FRE2 AC7.3: The regulatory advice framework - clients, disclosure, charging and cancellation

Assessment criterion 7.3 asks you to apply the regulatory advice framework to client situations. It is a long list: client relationships, types of client, fiduciary duties, service types and disclosure, adviser charging, limits of authority, cancellation rights, vulnerable clients, advice standards, reviews and product due diligence. In the CeMAP® FRE2 exam it is a favourite source of case-study questions, because each rule fits a moment in a client's journey.

Client relationships and adviser responsibilities

The relationship starts before any advice. The adviser must:

1. explain who they are, what service they offer and how they are paid (initial disclosure);
2. agree the terms of the service, ideally in writing;
3. act honestly, fairly and professionally, in line with the Principles, the conduct rules and the Consumer Duty;
4. keep client information confidential and use it only for agreed purposes;
5. take responsibility for the suitability of any advice given.

An adviser acting for a client is usually that client's agent, so the general duties of an agent (care, loyalty, accounting for money) apply alongside the regulatory rules.