APER 4.2 Statement of Principle 2

In the opinion of the FSA, conduct of the type described in APER 4.2.3 E, APER 4.2.5 E, APER 4.2.6 E, APER 4.2.8 E, APER 4.2.10 E, APER 4.2.11 E or APER 4.2.13 E does not comply with Statement of Principle 2 (APER 2.1.2 P).

Failing to inform:

1. (1)

   a customer; or

2. (2)

   his firm (or its auditors or an actuary appointed by his firm under SUP 4 Actuaries)1);

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of material information in circumstances where he was aware, or ought to have been aware, of such information, and of the fact that he should provide it, falls within APER 4.2.2 E.

Behaviour of the type referred to in APER 4.2.3 E includes, but is not limited to:

1. (1)

   failing to explain the risks of an investment to a customer;

2. (2)

   failing to disclose to a customer details of the charges or surrender penalties of investment products;

3. (3)

   mismarking trading positions;

4. (4)

   providing inaccurate or inadequate information to a firm, its auditors or an actuary appointed by his firm under SUP 4 (Actuaries)1;

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5. (5)

   failing to disclose dealings where disclosure is required by the firm's personal account dealing rules.

Recommending an investment to a customer, or carrying out a discretionary transaction for a customer, where he does not have reasonable grounds to believe that it is suitable for that customer, falls within APER 4.2.2 E.

Undertaking, recommending or providing advice on transactions without a reasonable understanding of the risk exposure of the transaction to a customer falls within APER 4.2.2 E.

Behaviour of the type referred to in APER 4.2.6 E includes, but is not limited to, recommending transactions in investments to a customer without a reasonable understanding of the liability (either potential or actual) of that transaction.

Undertaking transactions without a reasonable understanding of the risk exposure of the transaction to the firm falls within APER 4.2.2 E.

Behaviour of the type referred to in APER 4.2.8 E includes, but is not limited to, trading on the firm's own account without a reasonable understanding of the liability (either potential or actual) of the transaction.

Failing without good reason to disclose the existence of a conflict of interest in connection with dealings with a client falls within APER 4.2.2 E.

Failing to provide adequate control over a client's assets falls within APER 4.2.2 E.

Behaviour of the type referred to in APER 4.2.11 E includes, but is not limited to:

1. (1)

   failing to segregate a client's assets;

2. (2)

   failing to process a client's payments in a timely manner.

Continuing to perform a controlled function despite having failed to meet the standards of knowledge and skill set out in the Training and Competence sourcebook (TC) for that controlled function falls within APER 4.2.2 E.