FNSASIC302: Assessment 1 - Client Solutions and Fee Arrangements

This assignment solution for FNSASIC302 Assessment 1 addresses crucial aspects of financial services, including the interpretation of RG245 and its key elements for AFS licensees regarding ongoing fee arrangements. It explains the legal basis and purpose of providing a statement of advice, along with the legal and ethical issues surrounding trailing commissions. The solution also covers regulatory bases for risk disclosure in the Australian financial planning industry, client complaint procedures, and the requirements for Fee Disclosure Statements (FDS). Further, it explores whether insurance brokers must issue a statement of advice, the regulatory codes involved in EFT, and the legal basis of non-cash payments. The document provides a detailed and comprehensive overview of the topics covered in the assessment.

FNSASIC302 -
Develop, present and
negotiate client
solutions
Assessment 1
Knowledge
1

Table of Contents
Activity 1...............................................................................................................................................3
Identify and explain key elements of RG245 that AFS licencees and representatives must consider
when entering into ongoing fee arrangements...................................................................................3
Activity 2................................................................................................................................................3
Explain the legal basis and purpose of providing a statement of advice to a client...........................3
Activity 3................................................................................................................................................3
Explain the legal and ethical issues surrounding the payment of trailing commissions to finance
and mortgage brokers and advisers..................................................................................................3
Activity 4................................................................................................................................................4
Identify and explain the regulatory basis for risk disclosure in the Australian financial planning
industry.............................................................................................................................................4
Activity 5................................................................................................................................................4
Explain what a client should do if they have a complaint about a statement of advice....................4
Activity 6................................................................................................................................................4
RG245 requires Financial Service Providers to issue Fee Disclosure Statements (FDS) to clients who
enter into ongoing fee arrangements. How must a FSP provide FDSs to clients?.............................4
Activity 7................................................................................................................................................5
Are insurance brokers required to issue a statement of advice to their clients? Explain your
answer...............................................................................................................................................5
Activity 8................................................................................................................................................5
What regulatory code must a business involved in EFT consider?....................................................5
Activity 9................................................................................................................................................5
Explain the legal basis of the term ‘non-cash payments”..................................................................5
2

Activity 1
Identify and explain key elements of RG245 that AFS licencees and representatives
must consider when entering into ongoing fee arrangements.
The various key elements of RG245 are mentioned below:
The statement of fees disclosure which is obligatory is being mentioned in Division 3 of Pt 7.7A
under the act of corporation that states guidance upon FDS that who must submit along with a
direction towards its preparation. This key element also comprises about the time deadline and a
mode for submitting FDS. Other than this it includes, several remuneration and fees disclosure along
with its conduct that is an obligation for advisors to apply within. The disclosure comprises of about
data available in advice statement as well as service guide financial statement.
Activity 2
Explain the legal basis and purpose of providing a statement of advice to a client.
The legal basis and purpose of providing a statement of advice to a client comprises of three
different types of obligations which are legal following to which is a responsibility of an advisor is
during submitting of advice statement. The three legal forms are mentioned below:
 Corporation Act year 2001 section 947b which is also called as Corporation Law.
 Professional Practice Code
 Compliance to license of finance.
The main motive behind advice statement to client is to provide adequate and complete information
to him very clearly so to have effective decisions in order to think about reliability on available
information.
Activity 3
Explain the legal and ethical issues surrounding the payment of trailing
commissions to finance and mortgage brokers and advisers.
The RD245 statement of Fee disclosure refers to a guide from ASIC which is treated as a
regulatory that offers proper direction regarding commissions or fees. A statement says that there
should be full disclosure about the fees that is being received by a client or should be offered in
concrete written manner as soon as possible. In respect to implementation fee that is provided for
SOA are of three kinds which are mentioned below:
 Payment through received funds from recommendations of goods providers like a
commission.
 A payment made through paying a fees of service either by BPay or cheque.
 A collaboration of above mentioned all forms.
3

Other than this there is also an obligation being imparted by the act of corporation with is
also related to disclosure of remuneration and fees upon licenses of AFS from its
representatives who are authorised to provide retail clients with advice of financial product.
The different obligations covers below mentioned points:
 Providing and offering FSG in the category S941 to 943.
 Certain provisions related to remuneration conflicts along with different remunerations that
are banned under Pt 7.7A of Division 4-5.
 Providing and preparation of SOA by following S946 and 947 if advice is offered personally.
 S962K to 962Q different requirements in order to renew or opt in the notice for compliance.
Activity 4
Identify and explain the regulatory basis for risk disclosure in the Australian
financial planning industry.
The regulatory basis for disclosure of risk is mentioned below:
 Describing the interpretation of ASIC law.
 Having guidance of practicality like procedure related to licence application, etc.
 Describing the execution of specified powers which are going to be made by ASIC in relation
to legislation specially Act of corporation.
 An approach of ASIC towards its principles.
Activity 5
Explain what a client should do if they have a complaint about a statement of
advice.
If a client is unsatisfied with an advisor he has an option of lodging complaint against him by
following any of the option for complaint which is mentioned below:
 Contacting the firm by own in order to complaint against statement of advice.
 Lodging the complaint by self
 Having conversation with an Ombudsman of financial service.
 Can ask help form court for resolving the complaint.
Activity 6
RG245 requires Financial Service Providers to issue Fee Disclosure
Statements (FDS) to clients who enter into ongoing fee arrangements. How must
a FSP provide FDSs to clients?
The regulatory guides provides following guidance:
 Interpretation of law made by ASIC
 Describing about powers and legislations being implemented by advisor of ASIC
 ASIC approach of mentioning certain principles.
4

 Having full-fledged practical direction such as procedure for application of license or
otherwise having example of deciding some points to fulfil obligations by authorised entities.
Activity 7
Are insurance brokers required to issue a statement of advice to their clients?
Explain your answer.
There is a chance of providing statement of advice by an insurance broker on basis of advice
type which a broker offers. It is an option to advisor to ask for certain amount of fees for providing
statement or can be asked for a commission from insurance firm. In order to do this an insurance
broker is required to acquire licence from AFS and fulfil all guidelines of Corporation Act. They are
authorised to provide advice statement but not always only if such advice is depended on
statement.
Activity 8
What regulatory code must a business involved in EFT consider?
The regulatory code that must be involved in EFT is payment if transactions by electronic
mode. This is a specific code that includes payment of money through EFT, POS, ATMs, debit or
credit card, mobile or internet banking, BPay, online payment, etc. The code came into existence
from year 1986 being administered by ASIC.
Activity 9
Explain the legal basis of the term ‘non-cash payments”
Non cash payments comprise of certain products such as cheque of travellers, cash in
electronic mode, payments of bill electronically, cheques accounts, etc. This provides discussion
upon facilities of non-cash payments at less value, gift vouchers, schemes of loyalty, road toll
payment via electronic mode, etc. along with its facilities or policies that provides provisional reliefs
from Corporation Act.
5