FASEA Regulatory Framework and Compliance 3

Question 1

Under the FASEA Code of Ethics, Standard 3 requires advisers to not advise, refer, or act in any way that results in what?

Accepted Answer

A client being in a significantly worse position than if the service had not been provided

Answer

Reduced returns for clients

Answer

A client receiving inferior financial products compared to competitors

Answer

Excessive fees being charged to the client

Question 2

Which legislative instrument sets out the specific educational requirements that financial advisers must meet under the FASEA framework?

Accepted Answer

The Corporations (Relevant Providers Degrees, Qualifications and Courses Standard) Determination 2018

Answer

The Corporations Act 2001

Answer

The Australian Securities and Investments Commission Act 2001

Answer

The Financial Sector Reform (Hayne Royal Commission Response) Act 2020

Question 3

An adviser is offered a complimentary overseas conference trip valued at $5,000 by a product provider. Under ASIC's guidance on conflicted remuneration, this would most likely be treated as:

Accepted Answer

Conflicted remuneration that is banned under FOFA

Answer

An acceptable business benefit below the minor benefit threshold

Answer

A permitted education and training expense

Answer

An acceptable benefit if disclosed to clients

Question 4

What is the 'best interests duty safe harbour' under section 961B(2) of the Corporations Act designed to do?

Accepted Answer

Provide a set of steps that, if followed, will allow advisers to demonstrate they acted in the client's best interests

Answer

Guarantee that advisers cannot be sued for poor advice

Answer

Replace the general best interests duty with a checklist

Answer

Protect advisers from liability if clients suffer financial loss

Question 5

Under the ongoing fee arrangement rules introduced post-Hayne Royal Commission, how frequently must clients renew their consent for ongoing advice fees?

Accepted Answer

Annually

Answer

Every 5 years

Answer

Every 2 years

Answer

Only at the start of the arrangement

Question 6

Which of the following scenarios would require an adviser to provide a Record of Advice (ROA) rather than a full Statement of Advice (SOA)?

Accepted Answer

Subsequent advice to an existing client where their circumstances have not significantly changed

Answer

First time advice to a new retail client

Answer

Advice involving a new risk profile assessment for an existing client

Answer

Advice on a new financial product category not previously advised on

Question 7

Under ASIC Regulatory Guide 175, what is a 'general advice warning' required to communicate to clients?

Accepted Answer

That the advice does not take into account the listener's personal objectives, financial situation, or needs

Answer

The specific risks of the product being discussed

Answer

The adviser's qualifications and experience level

Answer

The fees charged for providing the advice