financialservices.royalcommission.gov.au · In addition, an application form was cqmpleted by and sent to Financial Wisdom in relation to- appointment as a CAR of Financial Wisdom.

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CBA.9000.0089.1003

Licensee Standards

15, As set out above, the Template ARAs require the Authorised! Representative to act in strict compli;rnce with the Licensee Standards, as amended from time to time. Financial Wisdom must provide the Authorised Representative with access to the licensee Standards.

16. Financial Wisdom has over 60 licensee Standards, which can be grouped into the following .categories:

(a) Pre-advice;

(b) Strategy;

(c) Analysjs & Research;

(d) Documenting Advice;

(e) Implement & Review;

(f) Training, SupeNision & Monitoring;

(g) Practice Management; and

(h) Conduct, Conflicts & Complaints.

'.17. Licensee Standards provide guidance in relation to the legislative and regulatory requirements and the provision of quality advice t.o clients.

18. From time to time, theTemplateARAs, Template licensee T &Cs and licensee Standards are updated. These amendments deal with, among other things, legislative changes, professional indemnity insura.nce rate changes and changes to fees.

Guarantees and Indemnities

19. From time to time, directors of CARs may be required to enter into a guarantee and indemnity with Financial Wisdom pursuant to which they guarantee the due and punctual performance and observance by the Authorised Representative of its obligations under the ARA

Exhibited at Exhibit MRB-6 [CBA.0517 .0179.4046) is a copy of the most recent template guarantee and indemnity within the Relevant Period.

0 2 . Exhibit the agreements in effectbetween Financial Wisdom -and and/or - ppolnting or as.an Authorised Representative during the Relevant · · . Pe-rio<:l-.·lnso.far as there are any difference~ between agreements With ~r and tM template agreements, summaris,e th<>se differenQes; · ·

- agreements during the Relevant Period

20. Financial Wisdom entered into an agreement with- appointing as a CAR of Flnancial Wisdom. This agreement was the ARA dated October 2011 between Financial Wisdom and and was in effect between the parties throughout the Relevant Period

- ARA).

Exhibited at Exhibit .MRB-7 [CBA.0001.0468.1322] is a copy .of the - ARA

21 . In addition, an application form was cqmpleted by and sent to Financial Wisdom in relation to - appointment as a CAR of Financial Wisdom.

Exhlbited at Ex.h ibi.t MRB-8 £.CBA.0517.0179.4018} is a copy o•••ICAR application form s fgned on 14 November 2011.

22. Set out below in paragraphs 29 to 36 is a summary of the drfferences between the ARA and the Template ARAs.

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BVP

Minimum performance criteria

Remuneration

Transfer of clients between Financial Wisdom Representatives

Transfer of clients to another AFS Licensee

Notice of termination

Additional clauses

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The - ARA includes a clause which provides that if the Representative is a Partnership, all obligations and liabilities owing to Financial W isdom under the agreement are incurred as an obligation and liability of the Partnership and as an obligation and liability of the Partners Uointly and severally) in their personal capacities. A similar clause is not provided for in the 2016 Template ARA.

As set out above. the ARA lndudes a BVP (see clause 12 and Schedule 2 of th~ ARA). The BVP is an option that the Authorised Representative may elect to apply for and Financial Wisdom may agree to exercise to purchase the Authorised Representative's business ln certain circumstances. A BVP is not available under the 2016 Template ARA

As set out above. th ARA includes a requirement that the Authorised Representative undertake to meet a 'Minimum Performance Criteria'.

In respect of remuneration, the ARA provides that Financial Wisdom will "recognise a product sold or any renewal thereof within the Financial Wisdom Approved Product List Policy during the term of the Agreement (and any other existing and/or previous arrangements as approved by Financial Wisdom to be included for the purposes of this Agreement) as forming part of the Representative's Business" (see clause 4(a) of the - ARA). This is not provided for in the 2016 Template ARA.

The ARA contains additional provisions for a scenario arising where the Authorised Representative or Sub-Authorised Representative dies or becomes incapacitated (clause 11 .4). This is not reflected in the 2016 Template ARA

The 2016 Template ARA provides an additional condition for the transfer of clients seNiced by Financial Wisdom that the client must provide consent (clause 13(b) 2016 Template ARA).

RA requires Financial Wisdom to provide the Authorised Representative with six months prior notice to terminate the Authorised Representative Agreement for any reason and must provide reasonable notice to terminate for an.Y reason.

In contrast, the 2016 Template ARA requires 30 days' notice required by either party.

Under the 2016 Template ARA. either party may terminate for a material breach if the breach is not rectified within 20 Business Days after written notice is given. Under the ARA Financial Wisdom can terminate for breach if the breach is not rectified within a reasonable time.

The RA does not include the following clauses Which are contained in the 2016 Template ARA :

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CBA.9000.0089.1 015

Financial Wisdom Licensee Standards

81 . During the Relevant Period, Financial Wisdom had in place the Licensee Standards Including referred to in paragraph 15 of the statement. The Licensee Standards are a set of principles

that apply to nd •••

82. The Licensee Standards are aligned to Financial Wisdom's fnternal polices. standards and frameworks and provide guidance in relation to the legislative and regulatory requirements and the provision of quality advice to clients and relevantly include:·

(a) Intra-fund advice standards: All Authorised Representatives of Financial Wisdom are fequired to cornply with Financial Wisdom's standards in relation to the provision ofintra-fund advice (Intra-fund Advice Standards). The standard requires Authorised Representatives to register their interest and obtain approval from Financial Wisdom's Risk Management & Complian.ce team (RM&C Team) prior to providing intra-fund advtce and complete product accreditations and trainrng.

Exhibited at Exhibit MRB·19 [CBA.0001 .0469.0996), [CBA.0001.0469.0987). [CBA.0001 .0469-.0991] are .copies of the. Intra-fund Advice standards dated 28 March 2014, 16 March 2015 and 21 December 2015. respectively.

(b) Financial Wisdom's advertising and brand standards: All Authorised Representatives of Financial Wisdom are required to comply with Financial Wisdom's ot>ligations in relation to the use of the Ffnancial Wisdom's logo and brand identity as well as obligations In relation to direct marketing to customers (Advertisln9 and Brand Standard). Authorised RepresematiVes are required to submit and obtain approval from Financial Wisdom for any and all advertising and marketing material issued to customers.

Exhibited at E)(hibit MRB-20 [CBA.0001 .047 4.04l 9] is a copy of Financial Wisdom's Advertising and Brand standard dated 14 March 2016.

Business Principal Checklist attestation and Authorised Representative attestation

83. As part of Financial Wisdom's regular supervision. the Prac.Uce Principal of CARs (in this case, - and all Authorised Representatives of Financial Wisdom (Including Authorised Representatives sub-authorised by - ) are required to provide to Financial Wisdom Attestations as follows.

(a) Business Principal Checklist: The objective of this checklist ls to record various elements of the practice's own supervision and monitoring and to assist the Practice Principal in identifying .and addressing key risks areas The Business Principal ChecJ<list is reviewed by Financial Wisdom's RM&C Team who will assess whether additional clarification, coaching and training support is required. The checklist question set ls regularly reviewed and varied by the RM&C Team to target certain trends or themes identified across a whole cohort.

(b) Authorised Representative attestation: The objective of the attestation is to. check ongoing compliance with the requirements for being an Authorised Representative under Financial Wisdom's AFSL. The responses are reviewed by Financial Wisdom's RM&C Team to confirm if there are any items or concerns that require further irwestigation/actlon by Fin<1ndal Wisdom's RM&C Team.

Pre-vettitJq

84. Tile Wealth Management Advice Paraplanning Team is responsible for reviewing certain categories of advice to assess quality of advice and adherence to Financial Wisdom's Licensee Standards prior to presentation of the advice to the client This process Is known as pre-vetting. This process also allows the identification of financial advisers who would benefit from further feedback or coaching.

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SCHEDULE 1

Dictionary

• AFS Licensee• means the holder of an Australian Financial Services Licence granted under s 9138 cf the Corporations Act.

"Authorised Representative" means a person or entity authorised under ss 916A or 9168 of the Corporations Act to provide a financial service on behalf of an entity that is an AFS Licensee.

"CFSIL" means Colonial Ffr~t State Investments Limite~ .

" choice p roduct" has the meaning given ins 10(1) of the SIS Act.

"Corporations Act" means the Corporations Act 2001 (Cth).

"Financial Wisdom'' means Financial Wisdom Umited.

--means- Financial Services Pty Ltd.

"MySuper producr has the meaning given ins 10(1) of the SIS Act.

"regulated superannuation fund" has the meaning g fven ins 10(1) of the SIS Act.

~Relevant Period" means the period from period 1 July 2013 to 30.June 2017.

•.RSE Licensee• has the meaning ins 10(1) of the SIS Act.

"SI$ Act" means the Superannuation Industry (Supervision) Act 1993 (Ctn).

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