Set out the parts that make up the Code of Ethics
The idea
The Code of Ethics states the ethical principles members and candidates commit to: acting with integrity, competence, diligence and respect; placing the integrity of the profession and clients' interests above their own; using reasonable care and independent professional judgement; practising in a way that reflects credit on the profession; promoting market integrity; and maintaining professional competence. The Code sets the principles, while the Standards of Professional Conduct give the specific, enforceable rules that apply them to situations.
A practice question
The Code of Ethics primarily sets out:
- the ethical principles members commit to — correct
- detailed enforceable rules for each situationWhy not: That is the work of the Standards. The Code states principles that apply where no specific rule fits.
- local securities regulationsWhy not: The Code is a professional commitment that applies across jurisdictions, alongside whatever local law requires.
The Code of Ethics states the broad ethical principles members and candidates commit to. The Standards of Professional Conduct turn those principles into specific, enforceable requirements.
A harder one
Placing the integrity of the profession and the interests of clients above one's own interests is:
- applicable only to those managing client portfoliosWhy not: The Code binds every member, and the principle applies wherever a member's interests could compete with a client's.
- a commitment required by the Code — correct
- a recommendation members may weigh against other dutiesWhy not: It is a requirement rather than a factor, which is why it appears as an ordering rather than a balance.
This is a principle of the Code, and the ordering it states — profession and client before self — runs through Standards III(A) and VI(B).
The hardest tier
A member argues that an action is acceptable because no specific Standard prohibits it. This reasoning is:
- sound, since only the Standards are enforceableWhy not: The Code is part of what members commit to, and conduct can be inconsistent with it without breaching a numbered rule.
- sound, provided local law also permits itWhy not: Permission from law and silence from the Standards still leave the Code's principles to be satisfied.
- weak, since the Code's principles apply beyond the letter of any rule — correct
The Code exists because rules cannot anticipate every circumstance. Its principles apply beyond the letter of any Standard, which is why the absence of a prohibition settles nothing.
In the app: 18 practice questions on this outcome, a narrated walkthrough with diagrams, spaced review that brings it back before you forget it.
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