RG 175 Flashcards
(71 cards)
1
Q
What obligations on providing entities (3)
A
- General advice - Warning
- All Advice - FSG
- Personal Advice - SOA
2
Q
What obligations on advice providers - personal advice (4)
A
- Act in best interest
- Provide appropriate advice
- Warn if info incomplete or inaccurate
- Prioritise clients interests.
3
Q
FSG required for general advice?
A
Yes, all advice
4
Q
When must FSG generally be given to client
A
Before providing a financial service
5
Q
Three key parts of SOa
A
- The advice
- The reasoning that led to that advice
- Conflicts that may affect the advice.
6
Q
BID and related obligations (4)
A
- Act in best interest
- Provide client apppropriate advice
- Warn client if based on inaccurate info
- Where conflict exists, prioritise client
7
Q
The advice provider is generally the person who
A
Provides the advice
8
Q
Providing entities
A
May be AFSL holder or the AR
9
Q
Is a representative that is not an AR a providing entity
A
No
10
Q
under 7.7 advice providers are responsible. When an AR is the advice provider there is an overriding duty on AFSL to ensure advice is provided in compliance with the law. why
A
Because AFSLs must take reasonable steps to ensure that ARs comply with FS laws.
11
Q
How many aspects of the client’s relevant circumstances need to be considered for it to be personal advice
A
only one
12
Q
General advice warning:
A
- Advice prepared doesn’t take into account, Objectives financial situation, or needs
- Client should therefor consider appropriateness before following
- If relating to product - should obtain a copy of the PDS before making a decision
13
Q
General advice in advertisements. What does ad need to say
A
Must identify product and refer to PDS and state that the client should consider whether appropriate - don’t need the whole general advice warning
14
Q
What is the section that deals with term independent?
A
923A
15
Q
Conditions to use the word independant?
A
- Not receive commissions or volume based payments or gifts
- Free from restrictions on financial products
- Free from conflicts that would influence
16
Q
what are the three main restricted words
A
Independent, Impartial, and Unbiased.
17
Q
Are asset based fees allowed (if independent)
A
Yes
18
Q
If commissions are rebated - can use independent? Timeframe
A
Yes - 3 months.
19
Q
Who can use financial planner or financial adviser
A
only relevant providers - e.g. people licenced and not provisional
20
Q
What are three common law provisions of providing product advice
A
- Duty to disclose conflicts
- Duty to adopt due care, diligence and competence and
- Fiduciary Duties.
21
Q
Up to page 25
A
up to page 25.
22
Q
The obligation to provide FSG applies to ______ that is ______ and ______
A
providing entities
AFSLs
ARs
23
Q
When must an FSG be provided?
A
As soon as practical after it becomes apparent that financial services will be provided.
24
Q
The FSG may be given to clients’ after the financial service has been provided in _________ what is where (2)
A
Time critical
Client expressly instructs Financial service to be provided immediately.
Not reasonable to provide FSG before hand.
25
Name (5 ) situations where FSG does not have to be provided
1. Not a retail client
2. Info in PDS and statement to that effect
3. Basic deposit product.
4. Public forum, General advice but only if info in 941C is given beforehand
5. No financial service is provided.
26
Failure to provide FSG will not contravene FSG if where was no reasonable __________
opportunity to do so.
27
Info about remuneration in and FSG must be (3)
Clear, concise and effective
28
What are the three requirements that need to be met, so that product advice to an intermediary would not be considered a service
1. expressly prohibit the intermediary to pass on.
2. Prominent statement that only intended for wholesale
3. No reasonable basis to believe it will be passed on.
29
If service provided through intermediary - does client need to get FSG
Yes
30
Can an FSG be bundled with PDS
Yes
31
An FSG is defective if (2)
1. Misleading statement
| 2. Omits required material
32
When must SOA be provided (3)
at same time as advice
or as soon as practicable
in any event - before before FS that derives from
33
SOA time critical - when ok (2)
1. Client expressly instructs and
| 2. Not reasonably practical
34
In time critical cases, how many days after FS provided
5
35
In time critical what info must be provided at time of advice (2)
946C
1. Conflicts of interest
2. Significant consequences from replacing financial product.
36
What are the conduct obligations of an SOA (4)
1. Act in the best interest of the client
2. provide appropriate advice
3. Warn if SOA based on incomplete or inaccurate info
4. Prioritise client interests ahead of your own.
37
SOA not required (3)
1. Not a retail client
2. Basic deposit product / general insurance
3. Further advice
4. Not related to financial product.
38
In a fact finding consultation. An SOA does not need to be provided as long as client is informed that (1)
1 purpose of consultation is to fact find so that advice can be provided.
2. The advice will be set out in an SOA
3. The client should not act on any representations in this consultation
39
Further advice - No SOA provided - ok if (3)
1. Already given client SOA
2. Relevant circumstances not significantly different.
3. Basis of advice is not significantly different.
40
If Further advice - what info needs to be provided
Any renumeration or benefit that could influence the advice.
41
ROA record keeping satisfied if (3)
1. Clearly set out advice provided to client
2. Summary of relevant circumstances
3. , Clear statement that info about relevant circumstances are in last SOA - only available if conducted reasonable enquiries to confirm that no change
42
What must an SOA contain(9)
1. Title - at or near front cover
2. providing entity details
3. if PE is AR - AFSL details
4. The advice
5. Basis for advice
6. Remuneration that may effect the advice
7. Info about remuneration someone else receives for referring.
8. Associations that could be expected to influence advice
9. Incomplete info warning
43
Switching advice needs to contain (3)
- The cost of action
- Lost benefits
- Other significant consequences
44
Can an SOA incorporate by reference
Yes
45
Reasoning that led to advice contains(
1. Subject matter sought by client
2. Scope
3. Summary of relevant circumstances
4. Why advice is considered appropriate including advantages and disadvantages
5. Concise statement of how advice provided has acted in best interest. (e.g. in better position)
46
Do you need to disclose if APL is restricted?
Yes
47
Three reasons remuneration does not need to be disclosed in an SOA
1. If doesn't depend on whether client follows advice.
2. It's rebated in full to the client.
3. Providing entity could not have reasonably been expected to be aware of benefit.
48
Other payments that need to be disclosed _____ o___ payements
Back office.
49
best interest duty obligations are on the
advice provider
50
If no person delivering advice - it is the ___ ____ who is responsible
Legal Person
51
When assessing whether an advice provider has complied with BID - consider:
Whether a reasonable advice provider would beleive that the client is likely to be in a better position if the client follows the advice
52
If an advice provider cannot act in the client's best interest in providing the advice. The provider must
not provide the advice
53
Does Safe Harbour need to be Met in order to meet BID
No, it's one way, but not the only way.
54
If safe harbour is not met, what is the requirement
carry out steps, that would at a minimum, provide at least the same standard - i.e. advice provider believes the client is in a better position
55
Modified BID - General insurance, cash - AR works for bank
Steps a - c
56
Best interest duty is
961B(1)
57
Safe Harbour is
961B(2)
58
Safe Harbour
a) Identify Objectives, Financial Situation and needs of client. (O,FS,N)
b) Identify - Subject matter of advice, relevant (OFSN)
c) if info relating to clients relevant circumstances (RS) is incomplete - make reasonable enquiries
d) asses if advice provider (AP) has enough expertise to provide advice (If not - decline)
e) If reasonable to recommend a financial product (FP) 1. Conduct reasonable investigations
2. asses info from 1
f) Base all judgements on RC
g) Take any other steps in the clients BI
59
An advice provider can determine scope only after...
identifying the subject matter of advice sought by client
60
An AP needs to use their judgement in determining scope. explain further
must determine scope in a way that is consistent with the clients relevant circumstances and the subject matter of the advice they are seeking.
61
Scope of advice - ASIC says it is good practice to do what in a case where scope is not self evident
Tell the clients what they think scope is and ask if correct
62
Scope of advice - How much client is willing to pay is a relevant factor, however...
It doesn't meant that advice providers can interpret subject matter according to what the client is willing to pay
63
What does ASIC say about providing general advice having personal information
We will not take action against an AFS licensee, authorised representative or advice provider where personal advice is given merely because general advice is given using personal information about a client’s relevant circumstances to choose general advice that is relevant and useful to the client. This only
applies if the client’s relevant circumstances are not considered when preparing the advice, and it is unlikely that the client would expect the advice provided to reflect a consideration of their relevant circumstances:
64
If the client requests that an advice provider consider a specific financial product, does the AP need to?
Yes
65
If an AP is unable to recommend a product outside APL and need to do so to meet BID advice provider must...
not provide advice
66
If AP's advice is based on other advice - (e.g. Tax agent) it must state
that they are assuming it is correct, rather than endorsing it.
67
A financial adviser who provides tax (financial) advice can do so without being registered with TPB provided
1. They are not doing so for fee or reward
| 2. The entity whom they are employed or registered has a sufficient number of individual registered tax agents.
68
What is the incomplete or inaccurate info warning (1)
1. Advice is incomplete or inaccurate
| 2. because of this, the client should consider appropriateness of advice taking into account O, FS and needs.
69
How long must records of advice be kept
Seven years
70
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71
BI test - A reasonable provider...
Should believe that the client is likely to be in a better position if the client follows the advice.
