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5.3 Core Principle 2: Professionalism

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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

5.3 Core Principle 2: Professionalism

Key Takeaways Explain This Topic AI

A Distributor and Consultant must conduct a suitability assessment in line with securities laws and SC and FIMM guidelines before recommending any scheme.

Gifts to entice investors are discouraged but not prohibited, provided they do not distract the investor from making an informed decision.

Distributors and Consultants must not accept cash from investors or let investors pay into any account other than the Distributor's account, apart from an exception for bank Distributors subject to FIMM controls.

Churning, meaning excessive redemptions and purchases using the same investment proceeds, is prohibited.

A Consultant must represent only one Principal for UTS or PRS at a time and must not make investment decisions on the investor's behalf.

Last updated: October 2026

The Required Conduct

Core Principle 2 asks for high standards of professionalism and due care, skill and diligence . The Code's required conduct includes:

  • Duty Who Detail
  • Service Distributor and Consultant Prompt, efficient and continuous service; treat investors with respect

Suitability assessment Distributor and Consultant Before recommending any scheme, under securities laws and SC and FIMM guidelines

Statements Distributor Keep investors updated by sending statements of account regularly

Gifts Distributor and Consultant Discouraged as incentives; not prohibited , but must not distract investors from an informed decision

AML/CFT Distributor and Consultant Comply with the SC's guidelines on preventing money laundering and terrorism financing

Regulators Distributor and Consultant Deal with FIMM and other authorities openly and cooperatively

Switching Distributor Use all free switching options before charging switching fees, and tell investors about them

Nominee arrangements Distributor Distributorship arrangements must not undermine investors' rights; cheques under the nominee system must be in the Distributor's name with the investor's identifying details on the back, matched to the application

Records Distributor Systems to identify, verify and document transactions, and keep personal data accurate (including current addresses)

Complaints Distributor Fair, efficient handling; records; resources; tell investors how to complain and about redress for monetary loss; quarterly complaint reports to FIMM or the SC; prompt notice to FIMM of serious complaints; keep complaint details confidential

Supervision Distributor Monitor Consultants' compliance, explain rules and train them

Pay Distributor Pay Consultants' commissions directly into the Consultant's own account , never through a third party

  • Change of Consultant Distributor Tell the investor in writing when the servicing Consultant changes
  • One Principal Consultant Represent only one Principal for UTS or PRS at a time
  • Product range Consultant Market only schemes distributed by his Distributor
  • Proof of registration Consultant Show proof of FIMM registration in the manner FIMM specifies
  • The Prohibited Conduct
  • For Distributors and Consultants (Code paragraph 4.3)

Using deceptive, misleading, unfair or aggressive methods to recruit Consultants.

Submitting a transaction for an investor without a valid instrument .

Accepting cash or cash deposits from investors.

Aggressive and offensive sales practices.

Letting investors pay into any account other than the Distributor's account.

Requesting, accepting or submitting pre-signed or pre-thumbprinted forms .

Letting a non-registered person market or distribute schemes.

Giving statements that create confusion or misunderstanding.

Giving investors a cash discount or cash rebate .

Churning : excessive redemptions and purchases using the same investment proceeds.

Using advertising that breaches the SC's Advertising Guidelines .

Negative or unwarranted statements that harm investors or the reputation of the industry, FIMM or the SC.

Encouraging investors to invest through loan financing .

Using FIMM's logo without written consent, except to show membership or registration.

Note

The cash ban does not apply to financial institutions that are "registered persons" under item (1)(g), Part 1 of Schedule 4 of the CMSA (banks acting as Distributors); they may accept cash subject to FIMM's additional controls (Code paragraph 4.3A).

For Consultants only (Code paragraph 4.4)

Impersonating or using the identity of another Consultant.

Assigning or allocating sales to another Consultant.

Using advertising and promotional material not provided or approved by the Distributor .

Using any valuation method other than the Distributor's to monitor or report on an investor's holdings.

Making an investment decision on behalf of the investor .

Agreeing to charge or receive from an investor any fee not disclosed in the prospectus, disclosure document or PHS.

Applying the Principle

Scenario Ruling

A client hands a Consultant RM5,000 in cash at a café "to save a trip to the bank" Prohibited: accepting cash (unless the Distributor is a bank registered person handling it under FIMM controls)

  • A client asks the Consultant to keep signed blank forms "for future top-ups" Prohibited: pre-signed forms
  • A Consultant gives a client RM200 cash back from his commission Prohibited: cash rebate

A Consultant gives new investors a branded umbrella at an event Allowed but discouraged; must not distract from an informed decision

  • A team leader books a junior Consultant's sale under his own name Prohibited: allocating or assigning sales
  • A Consultant switches a client between funds every month using the same money Prohibited: churning
  • Exam Tips

Gifts : discouraged, not prohibited. Cash rebates : prohibited.

Payment : only to the Distributor's account, never to the Consultant.

Suitability comes before any recommendation.

The Consultant must never take the investment decision for the client.