CH5-Meeting Customer Needs Professionally and Responsibly

Question 1

What is the definition of a financial product?

Answer 1

A facility through which, or through the acquisition of which, a person does one or more of the following:

a) Makes a financial investment
b) Manages a financial risk
c) Makes non-cash payments

Question 2

When providing financial advice, without an AFSL licence what information can ab individual provide?

a) Factual information
b) General advice
c) Personal advice

Answer 2

a) Factual information only. Factual information is defined as “Objectively ascertainable information, the truth or accuracy of which cannot be reasonably questioned”.

Question 3

When does an individual need to have an AFSL license?

Answer 3

When they are providing advice, recommendation or a statement of opinion that will:

a) Is intended to influence a decision related to a financial product or class of financial products
b) be reasonably regarded as having the intent to influence

Question 4

What is the difference between personal and general advice?

Answer 4

Personal advice is when you have considered one or more customer requirements. General advice is all other product advice, no taking into account the customer’s requirements/situation.

Question 5

When general advice is given to a customer, what else must accompany this advice?

Answer 5

A warning that the advice given is does not take into account the customer’s objectives, financial situation or needs.
And that the customer warned that they must consider the appropriateness of advice for themselves.

Question 6

What is hawking of financial products?

Answer 6

Hawking is the selling of financial products based on unsolicited contact.

Question 7

The Corporations Act 2001 requires that a Financial Services Guide (FSG) and Product Disclosure Statement (PDS) be provided to customers. What is the difference between these two documents?

Answer 7

A FSG helps customers understand the financial services being offered to them by a financial services provider. A PDS needs to provide all information on a financial product that a customer intends to purchase.

Question 8

What is the definition of a customer complaint?

Answer 8

An oral or written expression of dissatisfaction, made to or about the bank, about a product, service, staff or the handling of a complaint where there is an expectation (or legal requirement) of a response or resolution.

Question 9

RG271 requires all ASIC regulated entities to comply with a new set of complaint/dispute resolution processes. When did it come into effect?

Answer 9

5th October 2021.

Question 10

What are the four standard components to follow for handling a complaint?

Answer 10

1) Empathise
2) Gather facts
3) Resolve - Working towards agreeing on an appropriate resolution
4) Verify - Say what you can do, not what you can’t

Question 11

As a result of Regulatory Guide 271: Internal Dispute Resoution all banks must have an IDR and be a member of AFCA the approved EDR. What do the acronyms IDR, AFCA and EDR mean?

Answer 11

IDR - Internal dispute resolution
AFCA - Australian Financial Complaints Authority
EDR - External Dispute Resolution

Question 12

Under RG271 what what number of days is allowed for a final response for standard complaints?

Answer 12

30 days

Question 13

Samuel explains that the XYZ savings booster account has a bonus interest rate and is a good choice for customers who want a higher return on their account and do not need to access their funds. What type of advice is Samuel providing?

a) Factual information
b) General advice
c) Personal advice
d) Product recommendation

Answer 13

b) General advice

Samuel has given some advice such as “a good choice for a customer who wants a higher return”.

Question 14

Under RG271 the maximum timeframe for Standard Complaint must be:

a) No later than 45 calendar days after receiving a complaint
b) No later than 21 calendar days after receiving the complaint
c) No later than 30 calendar days after receiving the complaint|
d) No later than 90 days after receiving the complaint

Answer 14

c) No later than 30 calendar days after receiving the complaint

Standard Complaints need a response on 30 days for a final response

Question 15

Which would be considered factual advice only?

1. Providing a customer an insurance quote
2. Providing a customer with an estimate of how much insurance is appropriate
3. Recommending an account that will generate a higher interest return because of regular deposits that has been discussed with the customer
4. You recommend a product based on account activity

Answer 15

1. Providing a customer an insurance quote

Quote is factual advice as long as no specific information was taken from the customer.

Question 16

What is the maximum timeframe to respond to credit-related complaints involving default notices?

21 days

30 days

45 days

90 days

Answer 16

1. 21 days

If its 30 days for a Standard Complaint, a credit complaint is more time critical so will be a shorter duration.

Question 17

Which of the following statements define compound Issues if we have a vulnerable customer?

1. A customer 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
2. Part of a recurring situation, but not constant, such as recurring but irregular physical condition, depression, or providing care to a dependent
3. The issue is permanent and will not change, such as a permanent medical condition like impaired mobility, blindness, or dementia
4. Where the issue is not permanent but will cause short-term challenges, such as unemployment, short term illness or bereavement

Answer 17

1. A customer 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.

Compound implies the customer is already in a permanent vulnerable position then the situation is complicated by additional issues.

Question 18

Which document/s must be provided prior to providing General Advice?

1. FSG, General Advice Warning, and All Feedback is Good Feedback
2. Product Disclosure Statement
3. Banking Code of Practice, FSG and Product Disclosure Statement
4. FSG and Product Disclosure Statement and General Advice Warning

Answer 18

4. FSG and Product Disclosure Statement and General Advice Warning

Question 19

Which is true about vulnerable customers?

It may not be immediately obvious a customer is in a vulnerable situation

A customer needs to tell you they are vulnerable

If you are unsure, you should confirm if a customer is vulnerable on NABs source systems

Mental health is one of the two characteristics of vulnerability according to ASIC.Mental health is one of the two characteristics of vulnerability according to ASIC

Answer 19

1. It may not be immediately obvious a customer is in a vulnerable situation

Question 20

When looking at the ‘Customer Lifecycle’ what is true when it comes to ‘Independents’?

Likely to be earning an income but have no dependents

Additional income may go towards entertainment or holidays

They are tech savvy

They are becoming less loyal

Answer 20

1. Likely to be earning an income but have no dependents

Question 21

General advice can be provided

1. Verbally only
2. Only in written form, including electronic communication
3. Verbally or in written form, including electronic communication
4. In written form, including emails and brochures, but no through social media

Answer 21

3. Verbally or in written form, including electronic communication

Question 22

Sarah is asked by a customer “I am 25 and looking for a low interest rate and great rewards. What credit card would you recommend?” Sarah states “We offer two credit card products that suit your life stage, and both have a strong rewards program. I recommend you look at both of these products and apply them to your situation.” Sarah is providing which of the following?

1. Factual information
2. General financial advice
3. Personal financial advice
4. Product recommendation

Answer 22

2. General financial advice

Sarah has taken all NAB credit card products and provided two options based on her judgement for the customer. Input information is generalized, so additional specifics are sought from the customer.

Question 23

Which is not a type of issue a vulnerable customer may experience?

1. Temporary Issues
2. Sporadic Issues
3. Simple issues
4. Compound issues

Answer 23

3. Simple issues

Question 24

What are examples of customers experiencing vulnerability?

Answer 24

1. Learning difficulties
2. Physical disability or long term illness
3. Mental health problems
4. Low income or high debt
5. Dependent or caring responsibilites
6. Advanced aged
7. Young in less experienced
8. Change of circumstances incurring stress
9. Lack of English communication skills
10. Non-standard requirements or credit history

Question 25

Complaints procedures (IDR and EDR) are normally available in the FSG. IDR procedures should have four main features, what are they?

Answer 25

1. Enable staff to follow procedures
2. Promote accountability and transparency
3. Ease of understanding and accessibility for customers
4. Facilitate self-certification

Question 26

What types of complaints are there and what are their time frames for Internal Dispute Resolution responses?

Answer 26

• Credit related complaints - 21 days
• Standard complaints - 30 days
• Traditional trustee complaints - 45 days
• Superannuation complaints - 45 days
• Credit related involving hardship or enforcement - 21 days. However, given these circumstances are complex the provider has 21 days to request sufficient information. Upon request there is 21 days to receive information and a further 21 days to provide a response.

Question 27

What is External Dispute Resolution (EDR)?

Answer 27

Free service provided by Australian Financial Complaints Authority (AFCA) and is the only ASIC approved EDR scheme.

Question 28

What is outside the remit of AFCA?

Answer 28

1. Provide financial or legal advice
2. Complaints already dealt with by EDR, court, tribunal, etc.
3. Complaints on certain insurance, private health and commercial general