Sisters Emily and Kate (first introduced in the analysis task case study) have had a successful 12 months. They have implemented their new software at Kate’s hospital, and it has been adopted throughout the network of hospitals in Australia, New Zealand, Singapore and Hong Kong. They have made sufficient profit to buy out their Uncle Tom through fully franked distributions from their company to each other as shareholders. Kate now has $350,000 in her mortgage offset account. Emily has contributed $110,000 to her superannuation with the view to accessing it to purchase her first home.
The business structure they established was a trust with a corporate trustee of which both Emily and Kate are directors. Emily and Kate are the beneficiaries of the trust. Kate has established a trust, and that trust will be the beneficiary from the business trust, and Emily is a sole beneficiary of the business trust.
The sisters want to expand and realise that they need to employ more people to do that. They have found an empty former grocery store in a neighbourhood centre shopping strip. There is car parking underneath for staff and other shops and services in the centre that would make coming to the office a one-stop place for new staff.
You are a fully qualified financial adviser with 10 years’ experience. Kate sends you an email asking if you could provide them with advice. She has cc’d Emily into the message.
You reply to Kate and Emily that you would be happy to provide them with advice. You are already aware of some of their financial situation, and you customise your email response in the following way:
‘Hi Emily and Kate,
I’d be happy to discuss your financial situation and options with you.
I will need to gather some more information from you both about your current financial circumstances. Knowing your current corporate structure, would you consider setting up a self-managed superannuation fund (SMSF) and using your existing superannuation balances as a deposit for the new office, then borrowing the balance via the SMSF?
In any event, let’s arrange a time for a Zoom meeting and we will get started.’
Notes:
• You are required to undertake independent research to answer the following questions.
• Take care to ensure you answer these questions using your own words. Where applicable,
your response should relate to the case study details provided and for parts where you utilise other resources to support your answer, ensure you cite and reference these.
(a) Given the content of the email, what two (2) disclosures should you provide to Emily and Kate at this early stage of the advice process and the legislative source of these disclosures. (5 marks)
(b) Explain the purpose of each disclosure, with support from relevant ASIC Regulatory Guide(s).
(5 marks)
(c) What methods can you use to make those disclosures to Emily and Kate? (2 marks)
Criteria-Based Marking Guide for Question 1(a)–(c)
Excellent
(Mark range: 9–12 marks) Satisfactory
(Mark range: 6–8.5 marks) Unsatisfactory (Mark range: 0–5.5 marks)
• comprehensive explanation of two (2) disclosures and their legislative sources
• clear and well-reasoned discussion of the purpose of each disclosure with Regulatory Guide support
• clear explanation of methods to make disclosures to clients • adequate explanation of two (2) disclosures and their legislative sources
• adequate discussion of the purpose of each disclosure with Regulatory Guide support
• adequate explanation of methods to make disclosures to clients • inadequate explanation of two (2) disclosures and their legislative sources
• inadequate discussion of the purpose of each disclosure identified with Regulatory Guide support
• inadequate explanation of methods to make disclosures to clients
Identify four (4) additional regulatory obligations placed on financial services providers under the current legislative and regulatory framework, aimed at ensuring that consumers, like Emily and Kate, are protected and receive appropriate financial advice.
For each regulatory obligation, discuss its legislative and/or regulatory source and how the obligations are intended to protect consumers. (10 marks)
Notes:
• Do not include the two (2) disclosure obligations already identified in Question 1.
• You are required to undertake independent research to answer this question.
• You may include legislative and regulatory framework obligations which are legislated but not yet implemented.
• Your answer should only refer to the disclosure obligations for the provision of personal advice to a retail client when providing written advice to clients.
Criteria-Based Marking Guide for Question 2
Excellent
(Mark range: 7.5–10 marks) Satisfactory (Mark range: 5–7 marks) Unsatisfactory (Mark range: 0–4.5 marks)
• four (4) highly relevant obligations identified
• comprehensive discussion of the source of each obligation and how it is intended to protect consumers
• evidence of thorough independent supporting research • four (4) relevant obligations identified
• adequate discussion of the source of each obligation and how it is intended to protect consumers
• evidence of adequate independent supporting research • less than four (4) or incorrect/irrelevant obligations identified
• inadequate or no discussion of the source of each obligation and/or how they are intended to protect consumers
• little to no evidence of independent supporting research
Regulators are important intermediaries in any financial services system. They promote the smooth operation of the markets and protect the integrity of the financial system. The level of regulation differs between countries; however, there has been an increasing trend around the world to tighten the regulation of financial markets in an attempt to protect investors. There are also a number of international regulators that provide international standards and give assistance and guidance to domestic
regulatory bodies.
For each of the regulatory bodies listed below:
• Briefly explain the role it plays in financial planning in Australia.
• Discuss what role the regulatory body has in contributing to Australia’s economic wellbeing.
(a) ASIC (2 marks)
(b) APRA (2 marks)
(c) ASX (2 marks)
(d) ACCC (2 marks)
(e) AUSTRAC (2 marks)
Notes:
• You are required to undertake independent research to answer this question.
• It is important here that you answer in your own words and do not copy/paste or paraphrase the course notes or commonly accessed websites for these bodies.
• You must address each regulator separately in your answer.
Criteria-Based Marking Guide for Question 3(a)–(e)
Excellent
(Mark range: 7.5–10 marks) Satisfactory (Mark range: 5–7 marks) Unsatisfactory (Mark range: 0–4.5 marks)
• clear and succinct explanation of the role each regulator plays in financial planning
• clear and succinct discussion of how each regulatory body contributes to Australia’s economic wellbeing
• strong evidence of independent supporting research • adequate explanation of the role each regulator plays in financial planning
• adequate discussion of how each regulatory contributes to economic wellbeing
• some evidence of
independent supporting research • inadequate/incorrect explanation of the role each regulator plays in financial planning
• inadequate/incorrect discussion of how each regulator contributes to economic wellbeing
• little or no evidence of independent supporting research
Consider Kate and Emily from the case study in the analysis task and Question 1 of this assignment.
Provide discussion on the following points in relation to the superannuation system in Australia:
(a) Discuss the impact of two (2) changes to the superannuation system that were made during 2020 and 2021 which may impact Kate (now age 33) and Emily (now age 32). (5 marks)
(b) Discuss the potential impacts on the superannuation system generally of two (2) future changes to superannuation based on the federal government Budget of May 2021. (5 marks)
(c) Discuss how the changes from 2020 and 2021 would impact Kate and Emily in terms of their future retirement savings pool. (5 marks)
Note:
• Support your answers with relevant independent research.
• You are not required to complete any calculations.
Criteria-Based Marking Guide for Question 4(a)–(c)
Excellent
(Mark range: 11.5–15 marks) Satisfactory
(Mark range: 7.5–11 marks) Unsatisfactory (Mark range: 0–7 marks)
• comprehensive discussion of changes to the Australian superannuation system in 2020–2021 and their impact on the clients’ current situation
• comprehensive discussion of proposed changes to the system, from the May 2021 Budget
• comprehensive discussion of how the changes would impact the clients’ future retirement circumstances
• evidence of relevant independent supporting research • adequate discussion of changes to the Australian superannuation system in 2020–2021 and their impact on the clients’ current situation
• adequate discussion of proposed changes to the system, from the May 2021 Budget
• adequate discussion of how the changes would impact the clients’ future retirement circumstances
• evidence of adequate independent supporting research • inadequate or incorrect discussion of changes to the Australian superannuation system in 2020–2021 and their impact on the clients’ current situation
• inadequate or incorrect discussion of proposed changes to the system, from the May 2021 Budget
• inadequate or incorrect discussion of how the changes would impact the clients’ future retirement circumstances
• little to no evidence of independent supporting research
Section B
There is one (1) question with four (4) parts in this section. Answer all parts.
The critical role that commercial regulation plays in wealth management and financial planning is the promotion of confident and informed participation by investors and consumers in the financial system. In 2019, the following two legislative amendments were introduced:
1. Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth)
2. Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 (Cth).
Addressing each of the two (2) legislative amendments above in turn, answer the following questions:
(a) Provide a summary of the amendment, including its purpose, referring to any other Acts that are impacted by the amendment. Include in your answer the origin of the amendment.
(What behaviours is the amendment attempting to eliminate?)
(6 marks per amendment, total of 12 marks)
(b) How have these amendments impacted the way ASIC operates?
(6 marks per amendment, total of 12 marks)
(c) Explain the impact for individual authorised representatives and AFS licence holders of the implementation of the change to the law. (7 marks per amendment, total of 14 marks)
(d) Explain how the amendment will impact the provision of personal financial advice to retail clients.
(5 marks per amendment, total of 10 marks)
Notes:
• Structure your answer by addressing questions (a)-(d) in full relation to the first amendment, and then do the same for the second legislative amendment. Ensure that each part of your answer is clearly labelled and do not merge parts of your answers.
• Provide appropriate legislative references in your answers and assume any announced changes will proceed in full.
• Answers should be in your own words and supported by research. Do not copy/paste from the course notes or key websites relating to these amendments, although you may cite them as part of your research.
Criteria-Based Marking Guide for Question 5(a)–(d)
Excellent
(Mark range: 36–48 marks) Satisfactory
(Mark range: 24–35.5 marks) Unsatisfactory (Mark range: 0–23.5 marks)
(a) • clear and succinct summary of each amendment, including a sound discussion of its origin and purpose
• correct identification and summary of all relevant Acts impacted by each amendment • adequate summary of each amendment, including a discussion of its origin and purpose
• correct identification and summary of most relevant Act(s) impacted by each amendment • inaccurate or incomplete summary each amendment and/or incorrect discussion of its origin and purpose
• incorrect or no identification and/or summary of relevant Act(s) impacted by each amendment
(b) • clear and detailed explanation of how each amendment has impacted the way ASIC operates • adequate explanation of how each amendment has impacted the way ASIC operates • inadequate or incorrect explanation of how each amendment has impacted the way ASIC operates
(c) • clear and detailed discussion of the impact for individual authorised representatives and AFS licence holders • adequate discussion of the impact for individual authorised representatives and AFS licence holders • minimal/no or incorrect discussion of the impact for individual authorised representatives and AFS licence holders
(d) • clear and detailed discussion of how each amendment will impact the provision of personal financial advice to retail clients • adequate discussion of how each amendment will impact the provision of personal financial advice to retail clients • inadequate/no or incorrect discussion of how each amendment will impact the provision of personal financial advice to retail clients
• evidence of broad independent supporting research • some evidence of independent supporting research • little to no evidence of independent supporting research
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