Date 10/09/2015 September 2015 Technical Day Corporate Governance Update.

Date 10/09/2015

September 2015 Technical Day Corporate Governance Update

The Advice Exchange Pty Ltd 2

What is a complaint?Anyone in business will at one time or another experience an expression of

dissatisfaction from a client (a complaint) about their actions or inactions.

How TAE and its advisers deal with a complaint is important, as it is a

requirement under our Licence.

As outlined in the TAE Representative Manual and Policies, there are set

procedures to follow for complaints and incidents, which we will go through

today.

Understanding different types of client dissatisfaction:

1. Concerns

2. Complaints.


Concern or complaint?

Concern

A concern is an expression of disappointment with a situation that can generally be resolved by way of an explanation on the spot. Concerns are usually made verbally.

Examples:

Client questions why their portfolio value has fallen

Client asks why the fees disclosed in the SOA are so high


Concern or complaint?Complaints

A complaint is any expression of dissatisfaction that cannot be resolved on the spot. Complaints can be verbal or in writing.

Types of Complaints

1. An advisory complaint is where a client expresses dissatisfaction with:

the Financial Advice given by a Representative;

the manner in which a Representative has conducted an interaction, and

General dissatisfaction with performance.

Examples:

Client expresses dissatisfaction with the exit fee deducted from their portfolio when withdrawing funds, as it was not disclosed in the SoA

Client lost their insurance cover when they rolled over an old super fund. They now want to make a complaint as it was never disclosed in the SoA.


Types of complaints

2. A product complaint is where a client expresses dissatisfaction with:

a product processing or procedural error;

product-related delays (e.g. receipt of documents, payment delays), and

product premiums and charges.

Example

Client questions why there was a long delay in the processing of their application. The fund manager had lost all their paperwork and markets fell during the processing time.

3. A non-advisory complaint is where a client expresses dissatisfaction with any other aspect of the service or product they have received.


Complaints - what am I required to do?

Record all complaints in your complaints register.

A template is available on the TAE website

Advise the TAE Corporate Governance Manager where a complaint might:

Incur costs of more than $1000.

Where a complaint escalates or is likely to escalate into an incident (incident reporting process outlined next page).


What is an incident? An incident is any event, resulting from a risk, which has direct monetary,

regulatory or other economic impact.

This may occur due to inadequate or failed:

Internal processes

Methodologies

Systems

OR

Human error

External events.


Examples of incident’s SoA delivered outside the time critical period of 5 business days after

providing verbal advice;

A FSG has been updated and was not provided to an existing client when

further advice was provided;

Providing a RoA to an existing client when there were significant changes to

the client’s personal circumstances;

Employee or third party theft, deceit;

Non-disclosure of referral fees;

Loss due to inadequate data security;

Disclosure of client’s details to another business;


Examples of incident’s

Loss due to systems failure;

Not following the complaints handling process;

Any breaches of regulations;

Legal action due to misleading advice;

Non-compliance (breach) with any TAE business policy or guidelines, and

Loss due to external events, such as natural disaster.


Incidents - what am I required to do?

All practices are required to keep an incident register and have this available for your audits.

ALL Representatives are responsible for reporting incidents to the TAE Corporate

Governance Manager who will be responsible for maintaining the register for the

Licensee.


These incidents must be reported to TAE within 48 hours.

Any situation where the cost to the organisation is $1000 or more

Any compliance breach and or fraud, regardless of size

Systemic incidents – where incidents recur which can highlight

inadequate or failed processes or a breakdown of controls

Any potential lawsuit or complaint that might cost more than $1000

Near misses – these are instances where but for a lucky coincidence,

would have resulted in an incident e.g. a bulk mail out of FDS would have

been sent with incorrect/missing formation if someone else hadn’t noticed it

(e.g. mail house).

How do I notify TAE?

Send an email to the Corporate Governance Manager containing all

information of the incident – you may wish to attach a copy of your incident

register

TAE will then guide you through any further action steps required.


What is a Breach? A breach is any circumstance where we have been unable to meet our

legislated obligations.

E.g. an adviser giving advice outside the scope of our licence.

These obligations can stem from any part of the law that applies to our

business, including our AFSL license conditions or our professional body (FPA)

Code of Conduct. This is quite extensive.

Significant/ Reportable Breach

Factors that determine whether a breach (or likely breach) is 'significant' and may

need reporting to ASIC include:

the number or frequency of similar previous breaches

the impact of the breach on the TAE's ability to provide the financial services

covered by the licence

the actual or potential loss to clients or the licensee itself.


SummaryEvery practice is required to keep:

1. A Complaints Register

2. An Incident Register

Templates of these Registers are available on TAE website

TAE encourages and supports a culture of disclosure

– if you are unsure on whether you have an incident

that needs reporting, simply give us a call and

we can workshop it together.

Training and RG 146 Update


RG 146 and SMSF

In recent times there has been increased demand for advisers to meet Regulatory Guide 146 (RG146) compliance in the specialist knowledge area of SMSF.

TAE’s Policy on SMSF’s

The area of SMSF requires specialist technical knowledge e.g. tax, legislation etc. – currently most SMSF courses offer between 20 to 35 CPD in recognition of the very technical nature of these studies.

As such it is TAE’s policy that all of our advisers that wish to provide full SMSF advice need to meet RG 146 for SMSF (by way of an accredited SMSF qualification).


RG 146 and SMSFWhat does this mean for you?

Scenario 1

You receive referrals from an accountant to do the recommendation and placement of funds and insurance within an existing SMSF structure.

No additional training required – please note that you would not be able to provide any advice in your SOA re the “appropriateness of the existing SMSF”.

Scenario 2

You wish to be able to review a clients situation and then recommend the establishment of a SMSF for them.

You will need to be accredited with a RG 146 SMSF qualification to be able to recommend the establishment of a SMSF.

Your new TAE Authorisation certificate (being handed out today) will show whether you are approved for SMSF or whether it is listed as an exclusion.


RG 146 and SMSFWhat are my study options?

1. Undertake a SMSF course – these are offered through many institutions e.g.

FPA , Kaplan , Mentor, Adelaide University or SMSF Association.

2. Apply for RPL though SMSF Association accreditation exam:

Eligibility Criteria

Be an Associate Member

Have a minimum 2 years experience providing advice and/or services to the SMSF sector.

SMSF related work activities should account for, or be growing towards a minimum of 10% of your total workload.

The SSA™ accreditation program offers members two distinct options:

1. Express Program

Suitable for members that wish to complete the accreditation program based on their current SMSF expertise. 2 hour exam with no study content.

2. Pathway Program

Suitable for members that seek validation of their SMSF knowledge and guidance on their development needs prior to attempting the online examination component of the program.


RG 146 and Credit Licence Requirements

You need to hold a credit licence if you provide credit assistance to a client.

You are giving credit assistance to a consumer, by dealing directly with a consumer

or the consumer’s agent if you:

suggest or assist a consumer to:

apply for a particular credit contract with a particular credit provider, or apply for a particular consumer lease with a particular lessor;

apply for an increase to their credit limit on a particular credit contract; or

remain in their current credit contract or consumer lease; or



Examples

1. A suggestion to a consumer that they consider borrowing in order to finance residential property, but not referring to a particular credit provider or specific credit product, would not be ‘credit assistance’ under s8. NO

2. However, a suggestion that a consumer approach a particular finance company or bank about a specific product would be credit assistance, even if the person making the suggestion does not arrange or help with setting up the credit contract. YES

A suggestion to see a broker that offers a wide range of lenders is NOT credit advice

3. A consumer approaches an adviser for advice about managing their debts after becoming redundant. The consumer does not seek advice on whether they should stay in their current credit contracts or not.

The adviser suggests that, as a general principle, the consumer pay off the loans with the highest interest rate first. This advice is not credit assistance, even if the specific loans owed by the consumer are identifiable as particular credit products. NO

4. If an adviser tells a consumer seeking advice about debt management that they can approach their credit provider to discuss renegotiating a loan on the basis of hardship, then this would not be credit assistance. NO

However, it is credit assistance if the adviser:

suggests that the consumer remain in the existing credit contract; or

negotiates a new credit contract with the credit provider on the consumer’s behalf.



What are my study options?

Undertake a certificate IV in financial services (finance/mortgage broking) course – these are offered through many institutions: E.g. FPA , Kaplan , Mentor, Finance Institute


Tax (Financial) Advice

What is Tax (Financial) Advice?

Any advice given by a representative of a financial services licensee that involves application or interpretation of the taxation laws to the client’s personal circumstances, and it is reasonable for the client to expect to rely on the advice for tax purposes.

Generally this comes into play when we deal with superannuation.

If I register as a tax (financial) adviser, will I be able to lodge tax returns for a fee or reward?

No. To lodge tax returns on behalf of others for a fee or other reward you must be a registered tax agent.


Tax (Financial) Advice

What are my ongoing Requirements?

20 CPE per annum

This can be made up from existing CPD which has a tax element

TAE Tech days will count

Kaplan TASA subjects have been added to all training profiles

Don’t let your Tax (Financial) Advice registration lapse due to missing CPE

as you will need a further qualification post 2016 to get it back.



The one take away from RG 146 is that as advisers we will always have a requirement to continually up skill by way of training and education.

If you have any questions in relation to your individual study requirements simply give me a call and we can work through the best option for you.

Date 10/09/2015 September 2015 Technical Day Corporate Governance Update.

Documents

product complaint

existing client

expression of dissatisfaction

highthe advice exchange

nonadvisory complaint

financial advice

andgeneral dissatisfaction

processing time