September 2015 Technical Day
Corporate Governance Update
Date 10/09/2015
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.
The Advice Exchange Pty Ltd
2
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
The Advice Exchange Pty Ltd
3
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.
The Advice Exchange Pty Ltd
4
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.
The Advice Exchange Pty Ltd
5
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).
The Advice Exchange Pty Ltd
6
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.
The Advice Exchange Pty Ltd
7
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;
The Advice Exchange Pty Ltd
8
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.
The Advice Exchange Pty Ltd
9
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.
The Advice Exchange Pty Ltd
10
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.
The Advice Exchange Pty Ltd
11
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.
The Advice Exchange Pty Ltd
12
Summary
Every 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.
The Advice Exchange Pty Ltd
13
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).
The Advice Exchange Pty Ltd
15
RG 146 and SMSF
What 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.
The Advice Exchange Pty Ltd
16
RG 146 and SMSF
What 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.
The Advice Exchange Pty Ltd
17
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
The Advice Exchange Pty Ltd
18
RG 146 and Credit Licence
Requirements
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.
The Advice Exchange Pty Ltd
19
RG 146 and Credit Licence
Requirements
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
The Advice Exchange Pty Ltd
20
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.
The Advice Exchange Pty Ltd
21
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 Advice Exchange Pty Ltd
22
The Advice Exchange Pty Ltd
23

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.
The Advice Exchange Pty Ltd
24