When must the Reason Why statement be provided to a client according to the Consumer Protection Code?

• A. A prior to the provision of any investment advice to the client
• B. B prior to providing or arranging an investment product for the client
• C. C at the same time as the client signs an investment product application form
• D. D before the expiration of the cooling off period applicable to a recommended product

Answer: (B)

The reason why the statement must be provided to a client prior to providing or arranging an investment product is rooted in the principles of transparency and informed decision-making as outlined in the Consumer Protection Code. This requirement ensures that clients have a clear understanding of the rationale behind the investment product being offered, allowing them to make more informed choices that align with their financial goals and risk tolerances.

By delivering the Reason Why statement at this stage, the advisor fulfills their obligation to communicate key information that may influence the client’s decision. This practice promotes accountability and establishes a foundation of trust between the advisor and the client, as the advisor must justify their recommendations.

In contrast, other timing options do not provide the same level of proactive disclosure that is essential for informed consent. For example, providing the statement after the investment advice or right before signing an application form could undermine the client's ability to fully understand the implications of their decisions before committing to a product. Additionally, waiting until after the cooling-off period would not meet the standard of timely and effective communication that the Consumer Protection Code seeks to uphold.