FRE2 · Skills, Principles and Ethical Behaviours
This topic is FRE2 LO6 AC6.1: the skills that turn a conversation into suitable advice. Questions are almost all scenarios: which question type fits, what a client's words or body language tell you, how to weigh attitude to risk against capacity for loss, what to do with a gap or a red flag, how to present a recommendation, and how to handle an insistent client. The rules behind them are suitability (COBS 9.2, MCOB 4.7A), the Consumer Duty's consumer understanding outcome (PRIN 2A.5) and the FCA's vulnerability guidance (FG21/1). The right answer is usually the one that gets accurate information, checks understanding and records the outcome.
9 min read7 sections
Checked against: Walbrook (formerly LIBF) FSRE specification v7 (July 2026), FRE2 LO6 AC6.1; FCA Handbook COBS 9.2, 9.4.7R, MCOB 4.7A, 4.4A, 11.6, PRIN 2A.5-2A.6; FCA FG21/1; FCA guidance on insistent clients; MoneyHelper emergency fund guidance; checked 11 Oct 2026. Independent prep, not endorsed by Walbrook (formerly LIBF).
Good advice depends on accurate information, and the client only shares it if the conversation works. Rapport builds trust, so clients disclose fuller and more honest facts, including sensitive ones. It does not replace the fact-find. Choose the question type for the job.
| Question type | Use it to | Example |
|---|---|---|
| Open | Explore goals, feelings and soft facts | What would you like your life to look like in ten years? |
| Closed or specific | Confirm a precise hard fact | What is the monthly payment on your car loan? |
| Hypothetical | Test attitudes and reactions | How would you feel if this fund fell 20% in a year? |
| Leading (avoid) | Nothing useful: it pushes the client to your answer | You'd want the five-year fix, wouldn't you? |
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Trap: taking silence or a nod as understanding. Many clients will not say they are lost.
Takeaway: Open questions to explore, closed to confirm, never leading. Listen, summarise, watch body language, and check understanding before moving on.
In an advised sale the firm must take reasonable steps to ensure the recommendation is suitable (MCOB 4.7A.2R; COBS 9.2.1R). That needs the client's needs, circumstances, objectives and preferences (MCOB 4.7A.6R; COBS 9.2.2R). The fact-find can be proportionate, but a client who says 'just get me the cheapest fix' still has to give enough for you to judge suitability.
Verify, do not assume. A bonus with no track record may not count for lenders, which must verify income (MCOB 11.6.8R). If payslips and bank credits do not match, do not submit; query it, and report suspicion to the nominated officer (POCA 2002 s330) without tipping off.
Trap: skipping the fact-find because the client 'knows what they want'. An advised sale without information cannot be shown to be suitable.
Takeaway: Gather hard and soft facts, current and future. Check existing cover. Verify figures, and stop if the documents do not add up.
