A MiFID investment firm covered by the Investor Compensation Scheme is NOT allowed to:

• A. advertise the fact that the firm is covered by the scheme.
• B. refer to the scheme in its Terms of Business.
• C. give clients any information about the scheme.
• D. hold any client funds or assets.

Answer: (A)

Communications about investor protection schemes must be accurate and not promotional. The Investor Compensation Scheme exists as a safety net, but it does not guarantee against all losses, and marketing that a firm is “covered” by the scheme can mislead clients into thinking protections are absolute or broader than the scheme provides. To prevent giving a false sense of security, rules prohibit advertising the fact that the firm is covered by the scheme. It’s acceptable to reference the scheme in the Terms of Business or to provide factual information about it to clients when appropriate, and the scheme itself does not automatically restrict a firm from holding client funds or assets under other regulatory requirements.