McMasters Solicitors Newsletter April 2013

Transcription

1 McMasters Solicitors Newsletter April 2013 McMasters Solicitors 71 Tulip Street, Cheltenham Victoria 3192 PO Box 68 Sandringham Victoria 3191 Phone:

2 To our valued clients and readers, McMasters Solicitors is proud to announce the launch of their new website at: Please visit this site and don t hesitate to give us your feedback. ASIC have suggested that the best interest duty means that the financial planner must focus on the outcome of the advice given to the client, and whether the client would be in a better position as a result of the advice... My Adviser, The Duty and I: What the new Best Interest Duty in Financial Planning means to the client Over the last year, the Government has implemented major legislative change in the financial services industry through the Future of Financial Advice reforms (FOFA). Part of these reforms include the ban of commissions, and the implementation of a new Best Interest Standard on the way that financial planners must provide advice to their clients. FOFA can be voluntarily adopted by financial planners from 1 July 2012, however, from 1 July 2013, these reforms will apply to all financial planners in Australia. So what does this mean for financial planners and the client? What is the Best Interest Duty? The best interest duty is imposed by changes to the Corporations Act 2001 (Cth) (the Act). Section 961B of the Act, states that a financial planner must act in the best interests of their client. ASIC has interpreted best interests to mean [w]hether a reasonable advice provider would believe that the client is likely to be in a better position if the client followed the advice (at ASIC Regulatory Guide ). Through their Regulatory Guides, ASIC have suggested that the best interest duty means that the financial planner must focus on the outcome of the advice given to the client, and whether the client would be in a better position as a result of the advice. Before FOFA, a reasonable basis test was used to determine whether financial advice given by a financial planner was appropriate to a client. Accordingly, the new duty holds financial planners to a much higher standard. As the client, whether your financial adviser acts in your best interests depends on whether the adviser has thoroughly considered: the position that you would have been in if you did not follow the advice;

3 For example, at the time of the advice, if the recommended product is viewed by most financial planners as being a good product, but it is subsequently proven to be a financial failure, the advice would still be considered to be in the best interests of the client. the facts at the time that the advice is provided that the financial planner had, or should have had; the subject matter of the advice sought by you; your objectives, financial situations and needs; where relevant, product features that you particularly value, provided that you understand the cost of, and are prepared to pay for, those features; if you follow the advice, you receive a benefit that is more than trivial; and whether a reasonable adviser would consider that you would be in a better position, at the time of the advice, if you followed the advice. What is in the client s best interests is determined at the time that the advice is given. This means that if, for example, at the time of the advice, the recommended product is viewed by most financial planners as being a good product, but it is subsequently proven to be a financial failure, the advice would still be considered to be in the best interests of the client. What does the Best Interest Duty mean for clients and financial planners? From 1 July 2013, the best interests duty will inevitably change the way some financials planners do business. For example, you should expect the practice of financial planners giving advice driven by obtaining commissions to be greatly reduced and the practice of generic financial product selling (where one financial product fits all) should be a thing of the past. Under the new law, financial planners should always be acting in their client s best interests and, specifically,: Explaining any limitations in the advice they can give to clients, either in product types (e.g. insurance or investments) or in product providers (e.g. products from a limited range of companies); Not to misrepresent to clients their skills, competency, experience, expertise, capacity or benefits they might receive;

4 It is the duty of the financial planner to clearly explain to clients the reasons why they have recommended a financial product to them and to make financial recommendations that most financial planners would view as giving clients a better outcome if they followed the advice. Clearly explain their professional services to clients and document the scope of work that clients have agreed for them to do, including the specific services they will provide; Explain and disclose to clients how much they will charge clients and the costs clients will incur if they proceed with the planner s recommendation; Explain and disclose the product and administration costs associated with their financial recommendations to clients; Clearly explain to clients the reasons why they have recommended a financial product to them; Make financial recommendations that most financial planners would view as giving clients a better outcome if they followed the advice. If you are a financial planner and you have queries about your obligations in any way, please do not hesitate to contact Simon Lo at McMasters Solicitors on simonl@mcmasters.com.au. If you are a client wanting to know more about any of this or financial planning services, please contact Mina Andrawis at McMasters Solicitors on minaa@mcmasters.com.au CONVEYANCING SALE! New Conveyancer Wendy Toura McMasters Solicitors are pleased to introduce our new conveyancer, Wendy Toura. Please do not hesitate to contact Wendy on wendyt@mcmasters.com.au or (03) with any Victorian land conveyancing, Victorian business conveyancing or Interstate (related party only) conveyancing needs. For the month of April 2013, we are offering a 20% discount on professional fees on all new conveyancing matters! Contact Wendy or simply complete our details in your Contract of Sale and send a copy of the contract to us to instruct us.

5 It is possible for a Will to be challenged if there is sufficient evidence to show that, at the time the testator made the Will, they did not have the required mental capacity to understand the nature and effect of making the Will. Estate Litigation Services Meghan Warren of McMasters Solicitors can provide our clients with assistance in:- Contested estates; Testator s family and maintenance provision claims; and Testamentary capacity claims. These types of matters can be very distressing and emotional for clients, which we recognise and endeavour to provide our clients with very high level support, understanding and compassion in these circumstances. It is possible for a Will to be challenged if there is sufficient evidence to show that, at the time the testator made the Will, they did not have the required mental capacity to understand the nature and effect of making the Will. For example, in cases where it can be proved that the testator was suffering form advanced dementia at the time the of making the will and, therefore, they did not have a full or proper understanding of their actions, then a challenge may be brought. Also, in cases where it can be proved that undue influence or pressure have been brought to bear on a testator in making his or her Will (such as threats or where a health care professional is a beneficiary), a challenge may be brought. A family and maintenance provision claim may be brought against a deceased estate if a person was either left out of a Will entirely, or was not adequately provided for in a Will. There are many factors that are relevant and need to be taken into consideration in any family and maintenance provision claim, including character and conduct of the claimant. Please do not hesitate to contact Meghan Warren on meghanw@mcmasters.com.au or (03) for a free 30 minute consultation to discuss these matters further. We can assist you in relation to your estate litigation matter or enquiry, as well as with any more general estate administration needs that you may have (probate and letters of administration). We have built excellent relationships with the leading barristers in this area and we are extremely well-equipped to assist you in relation to this specialised area of the law.

6 Applying for Compensation from ATO Applying for Compensation from ATO Applications and objections are regularly made to the ATO, often at a significant cost to taxpayers. The associated professional fees alone can run into the thousands of dollars (even if an application is successful) and the associated costs can significantly reduce the net proceeds the taxpayer receives. Applications and objections are regularly made to the ATO, often at a significant cost to taxpayers. The associated professional fees alone can run into the thousands of dollars (even if an application is successful) and the associated costs can significantly reduce the net proceeds the taxpayer receives. The Government does have approved channels exists whereby taxpayers may be able to seek compensation from the ATO. Types of compensation that can be considered are financial losses that have a direct connection to the actions of the ATO that give rise to a finding of legal liability or defective administration. This can provide taxpayers with the ability to recover a proportion, if not all, of the professional fees and other costs associated with a successful application. The main avenues for compensation are: the Scheme for Compensation for Detriment caused by Defective Administration; compensation for legal liability (e.g. negligence); and act of grace payments (administered by the Department of Finance, not the ATO). Although the above is often worthwhile looking into, it will only be available in limited circumstances. Also, lodging a claim for compensation will typically give rise to costs in professional fees. Despite this, it is worth keeping in mind. You can find out more about this here:- Applying For Compensation Or contact Meghan Warren at McMasters Solicitors on meghanw@mcmasters.com.au for assistance with your ATO applications, objections or possible compensation claims. Yours faithfully Meghan Warren Senior Lawyer