Level III Core · Asset Manager Code of Professional Conduct

Asset Manager Code Notification of Compliance

Updated 9 October 2026 · Fact-checked

Notification of compliance is how an asset manager tells clients and others that it follows the Asset Manager Code. A firm may claim compliance only if it actually meets the Code's provisions that apply to it. It must make the claim accurately, keep meeting the Code, and correct the claim if it stops complying.

Understand Notification of Compliance

The Asset Manager Code of Professional Conduct is a voluntary set of conduct standards for firms that manage client assets. No one forces a firm to adopt it. A firm chooses to adopt it, and then it may tell the market that it complies.

The telling is the notification of compliance. It is a public claim. Clients and prospects rely on it when they pick a manager. So the claim must be true. Think of it like a label on a product: the label is only honest if the product matches it.

Three ideas sit under this topic. First, substance before statement: the firm must really have the policies, procedures and culture to follow the Code before it says so. Second, accuracy: the firm should not overstate, for example by claiming compliance with only the parts it likes. Third, ongoing responsibility: a claim is not a one-time event. If the firm stops complying, it must not keep making the claim and should fix the problem or withdraw the claim.

Do not mix this up with a GIPS compliance statement. GIPS is about how a firm calculates and presents investment performance. The Asset Manager Code is about how a firm behaves toward clients: loyalty, investment process, trading, risk management, performance and valuation, and disclosure. A firm can claim one, the other, both or neither. Claiming one does not give a claim to the other.

For the exam, use the exact wording and requirements in your curriculum text. Questions usually give a scenario and ask whether a firm's claim is appropriate, so focus on the principles above.

Key rules to remember

Claim rule: Claim of compliance allowed only if the firm complies with all Code provisions that apply to it; No partial or cherry-picked claims. If the firm cannot meet the Code, it should not claim compliance.
Accuracy rule: Statement made = actual status of the firm; A claim that overstates, misleads or implies more than the firm does is a breach of the spirit of the Code.
Ongoing rule: Stop complying → stop claiming (or remedy promptly); The claim must stay true for as long as it is made.
Code vs GIPS: Asset Manager Code = conduct toward clients; GIPS = performance calculation and presentation; Separate claims. Neither replaces the other, and each has its own requirements.

How to solve Notification of Compliance questions

Use this method for any scenario question on claiming or communicating compliance with the Asset Manager Code.

1Identify which claim is in the question: the Asset Manager Code, GIPS, or something else. Name it before you reason.
2List what the firm has actually done: adopted policies, trained staff, put controls in place, or only written a marketing line.
3Check whether the firm meets all the Code provisions that apply to it. If any apply and are not met, the claim is not supported.
4Check the wording of the statement. Is it accurate, complete and not misleading? Look for partial claims and overstated language.
5Check timing and ongoing duty. Has the firm's status changed since the claim was made? If so, the claim must be corrected or withdrawn.
6Check who receives the notification: clients, prospects and others who rely on it. Is the claim made openly rather than hidden?
7State your conclusion in one line (appropriate or not), then give the one or two facts that support it.

Quickest way: Three-question test for any compliance claim

When to use it: When you have about a minute for a multiple-choice item on claims of compliance.

Is the firm truly complying with every applicable provision? If no, the claim fails.
Is the wording accurate and complete, with no cherry-picking? If no, the claim fails.
Is the claim still true today? If no, the firm must correct or withdraw it.
If all three are yes, the claim is appropriate. Then check the options for any GIPS mix-up.

Common mistakes in Notification of Compliance

Thinking a firm can claim compliance with only the parts of the Code it follows.
Candidates treat the Code as a menu, like a list of best practices.
Fix: Remember the claim covers the Code as a whole. If the firm cannot meet the applicable provisions, it should not claim compliance.
Treating the claim as a one-time act.
Adoption feels like a single event, such as signing a document.
Fix: Link the claim to current status. A firm that stops complying must stop claiming or fix the gap promptly.
Confusing the Asset Manager Code compliance claim with a GIPS compliance statement.
Both are voluntary, firm-level claims that appear in marketing.
Fix: Ask what the claim covers. Conduct toward clients means the Code. Performance calculation and presentation means GIPS.
Assuming that a claim of compliance is enough without real policies behind it.
Candidates focus on the notification and forget the substance.
Fix: Put substance first. Policies, procedures, supervision and culture must exist before the statement is made.
Assuming the Code replaces or overrides applicable law.
Candidates over-apply the idea that the Code is the top rule.
Fix: The Code is not a substitute for the law and does not supersede it. The firm must comply with applicable laws and regulations. Claiming compliance with the Code never excuses a breach of law.
Assuming the claim must be verified by a third party before it can be made.
Candidates carry over ideas from GIPS verification.
Fix: Do not assume an outside check is required for the Code claim. The test is whether the firm genuinely complies and describes this accurately.

Worked examples

Example 1

A manager has adopted written policies on only some of the sections of the Asset Manager Code that apply to its business, with two applicable sections uncovered. Its brochure states that the firm complies with the Code. Is the claim appropriate?

Show the solution

Identify the claim: compliance with the Asset Manager Code.
Check substance: two applicable sections have no policies, so the firm does not meet all applicable provisions.
Check wording: the brochure states full compliance, which overstates the firm's actual status.
Conclude: the claim is not supported and is misleading.

Answer: Not appropriate. A firm may claim compliance only if it meets all applicable provisions. The firm should put the missing policies in place first, or stop making the claim until it does.

Example 2

A firm correctly claimed compliance with the Asset Manager Code. Later, an internal review finds that its trade allocation procedures no longer work as written and clients are not being treated fairly. The firm keeps its compliance statement on its website while it studies the problem. Which action is most consistent with the Code? A) Keep the statement because the firm was compliant when it was made. B) Correct the problem promptly and, until it is fixed, stop making the claim. C) Replace the statement with a GIPS compliance statement. D) Keep the statement but tell only new clients.

Show the solution

The claim must match current status, not past status. This rules out A.
A GIPS statement covers performance presentation and does not cure a conduct failure. This rules out C.
Telling only some clients leaves others relying on a claim that is not true. This rules out D.
The firm should fix the breach and not claim compliance while it exists. This matches B.

Answer: B. The claim must stay true. The firm should remedy the problem promptly and not make the claim while it is not complying.

Exam tips

Read the claim first. Many wrong options swap the Code and GIPS, so name which one the question is about.
Look for words like "all applicable", "partial" and "no longer". They signal that the question tests accuracy and ongoing compliance.
In constructed response, answer with a verdict first, then the one fact that decides it. For example: "Not appropriate; the firm lacks policies for two applicable sections."
Use the exact wording and requirements from your curriculum text when stating the content of a notification. Do not invent wording.
Link this topic to disclosure and conduct sections of the Code. A false claim of compliance is also a misrepresentation issue.

Notification of Compliance: frequently asked questions

Is it mandatory for an asset manager to claim compliance with the Asset Manager Code?

No. Adopting the Code is voluntary. If a firm chooses to claim compliance, it takes on the duty to make that claim accurate and keep it true.

Can a firm claim partial compliance with the Asset Manager Code?

A firm should not cherry-pick. It may claim compliance only if it meets the provisions of the Code that apply to it. A partial claim presented as full compliance would mislead clients.

What is the difference between the Asset Manager Code and a GIPS compliance statement?

The Asset Manager Code covers how a firm behaves toward clients across areas such as loyalty, trading, risk management and disclosure. GIPS covers how a firm calculates and presents investment performance. The two claims are separate, and having one does not give the other.

What should a firm do if it stops complying after making the claim?

It should not keep making a claim that is no longer true. It should fix the problem promptly and withdraw or correct the claim until it complies again.