A 'Reason Why Statement' issued to a customer was deemed to be in breach of the Consumer Protection Code. This was because it was:

• A. posted to the client.
• B. not signed by the adviser.
• C. not completed at the first meeting with the client.
• D. prepared five days after the recommendation.

Answer: (B)

The key idea here is accountability and proper authorisation of client communications. A Reason Why Statement is meant to explain why a particular recommendation is being made, and it must be approved and signed off by the adviser. The adviser’s signature provides an auditable confirmation that the content was prepared by and reflects the adviser’s considered judgment, aligning with the requirement to present clear, accurate, and personally verifiable information to the client.

If the adviser doesn’t sign it, there’s no formal sign-off to show who reviewed and approved the rationale, which weakens the accountability and regulatory assurance that the client is receiving properly vetted advice. That lack of sign-off is what constitutes the breach.

Delivery method or timing can raise other concerns in different contexts, but the essential regulatory lapse in this case is the absence of the adviser’s signature on the Reason Why Statement.