FINANCIAL PLANNERS PROFESSIONAL INDEMNITY INSURANCE PROPOSAL NOTICE TO THE APPLICANT FOR INSURANCE 1. YOUR DUTY OF DISCLOSURE Before you enter into a contract of general insurance with the insurers, you have a duty, under the Insurance Contracts Act 1984, to disclose to the insurers every matter which you know, or could reasonably be expected to know, is relevant to the insurers decision whether to accept the insurance risk and, if so, on what terms. You have the same duty to disclose those matters to the insurers before you renew, extend, vary or reinstate a contract of insurance. Your duty however does not require disclosure of a matter: that diminishes the risk to be undertaken by the insurers; that is common knowledge; that the insurers know or, in the ordinary course of business as insurers, ought to know; as to which compliance with your duty is waived by the insurers. NON-DISCLOSURE If you fail to comply with your duty of disclosure, the insurers may be entitled to reduce their liability under the contract in respect of a claim or may cancel the contract. If your non-disclosure is fraudulent, the insurers may also have the option of avoiding the contract from its beginning. COMMENT: The requirement of full and frank disclosure of anything which may be material to the risk for which you seek cover (e.g. claims, whether founded or unfounded), or to the magnitude of the risk, is of the utmost importance with this type of insurance. It is better to err on the side of caution by disclosing anything that might conceivably influence the insurers consideration of your proposal. 2. CLAIMS MADE POLICY This proposal is for a "claims made and notified" policy of insurance. This means that the policy indemnifies you for claims made against an insured and notified to the insurers during the period of insurance. The policy does not provide indemnity in relation to: claims arising from acts errors or omissions committed prior to the retroactive date of the policy (if such a date is specified); claims made, threatened or intimated prior to the commencement of the period of insurance; claims made after expiry of the period of insurance even though the event giving rise to the claim may have occurred during the period of insurance; claims arising from facts or circumstances notified (or which ought reasonably to have been notified) under any previous insurance policy; claims arising from facts or circumstances noted on the proposal form for the current period of insurance or on any previous proposal form; claims arising from facts or circumstances of which you first became aware prior to the commencement of the period of insurance, and which you knew or ought reasonably to have known might to give rise to a claim under this policy. COMMENT: The policy will respond to claims pursuant to Section 40 (3) of the Insurance Contracts Act 1984 which states: Where the insured gave notice in writing to the insurer of facts that might give rise to a claim against the insured as soon as was reasonably practicable after the insured became aware of those facts but before the insurance cover provided by the contract expired, the insurer is not relieved of liability under the contract in respect of the claim when made by reason only that it was made after the expiration of the period of insurance cover provided by the contract. 3. AVERAGE PROVISION The policy provides that if a payment in excess of the limit of liability available under the policy is made to dispose of a claim, the insurers liability for defence costs incurred with it s consent shall be such proportion of the total defence costs as the limit of liability available under the policy bears to the amount paid to dispose of the claim. 4. RIGHTS OF RECOVERY The policy does not cover liability, loss or damage in respect of which you have at any time foregone, excluded or limited a right of recovery Page 1 PI Financial Planners Proposal Form 2013
YOUR DETAILS 1. Name of all entities to be insured: ABN Website 2. Address of the Company s head office: 3. Address of other offices: 4. Commencement date of your business: / / 5. Australian Financial Services Licence (AFSL) Number: 6. Please advise the following details in respect of your principals or directors Name Age Professional Qualifications Date qualified Date appointed / / / / / / / / / / / / / / / / / / / / (Please attach curriculum vitas or resumes for all principals/partners/directors detailing qualifications and a summary of career experience). 7. Please supply total numbers of: Principals or directors n-employed (External) Authorised Representatives Other staff Employed Authorised Representatives Other qualified staff TOTAL Page 2 PI Financial Planners Proposal Form 2013
YOUR BUSINESS DETAILS 8. In the last 10 years: (a) Has the name of the business changed? (b) Has any other business or practice amalgamated or merged with you? (c) Have you purchased any other business or practice? If to any of the above, please supply the details. 9. Is any partner, principal or director connected or associated (financially or otherwise) with any other business or practice? If, please supply the details. 10. Please list any current memberships of professional bodies or associations to which you belong. 11. (a) Has there been any substantial change in your activities during the last 12 months? (b) Do you envisage any substantial change in your activities or are any major new operations contemplated during the next 12 months? If, to either of the above, please supply details. 12. Please describe the precise the nature of your activities or business and professional services provided. Page 3 PI Financial Planners Proposal Form 2013
YOUR FINANCIAL DETAILS 13. (a) Please state the date of your financial year-end. Day Month (b) Please supply details of your fee income in Australian dollars (A$) for the following: Financial Year Australia Other Total Last Completed Financial Year $ $ $ Current Financial Year Forecast $ $ $ Estimate for Next Financial Year $ $ $ (c) Please supply details of activities performed outside Australia. 14. Please state the approximate percentage of your activities (based on fee income) applicable to each State, Territory and Overseas. NSW VIC QLD SA WA TAS ACT NT O/S % % % % % % % % % 15. Please advise how your employed representatives and non-employed AR s are remunerated. (a) Salary (b) Commission (c) Combination of salary & commission (d) Fee for advice (e) Other (please specify) 16. Please provide the approximate percentage of your income (fees and commissions) generated in the last completed financial year from the following activities. a. Financial Planning/ Portfolio Management % b. Life Insurance acting as AFS Licensed Holder % c. Life Insurance acting as AFS Authorised Representatives % d. General Insurance Agency/Broking (please note this will be excluded) % e. Mortgage Originating/Mortgage Broking (please complete Mortgage Brokers Addendum) % f. Superannuation Administration i.e. the overall administration of a self managed or regulated super fund (please complete Question 8 ) % g. Accounting (please complete Accountants Addendum) % h. Other (Please provide details) % Total 100% Page 4 PI Financial Planners Proposal Form 2013
17. Please advise the percentage of client s investments according to the following breakdown: a. Australian equities on a Direct basis % b. Australian equities via a Managed Fund % c. Foreign equities via a Managed Fund % d. Foreign equities on a Direct basis % e. Property trusts via a Managed Fund % f. Property trusts on a Direct basis % g. Fixed interest securities and/or cash % h. Hedge Funds % i. Margin Lending via a Managed Fund % j. Margin Lending on a Direct Equity basis % k. Derivatives % l. Agricultural or Primary Industry Managed Investment Scheme % m. Managed Investment Schemes (exempted by ASIC) % n. Managed Investment Schemes (other than above) % o. Other (please provide full details) % Total 100 % 18. Has the above allocation of clients investments varied significantly in the past three years? If, please supply details. 19. Please provide the following breakdown of clients by size of investment portfolio. Client Funds Under Advice/Management Number of Clients Total Funds Under Advice/Management Up to $100,000 $ $100,001 to $250,000 $ $250,001 to $500,000 $ $500,001 to $1,000,000 $ Over $1,000,000 $ TOTAL $ 20. (a) Please list the top 5 investment products (in order) that produced the highest per investment income as a % (including commissions, fees) to you in the past 12 months. Name of Investment Product Income Earned Type of Investment (i.e. Equity, Property) TOTAL commission rate for this product Rate of Return on Investment Product $ % % $ % % $ % % $ % % $ % % Page 5 PI Financial Planners Proposal Form 2013
(b) Do you disclose the commission earned on each of the products recommended above to all of your clients? (c) Do any of these institutions have a proprietary/financial interest in your business? If, please supply details and confirm this is disclosed to all of your clients when recommending an investment product. (d) Do you have a proprietary/financial interest in any of these institutions/products? If, please supply details. 21. Australian Equities on a Direct Basis (a) Do you obtain external advice and/or view external analyst reports regarding investing into shares? If, please attach your guidelines for ensuring the investment is suitable to your client. (b) Do you ensure the investments are spread across more than five industries? 22. Margin Lending (a) Please advise the total number of clients that have margin lending (b) Please advise the total value of all margin loans outstanding $ (c) Do you provide your clients with a copy of the current PDS for each funding provider when recommending margin lending products? (d) What is the MAXIMUM LVR when you set up a margin facility? % (e) Do you provide your clients with adequate details regarding the investment, interest rate and the margin call risks associated with margin lending? (f) Do you provide taxation advice to the client on the implications of margin lending? If, do you refer them to a Qualified Accountant? (g) Please list the Margin Lending facilities utilised by you. Page 6 PI Financial Planners Proposal Form 2013
23. Superannuation Administration (a) Are you involved in establishing/setting up superannuation funds? (b) Are you involved in preparing any documentation in respect to the establishment of superannuation funds? (i.e. trust deeds) (c) Are you performing superannuation administration work? (d) Are you acting in the capacity as a trustee of a superannuation fund? 24. Property Trust (a) Are you financially connected to, or have any ownership in, any Property Trust you recommend to clients? (b) Do you ensure all of the investment reports from Independent Research Houses provide a current (last 12 months) investment grade classification to the specific investment? (c) Do any of the investment reports on the Property Trust have a grading below A? If, please advise ALL the names of such Property Trusts rated below A. (d) What is the highest rate of return received on Property Trust investments? % (e) Do you provide any disclaimers to your clients in relation to investing in Property Trusts? (f) Please list the top ten Property Trusts you recommend to your clients. 25. Unlisted/Unrated Debentures/Promissory tes (a) Do you provide any advice involving Unlisted/Unrated Debentures/Promissory tes? If, please answer (b) and (c) (b) What percentage of your total fees/income is derived from activities involving Unlisted/Unrated Debentures/Promissory tes? (c) Who are the issuers of the Unlisted/Unrated Debentures/Promissory tes? % Page 7 PI Financial Planners Proposal Form 2013
26. Discretionary Investments Are you involved in client portfolio management on a discretionary basis (MDA?) If, please provide the following information: (a) Total number of clients that have MDAs (b) Total funds under management in respect of MDAs $ (c) Do you have a written agreement with each client? Please provide a copy of your standard MDA client agreement. RISK MANAGEMENT 27. Approved Products List (a) Do you have an Approved Products List? Please attach details of the procedures in place to select and approve investment products and services and ongoing monitoring of same. (b) Has your Approved Products List changed from last year? If, please provide details (c) What action do you take when a product or investment is removed from your Approved Products List? (d) How is this communicated to your clients if they have invested in the product now removed from your Approved Products List? (e) Do you allow employed representatives or non-employed AR s to advise clients on any investment products not on your Approved Products List? If, please provide details. Page 8 PI Financial Planners Proposal Form 2013
28. Risk Appraisals/Disclaimers (a) Do you conduct a risk appraisal / needs analysis for all financial planning/portfolio management clients and present a written plan to clients for their agreement and have copies of the signed agreement on file? (b) Do you provide clients with a copy of a Statement of Advice? (c) Do you provide all your clients with a copy of a Product Disclosure Statement for ALL investment products recommended? (d) Do you provide disclaimers on your documentation in relation to high risk investments? (e) Are Independent Research House reports obtained in relation to ALL investment products recommended? (f) Does a Paraplanner prepare your plans? If, who completes the plans? 29. Audit Details (a) Do you conduct random audits on your clients existing portfolio? If, please confirm how often and who conducts such audits. (b) Do you conduct random audits on both employed representatives and nonemployed AR s? If, please confirm how often and who conducts such audits. (c) Have you been audited by an independent external body? If, (i) Please confirm when the last external audit was conducted. (ii) Have you ensured that all recommendations have been implemented? 30. Appointment of Authorised Representatives (a) Please provide full details regarding the selection process for engaging representatives. (b) Do you conduct full background checks? (i.e. police checks and any prior professional indemnity claims experience details) Page 9 PI Financial Planners Proposal Form 2013
(c) What qualifications and/or experience are representatives required to have? (d) What initial training and ongoing training is required of representatives? (e) What procedures do you have in place for monitoring, reviewing and auditing the services provided by representatives? YOUR CLAIMS DETAILS 31. In the last ten (10) years, have any claims for negligence or breach of professional duty been made against your business or practice or any of its predecessors in business or any prior business or practice of any of its present or former partners, principals or directors (whether or not you consider there is or was a liability), or has any fact or circumstance been notified to insurers that has the potential to give rise to such a claim? If, please provide the following details in respect of each claim, fact or circumstance: Date notified Name of Insurer Brief description Is it finalized Amount paid or estimate outstanding / / $ / / $ / / $ / / $ Page 10 PI Financial Planners Proposal Form 2013
32. Are any of the partners, principals or directors, after enquiry, aware of any fact or circumstance which has the potential to give rise to a claim against your business or practice or any prior business or practice of any of their present or former partners, principals or directors (whether or not you consider there is a liability), which fact or circumstance is not referred to in question 32 above? If, please provide the following details in respect of each claim, fact or circumstance: Name of claimant or potential claimant Brief description of matter Estimate of potential liability $ $ $ 33. Has any partner, principal, director or staff member ever been subject to disciplinary proceedings for professional misconduct? If, please supply the details. 34. Are any of the partners, principals or directors, after enquiry, aware of any inquiry (including any coronial inquiry or any inquiry under the disciplinary rules of a professional association of which they are a member) or other similar process relating to or connected with the affairs of your business which you may be required to attend? If, please provide the following details in respect of each inquiry or similar process: YOUR INSURANCE DETAILS 35. (a) Does your business or practice currently carry or has it carried professional indemnity insurance? If, please provide the following details: Insurer: Expiry date: / / Limit of liability: $ Deductible: $ Retroactive Date: Page 11 PI Financial Planners Proposal Form 2013
(b) Has your business or practice or any partner, principal or director ever been declined this type of insurance, or had similar insurance cancelled, or had an application for renewal declined, or had special terms or restrictions imposed? If, please supply the details. 36. Limit of Liability required $ Deductible required $ OPTIONAL EXTENSIONS 37. Previous Business: Do you require cover for any of your partners or directors in respect of a previous business of theirs? If yes, please identify the previous practices with which all partners, principals & directors have been associated. Names of Partners/Principals/Directors Name of Previous Practice Years practising as Partner/Principal/Director 38. Fidelity: Do you require Fidelity cover? If, please complete the remainder of this question. te: Provided that the insurers offer this extension, the limit available under this Insuring Clause will be sub-limited. (a) Does your business or practice carry any fidelity insurance? If, please advise: Insurer: Expiry Date: / / Limit: $ Deductible: $ (b) Have you ever sustained any loss through the fraud or dishonesty of any employee? If, please supply the details and advise what precautions have been taken to prevent a reoccurrence. Page 12 PI Financial Planners Proposal Form 2013
(c) (i) Are cash, securities and negotiable instruments subject to control by a principal or director? (ii) (iii) (iv) Are cheques signed/co-signed by a principal or director, or by at least two Employees? Do you apply the principle of separation of duties, as much as is practicable, in order to minimise the incidence of fraud and dishonesty by employees? Do you always require and obtain satisfactory references before hiring employees? If you answered to any of the above questions, please supply the relevant details and indicate what extra precautions you take to minimise the chances of fraud or dishonesty by an employee. (d) Fidelity Limit required $ Deductible required $ ADDITIONAL INFORMATION & SUPPORTING DOCUMENTATION The following documentation and support information is required with this Proposal Form: 1. Current Approved Product List 2. Representative Statement of Advice 3. Current Financial Services Guide 4. Copy of your complaints register 5. A5 Business Description as prepared for your AFS License application 6. Copy of your latest compliance audit report 7. Copy of margin lending or gearing guidelines (if applicable) 8. Details of your Investment Committee 9. Details of the procedures in place to select and approve investment products and services and ongoing monitoring of same. Page 13 PI Financial Planners Proposal Form 2013
AXIS PRIVACY STATEMENT AND AUTHORITY About your information At AXIS we collect, use and store personal information that is necessary to provide and manage the products or services we offer, develop and identify products and services that may interest you and to conduct market or customer satisfaction research. We disclose personal information to third parties when necessary to assist us and them in providing and managing the relevant services and products. We limit the use and disclosure of any personal information provided by us to them to the specific purpose for which we supplied it. You authorise AXIS to collect, use, store and disclose your personal information for these purposes. You also give express authority for AXIS to, wherever applicable: obtain details of any insurance held by you now or in the past, or any claims experience under that insurance, whether with AXIS or another organisation, which may be relevant to the acceptance of your application or proposal, or to the resolution of a claim; and collect, use, store and disclose your personal information that amounts to sensitive information under the Act, as required to provide and manage the relevant product or service. Personal information about others If we give you personal information, you and your representatives must only use it for the purposes to which we agree. Where relevant, you must meet the requirements of the Privacy Act 1988 when collecting, using, disclosing and handling personal information on our behalf. You must also ensure that your agents, employees and contractors meet the above requirements. When you give us personal information about other individuals, we rely on you to have made or make them aware that you will or may provide their information to us and the types of third parties we may provide it to, the relevant purposes we, the insurers and the third parties will use it for, and how they can access it. If it is sensitive information we rely on you to have obtained their consent on these matters. If you have not done or will not do either of these things, you must tell us before you provide the relevant information. If you provide us with personal information or make an application for insurance to us, we will consider you have accepted the terms and conditions of this Privacy Statement unless you tell us in writing otherwise. You can also withdraw your consent at any time by advising us in writing. If you do not agree to the above we may not be able to provide you with our services or products. If you wish to request access or correction to the information we hold about you, opt out of receiving materials we send, or request a copy of our privacy policy, then contact the Privacy Manager, AXIS Specialty Australia, Level 21, 45 Clarence Street, Sydney NSW 2000. Further information about AXIS' privacy policy is available at www.axiscapital.com.au. If you are not satisfied with any response from our Privacy Officer then you are advised that complaints can be made to the Office of the Federal Privacy Commission. I declare as follows: DECLARATION (1) I am authorised by the persons or entities applying for this insurance, to make this declaration. (2) I have read and understood the tice to the applicant for insurance and the AXIS Privacy Statement in this proposal. (3) I have read this proposal and the accompanying documents and acknowledge the contents to be true and complete. (4) I understand that, up to the date of the commencement of the period of insurance, the Insured is under a continuing obligation to immediately inform AXIS of any material change in the information provided in this proposal and in accompanying documents. Although the signing of this proposal does not bind the applicants to effect insurance, I acknowledge that the particulars and statements contained in this proposal and in the accompanying documents shall be the basis of the contract if a policy is issued. I also acknowledge that the proposal and the accompanying documents will be incorporated in the contract of insurance. Name of Business or Practice: Signature of Principal or Director: Name of signatory: Date: / / Page 14 PI Financial Planners Proposal Form 2013
AUTHORISED REPRESENTATIVES TO BE INCLUDED UNDER POLICY Please provide details of ALL NON-EMPLOYED (EXTERNAL) authorised representatives (AR) that are required to be covered by this application. Name of Individual Authorised Representative Corporate Name Qualifications Date Commenced as AR Does the AR have a claims history / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / ** If there are any claims please provide FULL DETAILS Name of Business or Practice: Signature of Principal or Director: Name of signatory: Date: / / Page 15 PI Financial Planners Proposal Form 2013