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5.1 Compliance, Ethics and the Structure of the FIMM Code of Ethics

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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

5.1 Compliance, Ethics and the Structure of the FIMM Code of Ethics

Key Takeaways Explain This Topic AI

Compliance is the discipline of complying with applicable laws, rules and regulations, codes of conduct and internal policies and procedures, and it is a culture everyone must follow, including Consultants.

FIMM's study guide compares compliance to insurance cover against the risks and consequences of breaching regulatory requirements.

The FIMM Code of Ethics Fourth Edition came into force on 10 October 2023, replacing the Third Edition of 13 January 2020 and the Second Edition of 22 January 2013.

The FIMM Code sets out five core principles: honesty and integrity, professionalism, avoidance of conflict of interest, disclosure of information, and observance of confidentiality.

The Code's two objectives are to uphold ethical standards and professional conduct in marketing and distributing UTS and PRS, and to instil public confidence in the industry.

Last updated: October 2026

Why Ethics and Compliance Matter Here

The UTS and PRS industry channels retail savings into the economy and gives investors a way to earn returns and save for retirement. Because investors rely on schemes to meet financial goals, everyone involved in marketing and distribution must behave ethically and professionally . The FCE tests both the study guide's Chapter 5 and the FIMM Code of Ethics itself.

What Is Compliance?

Compliance is the discipline of complying with applicable laws, rules and regulations, codes of conduct, and internal policies and procedures .

The SC requires Distributors to have a compliance function that ensures the business follows the applicable rules.

Compliance is not only the compliance officer's job . It is a culture everyone must live, especially Consultants, so that investors are protected and treated fairly.

Consultants should work closely with compliance staff , who supply tools such as checklists and training.

Compliance as a Risk-Management Tool

The study guide's analogy: businesses buy insurance against events such as fire after assessing their risks. Compliance is like insurance against the risks and consequences of breaching legal and regulatory requirements. It is also like quality control in a car factory that aims for steady output with no defects.

A strong compliance culture helps Consultants by:

Benefit Explanation

Fewer complaints and lower restitution costs Including the time spent resolving complaints and putting things right

  • Less litigation risk Fewer lawsuits, penalties and associated costs
  • More clients, kept longer Trust and confidence attract and retain clients
  • Better professional standards Compliance training keeps Consultants up to date

What Is Ethics?

Ethics is a system of moral principles by which actions are judged right or wrong . It is a matter of personal responsibility, integrity and conscience . Regulators cannot watch everyone all the time (and constant monitoring would raise costs and bureaucracy), so Distributors and Consultants must keep their own conduct in check. Ethical requirements issued by FIMM and the SC guide them to operate without breaking laws and regulations.

  • Compliance Ethics
  • Following external and internal rules Doing what is right even where no rule applies
  • Enforced by monitoring and sanctions Driven by personal integrity and conscience
  • "Is it allowed?" "Is it right for the investor?"
  • The FIMM Code of Ethics
  • Status and history
  • Edition Effective date
  • First Edition 1 September 2001
  • Second Edition (Code of Ethics and Rules of Professional Conduct) 22 January 2013
  • Third Edition 13 January 2020
  • Fourth Edition (current) 10 October 2023

The Code is issued under paragraph 2.2.2(a) of FIMM's Consolidated Rules and must be read with FIMM's rules, securities laws and other applicable laws. Acts done before 10 October 2023 are dealt with under the repealed codes.

Scope

The Code sets ethical standards and professional conduct for Distributors and Consultants :

in the marketing and distribution of UTS and PRS ; and

in any activity that may adversely affect the industry .

"Marketing and distribution" is defined broadly: promoting, offering, marketing and distributing schemes in any form, including attempting to do so.

The five core principles

No. Core principle In one line

1 Honesty and integrity Act honestly, in investors' best interests, in good faith and fairly; protect the industry's reputation

2 Professionalism Due care, skill and diligence; prompt, efficient, continuous and respectful service

3 Avoidance of conflict of interest Avoid conflicts; if unavoidable, disclose in writing and put the investor first

  • 4 Disclosure of information Accurate, timely, adequate information and clear explanation of scheme features
  • 5 Observance of confidentiality Safeguard investors' personal and financial information
  • Objectives

Distributors and Consultants must follow the five principles to:

uphold ethical standards and professional conduct in marketing and distributing UTS and PRS; and

instil public confidence in the industry.

Each principle states required conduct (Chapter 3 of the Code) and prohibited conduct (a non-exhaustive list in Chapter 4 of the Code). The Code augments the conduct requirements in SC guidelines; where they overlap, Distributors and Consultants must know and follow both.

FIMM's practice question asks what each core principle aims to do. The correct elements are: instil public confidence , augment the SC guidelines' ethics and conduct requirements and uphold ethical standards and professional conduct . A reminder that FIMM can take action is not one of the stated aims.

How to Study the Code

Sections 5.2 to 5.4 go through each principle with its required and prohibited conduct. A useful approach for exam questions:

Identify the behaviour in the scenario.

Decide which core principle it relates to (for example, omitting a material fact is a disclosure of information issue).

Check whether it appears on the prohibited conduct list.