Study guide
4.4 Cooling-Off Rights, Repurchase of Units, Suspension and Switching
FIMM Combined Examination FCE
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1 Introduction: The FIMM Combined Examination (FCE)
0.1 FCE Exam Facts, Registration Rules and How to Use This Guide
2 Chapter 1: Understanding Collective Investment Schemes in Malaysia
1.1 What a Collective Investment Scheme Is and How Malaysian CIS Are Classified 1.2 Investment-Linked Funds Are Not UTS; Industry Growth and History 1.3 Participants in the CIS Ecosystem: Unit Holders, Managers, Trustees, Distributors and Regulators
3 Chapter 2: Introduction to UTS and PRS
2.1 UTS and PRS as Investments: Mechanics, Unit Calculations and How They Compare 2.2 Types of Funds: By Asset Class, Fund Structure and Investment Objective 2.3 Methods of Investing and Dollar Cost Averaging 2.4 Benefits and Disadvantages of Investing in UTS and PRS 2.5 Understanding Risk and the Risks of Investing in Schemes 2.6 Shariah-Compliant Schemes, Their Risks and the Role of the Shariah Advisory Council
4 Chapter 3: Regulatory Framework
3.1 The Regulatory Framework: The SC, Other Regulators and FIMM's Dual Role 3.2 Legislation, SC Guidelines and FIMM Rules Governing UTS and PRS 3.3 Regulation of Scheme Providers and Oversight Functions 3.4 The Deed, the Prospectus or Disclosure Document, and the Product Highlights Sheet 3.5 Portfolio Constraints: Permitted Investments, Liquidity, Borrowing and Exposure Limits 3.6 Regulations for Other CIS: Real Estate Investment Trusts and Exchange-Traded Funds 3.7 Regulation and Duties of the Scheme Trustee 3.8 Regulation of Marketing and Distribution: Distributor Categories, Collection Points and Agency Structure 3.9 Registration of Consultants: Eligibility, Fit and Proper, Duration, Variation and Revocation
5 Chapter 4 (Part 1): Marketing and Distribution — Disclosure and Transactions
4.1 Servicing Investors and the Contents of the Prospectus and Disclosure Document 4.2 The Product Highlights Sheet, Advertising Standards and Account Maintenance 4.3 The Purchase Process and Suitability Assessment Before Personal Advice 4.4 Cooling-Off Rights, Repurchase of Units, Suspension and Switching 4.5 Financing the Purchase of UTS: Process, Safeguards and the Risk Disclosure Statement 4.6 EPF Transfers and Withdrawals for Investment in Approved Unit Trust Funds
6 Chapter 4 (Part 2): Marketing and Distribution — Distributions, Reporting and Service
4.7 Distributable Income, Distributions and NAV, "Buying" a Distribution and Taxation 4.8 Reporting to Investors: Confirmations, Statements, and Semi-Annual and Annual Reports 4.9 Marketing Principles, Delivering Quality Service and Handling Complaints 4.10 The Effect of Inflation, Taxation and Investment Costs on Returns 4.11 Investment Alternatives to UTS and PRS
7 Chapter 5: Code of Ethics
5.1 Compliance, Ethics and the Structure of the FIMM Code of Ethics 5.2 Core Principle 1: Honesty and Integrity 5.3 Core Principle 2: Professionalism 5.4 Core Principles 3 to 5 and Non-Compliance: Conflicts, Disclosure, Confidentiality and Misconduct
8 Chapter 6: Personal Financial Planning
6.1 Personal Financial Planning: Definition, Features, Five Areas and the Six Steps 6.2 Financial Planner Credentials, Skills, Remuneration, and How a Planner Differs from a Consultant 6.3 The Consultant's Role in Investment Planning and Advising Clients Through the Life Cycle
9 Chapter 7A: Features and Operations of UTS
7A.1 Structure of a UTS, the Trust Deed, the Parties and Modifying the Deed 7A.2 UTS Fees, Charges and Expenses, and the Management Expense Ratio 7A.3 Dealing in Units, Valuation, NAV Calculation and Unit Prices 7A.4 Forward and Historical Pricing, and the UTMC's Holding of Units 7A.5 Unit Splits, Distributions and Their Effect on NAV 7A.6 Measuring UTS Performance: Returns, Performance Tables, Risk Measures and Qualitative Factors 7A.7 Operational Aspects of Shariah-Compliant UTS and PRS and the Shariah Contracts Between the Parties 7A.8 Borrowing to Invest in UTS and the Risks of Loan Financing
10 Chapter 7B (Part 1): The Pension Landscape and the PRS Framework
7B.1 The Malaysian Pension Landscape and the Adequacy of Retirement Savings 7B.2 The World Bank's Five-Pillar Pension Framework in the Malaysian Context 7B.3 Key Players: EPF, KWAP, LTAT, Employer-Sponsored Schemes and Annuities 7B.4 Why Malaysia Needs PRS: Ageing, Longevity Risk and the Benefits of PRS 7B.5 The PRS Framework and the Private Pension Administrator (PPA) 7B.6 PRS Structure, the Trust and Deed, Advantages over Other Products, Eligibility and Contributions
11 Chapter 7B (Part 2): PRS Operations
7B.7 The PRS Default Option and Tax Incentives for Members and Employers 7B.8 The PRS Account Structure (Sub-Accounts A and B) and Vesting 7B.9 PRS Withdrawals: Pre-Retirement, Retirement, Permanent Departure, Incapacity and Death 7B.10 Switching Between Funds and Transferring Between PRS Providers (Portability) 7B.11 Unclaimed Monies, Death of a Member and PRS Nomination 7B.12 PRS Funds: Number, Core and Non-Core Funds, Objectives, Risk Profiles, Asset Classes, Authorisation and Naming 7B.13 PRS Fees, Charges and Expenses 7B.14 PRS Unit Creation, Forward Pricing, Valuation, Distributions, Performance Measurement and Electronic Communication
4.4 Cooling-Off Rights, Repurchase of Units, Suspension and Switching
Key Takeaways Explain This Topic AI
The cooling-off period must be at least six business days, starting from the date the Scheme Provider receives the application.
Under the current UTF and PRS Guidelines, the cooling-off refund is the lower of the original unit price and the market price when the right is exercised, plus the charges imposed on purchase.
The cooling-off right is not given to staff of the Scheme Provider, persons registered to deal in unit trusts or PRS, or contributions made by an employer on an employee's behalf.
Repurchase proceeds must be paid within seven business days of receiving the request, apart from limited exceptions disclosed in the prospectus.
A suspension of dealing must normally end within 21 days, and a Trustee that suspends dealing on its own accord must immediately call a unit holders' meeting.
Last updated: October 2026
The Cooling-Off Right
The cooling-off right protects an investor who bought without fully understanding the scheme, or who was misled, by allowing them to reconsider the purchase . It must be disclosed in the UTS prospectus and PRS disclosure document.
Who gets it
Gets the right Does not get the right
An individual investing with a particular Management Company (or in a PRS) for the first time Staff of that Scheme Provider
- A person registered to deal in unit trusts or PRS (Consultants)
- Corporations and institutions (the right is for individuals)
- Employer contributions to a PRS on behalf of employees
A PRS member who has already used the right (it does not apply to later contributions, even with another provider)
How long
The cooling-off period must be not fewer than six business days , counted from the date the Scheme Provider receives the application .
Illustration from the study guide: the application money is banked on Monday (Day 1) . With business days Monday to Friday and no holidays, the last day the provider must receive the cooling-off request is the following Monday (Day 6) . Providers' procedures can differ, so Consultants should know their provider's policy.
How much is refunded
Source Refund rule
Current UTF Guidelines (R7-2024, paras 9.05–9.08) and PRS Guidelines (R7-2024, paras 11.08–11.09) The lower of the original price and the market price at the point of cooling-off, plus the charges imposed on the day of purchase. If the market price is higher, the provider may pay the excess from its own money, not the fund . Refund in cash within 7 business days (for PRS, within 7 business days of receiving the PPA's authorisation )
FIMM FCE Study Guide (2025) wording NAV per unit on the day the units were first purchased, plus the sales charge per unit originally imposed
Important
The SC's current rule protects the fund: an investor who exercises the right after prices fall receives the lower market price plus the sales charge back, not the original price. If an exam question repeats the study guide's wording, recognise it; in practice, apply the current guidelines.
Worked example (current rules): Puan Siti invests RM10,300, paying a 3% sales charge (RM300) and buying 10,000 units at RM1.00. Three business days later she exercises her cooling-off right when the price is RM0.96. Refund = 10,000 × RM0.96 + RM300 = RM9,900 . Had the price risen to RM1.05, she would receive 10,000 × RM1.00 + RM300 = RM10,300, and the provider may choose to pay the RM500 excess from its own funds.
Repurchase of Units
Investors may sell (or, for PRS, withdraw within the PRS rules) at any time , even though schemes are meant for the medium to long term. PRS members must know that pre-retirement withdrawals are generally subject to a tax penalty , with exemptions such as housing and healthcare (Chapter 7B).
Step Detail
Request The investor completes the provider's repurchase request form and a payment instruction (bank credit, cheque or, with some providers, telegraphic transfer)
- Price The provider must repurchase at the prevailing price once it receives the request
- Payment Proceeds paid as soon as possible and within 7 business days of the request
Liquidity The provider keeps enough cash or liquid assets, cancels the units and uses the cash paid by the Trustee
The current UTF Guidelines allow a longer disclosed payment period in limited cases: feeder funds (payment within five business days of receiving the target fund's proceeds), funds whose NAV needs currency conversion , and funds using liquidity risk management tools .
Suspension of Dealing
If a fund's assets cannot be fairly valued (for example because a market is closed), it would be unfair to price units, so dealing may be suspended:
Rule Current UTF Guidelines (R7-2024)
Who may suspend The Management Company, in consultation with the Trustee , in exceptional circumstances with good and sufficient reason
Informing investors All unit holders must be told promptly
Maximum period Cease as soon as circumstances allow and within 21 days ; extendable if the Trustee agrees it is in unit holders' interests, with weekly Trustee review
Trustee acting alone A Trustee may suspend on its own accord but must immediately call a unit holders' meeting
The study guide describes the Trustee suspending dealing for up to 21 days , after which investors' consent through a meeting is needed, and the Trustee notifying the SC of the suspension and when it is lifted. Suspensions are rare and exist to protect investors.
Switching
A switch moves money from one fund to another fund of the same Scheme Provider : a repurchase from the first fund whose proceeds become the application money for the second. Points to know:
Providers often reduce or waive fees on switches, which can make a switch good value.
Sales charges can still apply , for example when switching from a no-load fund into a loaded fund. Investors must be told the charges.
Switching helps rebalance a portfolio when markets or personal circumstances change.
The FIMM Code of Ethics requires Distributors to use any free switching options before charging switching fees, and prohibits switching an investor merely to earn commission (Chapter 5).