long as it is licensed by the Authority to carry on insurance business under the Insurance Act 1966
• COnly insurers carrying on life business, general insurers being covered by separate arrangements under the Act
• DOnly insurers that apply to join the scheme and are accepted as members by the Agency