Guidance for Standard I: Professionalism

Standard I sets the baseline for being a professional at all: knowing and obeying the rules that govern your work, keeping your judgment free of improper influence, telling the truth about investments and about yourself, avoiding dishonest conduct, and being competent for the job you hold. It is the most frequently tested Standard group because almost every ethics scenario touches it. This module covers its five sub-sections, I(A) to I(E), including Competence, added in 2024.

Start this lesson free Practice questions

What you will learn

1. Apply Standard I(A) Knowledge of the Law, including the stricter-rule principle and the duty to dissociate from violations.

Know and comply with all laws, rules and regulations governing your professional activities, including the Code and Standards.
When local law and the Code and Standards differ, follow the stricter.
Do not knowingly participate in or assist violations; continued silent participation can count as assisting.
Raise suspected violations internally first; if unresolved, dissociate, and in extreme cases resign.
The Standards do not require reporting to regulators, though it may be appropriate or legally required.

2. Apply Standard I(B) Independence and Objectivity to gifts, issuer-paid research, travel, and pressure from employers, issuers and clients.

Do not offer, solicit or accept anything that could reasonably be expected to compromise independence or objectivity.
Client gifts for past service may usually be accepted but should be disclosed to the employer; gifts from those seeking future business deserve far more caution.
Issuer-paid research requires a flat fee unrelated to conclusions or price performance, plus clear disclosure.
Pay your own travel costs where possible; decline luxury extras.
Resist pressure from investment banking colleagues, issuers and large clients to change opinions.

3. Apply Standard I(C) Misrepresentation to statements about investments, performance, services and qualifications, including guarantees, omissions and plagiarism.

Do not knowingly make false or misleading statements or omit material facts.
Never guarantee returns on uncertain investments; describe genuine guarantees and fixed payments accurately.
Represent services, qualifications, experience and assets under management truthfully.
Plagiarism of others' analysis is misrepresentation; factual data from recognised statistical services may be used without attribution.
Understand third-party research and external products before relying on or promoting them.

4. Apply Standard I(D) Misconduct to distinguish professional conduct involving dishonesty, fraud or deceit from personal behaviour that the Standard does not reach.

Prohibits professional conduct involving dishonesty, fraud or deceit, and acts that reflect adversely on professional reputation or integrity.
Covers lying to clients, employers or regulators, falsifying records or expenses, and cheating on exams.
Off-duty conduct counts when it bears directly on professional trustworthiness.
Personal bankruptcy without fraud and peaceful civil disobedience are generally not violations.
Firms should adopt codes of conduct, publish sanctions and screen new hires.

5. Apply Standard I(E) Competence, introduced in 2024, to situations in which a professional's role, products or tools change.

Since 2024, members and candidates must act with and maintain the competence their professional responsibilities require.
The required competence depends on the role and must be updated when the role, products or tools change.
Competence includes understanding the models, systems and data one relies on.
Relying on experts is acceptable if the member can evaluate their work and stays responsible.
If competence is lacking, build it, get help, disclose the limitation or decline; do not simply proceed.

Module at a glance

I(A): know the law, follow the stricter of law and the Standards, never assist violations, and dissociate if needed.
I(B): refuse benefits that could reasonably compromise objectivity; issuer-paid research needs a flat, disclosed fee.
I(C): no false statements, no implied guarantees, no omissions of material facts and no plagiarism.
I(D): no professional dishonesty, fraud or deceit; private conduct without dishonesty is generally outside the Standard.
I(E): be competent for the role you actually hold, and update that competence when the role changes.
Reporting violations to regulators is not required by the Standards, but may be required by law.

This free module has 5 lessons, 16 practice questions with full explanations.

Start the lesson