FASEA Regulatory Framework and Compliance 4

Question 1

Under the FASEA Code of Ethics, what does Standard 6 require regarding an adviser's competence?

Accepted Answer

Advisers must only provide advice in areas where they have adequate knowledge and skill

Answer

Standard 6 requires that advisers only provide advice, provide services, and act within the limits of their competence, and refer clients when the matter exceeds their expertise.

Question 2

When must a licensee provide a Financial Services Guide (FSG) to a retail client?

Accepted Answer

As soon as practicable after it becomes apparent financial services will be provided

Answer

An FSG must be provided as soon as practicable after it becomes apparent that a financial service will be provided to a retail client and before the service is provided.

Question 3

Under the Corporations Act, which of the following is NOT a required component of a Statement of Advice?

Accepted Answer

The adviser's tax file number

Answer

A tax file number is not a required component of an SOA; the required elements include the advice subject matter, basis, relevant interests, and remuneration details.

Question 4

What was the primary reason the Hayne Royal Commission recommended removing the 'grandfathered commissions' exemption?

Accepted Answer

They created an inherent conflict of interest that undermined client-centered advice

Answer

Grandfathered commissions created ongoing conflicts of interest that could influence advisers to retain clients in inappropriate products, undermining the best interests duty.

Question 5

Under the FASEA Code of Ethics Standard 12, what must an adviser do when they identify that a client may be experiencing financial difficulty or vulnerability?

Accepted Answer

Give priority to the client's needs and consider whether additional safeguards are appropriate

Answer

Standard 12 requires advisers to prioritize clients experiencing vulnerability and consider whether additional protections or safeguards should be applied in the advice process.

(FASEA) Financial Adviser Standards and Ethics Authority Practice Test

(FASEA) Financial Adviser Standards and Ethics Authority Practice Test

FASEA Regulatory Framework and Compliance 4