Financial Conduct Authority (FCA) UK Regulation Sample Exam

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What is required of investment firms under COBS rules regarding communication with clients?

All communication should be via email only
To ensure communications are fair, clear and not misleading
Only verbal communication needs to be compliant
No specific requirements exist

The correct answer is: To ensure communications are fair, clear and not misleading

Under the FCA's Conduct of Business Sourcebook (COBS) rules, investment firms are mandated to ensure that all communications with clients are fair, clear, and not misleading. This principle is designed to uphold transparency and protect consumers, ensuring they receive information that helps them make informed decisions. By adhering to this requirement, firms can foster trust and maintain a reputation for ethical practice in the financial services industry. This obligation applies to all forms of communication, whether written, verbal, or otherwise, emphasizing the importance of clarity and completeness in all exchanges with clients. The aim is to provide clients with the necessary information to understand the products and services being offered, along with any associated risks, thereby supporting informed decision-making. The other options do not align with the FCA's regulatory framework: communication is not restricted to email only, compliance extends to all forms of communication, and there are indeed specific requirements aimed at protecting consumers and promoting fair practice.