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CS Professional · Banking and Insurance - Laws and Practice · Professional Opportunities

Nandini, a company secretary, advises a client on insurance and also holds a corporate agency with Insurer X. She recommends only Insurer X's policy, without disclosing her commission or the agency link, though a cheaper suitable policy exists elsewhere. Which is the most accurate assessment?

Her conduct is improper because she failed to disclose the conflict of interest and her commission, and gave advice that was not in the client's best interest. Selling one insurer's products is permitted, but an adviser must be transparent and must not pose as an independent adviser.

  1. AAcceptable, because agents may always recommend only their principal's products
  2. BAcceptable, because commission disclosure is required only for brokers
  3. CAcceptable, provided the client eventually signs the proposal form
  4. DImproper, because the conflict of interest and commission should be disclosed and advice must be in the client's interest, and she should not present herself as an independent adviserCorrect

Explanation

Distributing a single insurer's products is allowed, but an adviser must act with transparency and disclose conflicts and remuneration, and must not mislead the client about independence. Client signature does not cure non-disclosure, and disclosure duties are not confined to brokers. Professional ethics for company secretaries also require fairness and avoiding conflicts.

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