Tutorial 4

Question 1

Under a limited AFSL License can you recommend rolling funds into SMSF?

Answer 1

No

Question 2

What ‘class of product advice’ is allowed under limited AFSL

Answer 2

o	superannuation products
o	securities
o	simple managed investment schemes
o	general insurance products
o	life risk insurance products
o	basic deposit products

Question 3

What is class of product advice?

Answer 3

?

Question 4

Which act is the best interest duty in Corps act

Answer 4

961G

Question 5

Who’s duty to comply with best interest duty

Answer 5

Advice provider.

Question 6

FDS must be given within (days)

Answer 6

60 days

Question 7

Opt in terminates xxx days after anniversary

Answer 7

30

Question 8

If continuing to charge fees after opt in and fds then it is a xxx penalty

Answer 8

civil

Question 9

Conflicted remuneration is $ that could

Answer 9

1. Reasonably be expected to influence choice of product

2. Reasonable be expected to influence the product advice.

Question 10

Not conflicted rem if:

Answer 10

• General Insurance
• Less than prescribed amount
• Genuine training purposes.
• Info on technology or software support

Question 11

As a limited AFS the firm does not need to lodge an auditors report - instead a

Answer 11

annual compliance certificate

Question 12

What is the purpose of the FDS statement

Answer 12

To help client’s ascertain whether they are receiving a service from their advisor that is commensurate with the ongoing fee they are paying.

Question 13

Insurance premium commission is ongoing fee

Answer 13

False

Question 14

What must be included in the FDS (3)

Answer 14

Fee Amount
Services provided
Services entitled to.

Question 15

Is a clients decision to provide free tickets in exchange for free advice and ongoing fee. Why?

Answer 15

No - because each year the client makes the decision whether or not to but the tickets.

Question 16

Explain what you must do for ongoing fee arrangement

Answer 16

1. within 60 days of renewal notice day, give opt in and FDS

2. opt in must have a statement that the renewal period is 30 days from when the opt in is given.

Question 17

Simple path through conflicted rem(3)

Answer 17

1. Is the renumeration coming from client and has client consented? (ok so far)
2. If the ongoing fee more than 12 months - if so FDS/ RN
3. is the benefit coming from other entity. Could it reasonably be expected to influence the advice - if yes, then conflicted rem

Question 18

Conflicted rem is all commissions excluding

Answer 18

Certain life insurance commissions

Question 19

Conflcted Rem (4)

Answer 19

1. Commissons
2. Volume based payments
3. Potentially - non monetary benefits.
4. % fees on borrowed money

Question 20

When is the onus on proof on the receiving party to show that the remuneration is not conflicted?

Answer 20

Volume based payments.

Question 21

Name 5 circumstances where non-monetary is not conflicted rem

Answer 21

Benefit for General Insurance

Small value - e.g.

Question 22

Is brokerage conflicted rem?

Answer 22

No - excluded

Question 23

Criminal liabilities are what main things:

Answer 23

1. Lack of disclosure documents
2. Misleading statements
3. Hawking provisions

Question 24

Does FDS include pre- FOFA clients

Answer 24

Yes

Question 25

Does a client to agree to a commission or fee because the fee is put in the SOA

Answer 25

no

Question 26

Does an FDS need to be sent with the Opt_in

Answer 26

Yes

Question 27

What life insurance commissions are not except under the conflicted rem carveout.

Answer 27

1. Group Life

2. Life insurance in a default fund

Question 28

Generally is buyer of last resort conflicted

Answer 28

No - generally not

Question 29

Is conflicted rem that is paid back to client ok?

Answer 29

Yes

Question 30

Is conflicted rem that is not passed back to an adviser ok

Answer 30

Yes