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CQiB > 5. Meeting Customers' Needs > Flashcards

5. Meeting Customers' Needs Flashcards

1
Q

What are four types of personal accounts?

A
  1. Sole
  2. Joint
  3. Account for minors
  4. Trustee (including business accounts)
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2
Q

What is a sole personal account?

A

One account holder

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3
Q

What is a joint personal account?

A

Two or more account holders

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4
Q

What is an account for minors

A

For under 18s

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5
Q

What is a trustee?

A

People who are holding money in trust for someone else (including for a business)

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6
Q

What are the five life cycle stages for individuals?

A
  1. Youth
  2. Independent
  3. Family
  4. Empty nester
  5. Retirement
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7
Q

What are the characteristics of the youth life cycle stage?

A
  • Key target market for banks due to the fact that generally once an individual commences a relationship they stay for a long time
  • Younger generations are becoming less loyal and expect more from the products and services offered to them
  • This market is more tech-savvy and embrace change and values convenience
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8
Q

What are the characteristics of the independent life cycle stage?

A
  • Younger people who are likely to be earning an income, but have no dependents
  • They represent the transition between youth and family and are likely to have some short-term savings goals
  • They may have personal loans and credit card debt and are likely to seek innovative payment and product solutions
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9
Q

What are the characteristics of the family life cycle stage?

A
  • Generally have limited additional income to set aside in savings account
  • If they do save, it will probably be for short-term expenses like holidays
  • Some may have a longer-term savings goal to fund their childrens’ education
  • Many will have high levels of home loan or other debt such as investment loans
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10
Q

What are the characteristics of the empty nester life cycle stage?

A
  • This is where an individual may still be earning, but their children have left home
  • They tend to have a larger amount of disposable income and are likely to have the greatest opportunity to focus on savings and investments
  • Some of their additional disposable income may go on holidays and entertainment or preparing for retirement
  • They often have minimal or no outstanding debt
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11
Q

What are the characteristics of the retirement life cycle stage?

A

This is the stage where savings are generally used as a source of income. This group tends to focus on gaining sound investment returns over the duration of their retirement.

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12
Q

What factors influence good service?

A

How we perceive service could be influenced by a variety of factors, for example, our previous experiences, our expectations, our thoughts - even our mood, that is, how we’re feeling at the time. Service is therefore subjective. As such, providing great service to all customers at times is a challenge for any service provider.

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13
Q

What year was the Privacy Act enacted?

A

1988

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14
Q

What are the implications of the Privacy Act 1998 for bankers?

A

It is vitally important that customers’ affairs are not discussed outside the office, or with anyone outside the organisation. This is part of a banker’s duty of confidentiality.

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15
Q

What are some examples of customers experiencing vulnerability?

A
  • A physical disability
  • Severe or long-term illness
  • Mental health problems
  • Low income and/or high levels of debt
  • Caring responsibilities
  • Advanced age, for example, over 80
  • Being young with less experience
  • A change in circumstances (e.g., job loss, bereavement, divorce)
  • Language barriers
  • Non-standard requirements or credit history
  • Low levels of literacy, numeracy, and financially capability or formally diagnosed learning difficulties
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16
Q

What are four types of issues customers experiencing vulnerability may face?

A
  1. Temporary issues
  2. Sporadic issues
  3. Permanent issues
  4. Compound issues
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17
Q

What are temporary issues? Provide examples.

A

Such as unemployment, unexpected and significant expense, short-term illness or bereavement where the issues are not permanent but will cause short-term challenges.

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18
Q

What are sporadic issues? Provide examples.

A

Part of a recurring situation, but not constant, such as recurring but irregular physical conditions, depression, or providing care to a dependent.

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19
Q

What are permanent issues? Provide examples.

A

The issue is permanent and will not change, such as a permanent medical condition like impaired mobility, blindness or dementia.

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20
Q

What are compound issues for customers?

A

A customer that is already in a permanent vulnerable position could find their position further complicated by a short- or medium-term issue that would represent a much larger risk.

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21
Q

What year was the Corporations Act enacted?

A

2001

22
Q

What does the Corporations Act govern?

A

A number of laws govern interactions with customers, including the Corporations Act provisions 2001 regarding providing financial product advice. The corporation act also distinguishes between two different types of advice: (1) personal advice; and (2) general advice.

23
Q

What act governs providing financial advice?

A

Corporations Act 2001

24
Q

What is personal advice?

A

You have considered one or more of the customer’s financial situation needs or objectives, or a reasonable person might expect you to have considered one or more of those matters.

25
Q

What is general advice?

A

All other financial product advice that falls outside the scope of personal advice.

26
Q

What is hawking?

A

Hawking is the selling of financial products based on unsolicited contact with the customer. A clear example of hawking is the now prohibited selling of life insurance form people “knocking on front doors”.

27
Q

What event instigated the introduction of anti-hawking provisions and under which act? When did these changes become effective?

A

The Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry states that “no financial products should be hawked to retail clients.” As a result it is now illegal for the hawking of financial products under the Corporations Act. This includes managed investment schemes, securities, shares, currency trading superannuation and insurance and this became effective from 5 October 2021.

28
Q

What are the changes under the new anti-hawking provisions?

A

The new changes prohibit hawking under one general prohibition. A person cannot sell, request or invite the purchase of a financial product if the person is a retail client, and the offer is made in the course of, or because of, unsolicited contact with the customer.

29
Q

How is unsolicited conduct defined under anti-hawking provisions?

A

This is contact made by telephone, face to face meetings, or any real-time interaction that the customer did not consent to. A customer must consent to any contact and this consent must be voluntary, positive and clear.

30
Q

What are the three requirements for customer consent under anti-hawking provisions? How long is consent valid for?

A

Consent must be:
- Voluntary
- Positive
- Clear

Consent is valid for six weeks from the time contact is made. Customers can specify how they wish to be contacted and have the right to withdraw or vary this arrangement at any time.

31
Q

What is the overall effect of consent provisions when it comes to the selling of financial products?

A

This shifts the power to be contacted from the bank to the customer when it comes to the selling of financial products.

32
Q

What are the three steps for bankers working towards solutions for complaints?

A
  1. Asking the customer what they would like to happen
  2. Explaining your bank’s position
  3. Giving alternative solutions if you can
33
Q

What are five steps involved in gathering facts for handling complaints?

A
  1. Let the customer talk
  2. Listen for information and ask questions to clarify what happened
  3. Take notes so that you have a record of the conversation to refer to later
  4. Paraphrase key points and check your understanding with the customer
  5. Remember to thank the customer at the end of the conversation for telling you what happened
34
Q

What are IDR procedures? Why are they required?

A

A bank must have written internal dispute resolution procedures to ensure complaints are properly handled.

35
Q

What are the benefits of having written internal dispute resolution procedures?

A
  • Enable relevant staff to understand and follow the procedures
  • Promote accountability and transparency of the procedures
  • Facilitate the ease of understanding and accessibility of the procedures for consumers
  • Facilitate the self-certification process for AFSLs and credit license applicants.
36
Q

Who must IDR procedures be provided to and where are they normally documented?

A

A copy of the IDR procedures must be provided to all relevant staff. Complaint procedures are normally available in the Financial Services Guide.

37
Q

What regulation covers internal dispute complaint timeframes?

A

Under RG 271 different maximum timeframes for complaint resolution apply for different types of complaints.

38
Q

What is the maximum timeframe for financial firms to provide an IDR response to standard complaints?

A

No later than 30 calendar days after receiving the complaint.

39
Q

What is the maximum timeframe for financial firms to provide an IDR response to traditional trustee complaints?

A

No later than 45 calendar days after receiving the complaint.

40
Q

What is the maximum timeframe for financial firms to provide an IDR response to superannuation complaints?

A

Except for complaints about death benefit distributions, no later than 45 calendar days after receiving the complaint.

41
Q

What is the maximum timeframe for financial firms to provide an IDR response to credit-related complaints involving default notices?

A

No later than 21 calendar days after receiving the complaint.

42
Q

What is the maximum timeframe for financial firms to provide an IDR response to credit-related complaints involving hardship notices or requests to postpone enforcement proceedings?

A

No later than 21 calendar days after receiving the complaint. Exceptions apply if credit provider or lessor does not have sufficient information to make a decision, or if they reach agreement with the complainant.

43
Q

What are the requirements for financial firms if there is insufficient information relating to credit-related complaints involving hardship notices or requests to postpone enforcement proceedings?

A

If the credit provider or lessor does not have sufficient information about a hardship notice to make a decision, they must request the information no later than 21 calendar days after receiving the complaint. The complainant must provide the information within 21 calendar days of receiving the request.

Once the credit provider or lessor has received the requested information, the credit provider has a further 21 days to provide an IDR response. If the credit provider or lessor does not receive the requested information with 21 calendar days, the credit provider has 7 calendar days to provide an IDR response.

44
Q

How long does the credit provider have to confirm the terms of an agreement reached in relation to credit-related complaints involving hardship notices or requests to postpone enforcement proceedings?

A

If agreement is reached about a hardship notice or request to postpone enforcement proceedings, the credit provider or lessor has 30 calendar days to confirm the terms or conditions in writing.

45
Q

What are EDR schemes?

A

Services provided by external dispute resolution schemes are free to customers making a complaint. AFSLs pay an annual member fee as well as additional fees when a complaint is lodged and addressed by the EDR scheme. Decisions made by EDR schemes are binding on AFSLs and their employees and representatives.

46
Q

Who handles external dispute resolution schemes in Australia?

A

The AFCA (Australian Financial Complaints Authority) is the only ASIC approved EDR scheme for the Australian financial and credit authorities.

47
Q

What happens if a customer is unsatisfied with the result of an EDR outcome?

A

If a customer is unhappy with the result, they retain the right to pursue the issue through the civil court system at their own expense.

48
Q

What is the AFCA? Who is it operated by?

A

The Australian Financial Complaints Authority is the external dispute resolution scheme to deal with complaints from consumers and small businesses about financial services and products. It will be operated by a not-for-profit company limited by guarantee authorised by the Minister for Revenue and Financial Services (Minister).

49
Q

What does the AFCA replace? How has this improved upon the previously existing system?

A

The AFCA replaces three existing EDR schemes—the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and Superannuation Complaints Tribunal (SCT) so that consumers have access to a single EDR scheme.

49
Q

What does the AFCA replace? How has this improved upon the previously existing system?

A

The AFCA replaces three existing EDR schemes—the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and Superannuation Complaints Tribunal (SCT) so that consumers have access to a single EDR scheme. Membership of AFCA is required under law or a licence condition of financial firms that provide financial products and services.

50
Q

What year was AFCA introduced?

A

2018

51
Q

What can AFCA not do?

A

AFCA cannot:
- Provide financial or legal advice
- Deal with a complaint that has already been dealt with by a court, tribunal, arbitrator or a predecessor external disputes resolution scheme, including the Financial Ombudsman Service (FOS), Credit and Investments Ombudsman (CIO) and Superannuation Complaints Tribunal (SCT)
- Accept complaints about certain insurance products, including private health insurance and some commercial general insurance products

CQiB (7 decks)

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