SMSF Advisers Netwrk Pty Ltd Cmpliance Manual SMSF Advisers Netwrk Pty Ltd COMPLIANCE MANUAL Dated: 01/12/2014 Versin 1.0 SMSF Advisers Netwrk Pty Ltd
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Intrductin Cngratulatins n becming an Authrised Representative (AR) f SMSF Advisers Netwrk Pty Ltd (SAN). We believe that the assciatin yu have with SAN will be a prductive ne and f great supprt t yur accuntancy practice as yu mve frward t a wrld pst the accuntant s exemptin. The cntents f this manual are designed t infrm yu f the requirements f being an AR f an Australian Financial Services Licence (AFSL). In additin t thse there are als requirements due t refinements included with the licence terms by the licensee, SAN. While it might be cnsidered that additinal requirements by a licensee make things mre cmplicated, the scpe f the SAN requirements have been placed t recgnise yur rle as an accuntant adviser t yur clients with the AFSL t supprt this rle; nt impede it. What als must be recgnised is that the requirements f the licence (including its authrised representatives) are t meet the standards required f them under the Crpratins Act. Any breach f these standards can jepardise the licence and in turn yur practice and the practice f all ther ARs. Frm this perspective it is imperative yu knw, understand and practice the elements cvered in this dcument. If yu have any questins relating t items in this manual after yu have cmpleted the inductin t the AFSL we encurage yu t cntact us s that we can make sure yu are clear n what the expectatins are fr AR s and what is required f the licence. We lk frward t wrking with yu and taking yur practice thrugh this transitin. SMSF Advisers Netwrk Pty Ltd Page 2 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Table f Cntents Cntents Intrductin... 2 Table f Cntents... 3 Understanding ur licence... 5 Licensee limitatins... 5 Representative f the Licensee... 6 Individual Authrised Representative... 6 Crprate Authrised Representative (CAR)... 6 Assciate Representative... 6 Identifying yurself t clients... 6 Disclsure f yur psitin... 6 Business cards... 7 Letterhead... 7 Website... 7 Advertising materials... 7 Disclaimers... 9 Office Cmpliance Requirements... 9 Independent, Impartial r Unbiased... 9 The Planning Prcess... 10 1. Intrduce the advice prcess... 10 2. Identify current situatin and bjectives... 10 3. Determine and dcument strategy... 10 4. Present and prceed with the advice... 11 5. Manage the implementatin prcess... 11 6. Review nging recmmendatins... 12 SAN Internal Cmpliance Requirements... 13 Uplad f client files... 13 Client Invicing... 13 Cntinuing Prfessinal Develpment (CPD)... 13 CPD hurs crssver... 13 CPD hur spread... 14 Crpratins Act Requirements... 15 Financial Services Guide (FSG)... 15 Fact Finder/Data Cllectin... 15 Infrmatin t be btained frm Fact Finder/ Data Cllectin... 16 All Areas Must be Cvered... 16 Statement f Advice (SOA)... 16 Cnflict f Interest... 17 Replacement f Prduct... 18 Fee Disclsure Statement (FDS)... 19 Best Interests Duty... 19 Best practice... 21 Signed fact finder... 21 Written strategy ntes... 21 Signed authrity t prceed... 21 File ntes... 21 Advice prcess... 22 SMSF Advisers Netwrk Pty Ltd Page 3 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Reprting Requirements... 23 Cmplaints... 23 Breaches... 24 Sft Dllar... 26 N Cntact... 27 Anti-Mney Laundering/Cunter Terrrism Financing Act... 28 PI Insurance... 29 Appendices... 30 1. Cmplaint Reprt... 30 2. Breach Reprt... 30 3. Alternative Remuneratin (Sft Dllar) Register... 30 4. N Cntact Register... 30 Cmplaint Reprt... 31 Recrd f Breach... 32 Alternative Remuneratin Register... 30 SMSF Advisers Netwrk Pty Ltd... 31 N Cntact Register... 31 SMSF Advisers Netwrk Pty Ltd Page 4 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Understanding ur licence The SAN Australian Financial Services Licence (AFSL) has been issued by ASIC as licence n. 430062. The terms f this licence include authrisatins fr the fllwing classes f prduct: Depsit prducts (basic and ther); Life prducts (limited t life risk insurance prducts as well as any prducts issued by a Registered Life Insurance Cmpany that are backed by ne r mre f its statutry funds); Managed Investments; Securities; and Superannuatin. It is imprtant t nte that unlike a Limited Licence ffered by ASIC in place f the remval f the accuntant s exemptin, this licence allws advice n specific financial prducts cvered by the abve areas. At this time, it is the intentin f the licensee nly t ffer authrisatin fr advice n Superannuatin and Depsit Prducts. Remember that t prvide prduct advice des nt necessarily mean yu stipulate a particular investment r insurance cntract. It shuld be understand that a brad statement such as I believe yu shuld invest in shares is a financial prduct advice recmmendatin. Advice given at this level must be accmpanied by the dcuments required under the Crpratins Act (that we will cver ff later). Licensee limitatins The purpse f making applicatin fr this licence was t supprt accuntants t prvide advice n Self Managed Superannuatin Funds (SMSFs), but nt utside this specialisatin. Accrdingly, Advice may nly be given t thse wh are r thse abut t becme trustees f an SMSF, in relatin t the set-up, adjustment and clsure f an SMSF structure. This authrisatin will see the AR able t advice n: Establishment f an SMSF; Cmmencement f a pensin (Transitin t Retirement and Accunt Based); Limited Recurse Brrwing Arrangement Structuring Rllver f existing superannuatin plans; and Cntributins: Cncessinal Nn-cncessinal In specie The ASIC licence authrisatin will be restricted t: Basic Depsit Prducts (limited t bank transactin accunts) ; and Superannuatin Advice may be prvided n an asset class investment strategy fr the SMSF and general advice n whether the fund shuld include persnal insurance as part f its set-up. SMSF Advisers Netwrk Pty Ltd Page 5 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual N advice may be given as t specific investments (direct r managed) r n specific insurance prducts r cmpanies that might ffer such prducts. Advice may nly be given t thse wh are r thse abut t becme trustees f an SMSF; and Advice may nly be given in relatin t the SMSF and nt regarding any ther asset/financial prduct utside the SMSF. Representative f the Licensee It is imprtant t remember that in all yur dealings with clients, and hw yu represent yurself in the prvisin f advice, that yu d s as an authrised representative (AR) f SAN. Further representatin must ccur based n yur authrisatin: Individual Authrised Representative An individual AR f SAN is a persn that des nt interpse a cmpany structure between themselves and the licensee. In this way the individual AR acts directly n behalf f the licensee. Crprate Authrised Representative (CAR) This situatin ccurs where a crprate entity takes authrisatin with SAN. Where this ccurs, any statements made by any emplyee r directr f the cmpany are taken t be frm the licensee, whether authrised r nt. It des nt mean hwever that all emplyees and directrs are able t prvide such advice. Only thse authrised as an Assciate Representative f the CAR can ffer advice, and will be required t shw cmpliance with RG146 accreditatin befre SAN will ffer registratin fr such individuals. This is an area where CAR s must take great care. Any representatin made by an emplyee r directr f a CAR abut smething they need t be licensed fr, will see the CAR held liable fr any cmplaint r lss made by a client. Hwever SAN will take n respnsibility fr such a representatin made by an unlicensed persn. Als, as such a situatin wuld see a CAR acting utside their authrisatin agreement with SAN, the nging relatinship wuld have t be cnsidered. Assciate Representative As nted in the sectin abve, an Assciate Representative is ne wh is authrised under a CAR agreement, and prvides advice n behalf f that CAR. Identifying yurself t clients When dealing with clients SMSF needs it is imprtant that they understand yu are nw speaking n behalf f the SAN AFSL. Because yu are representing the licensee yu shuld infrm them f such and have them understand what they can expect in terms f advice and hw it will be prvided. This is als imprtant shuld yur advice ever give rise t a cmplaint s that the client understands their ptins in this area. Mre is discussed in this area later in the sectin utlining the planning prcess. Disclsure f yur psitin In yur activities there are varius dcuments in which yu need t disclse yur relatinship with the licensee. This must be dne in a specific way t ensure clients understand the basis n which yu are prviding advice and wh is ultimately respnsible. SMSF Advisers Netwrk Pty Ltd Page 6 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Business cards While nrmal practice with a business card is t prvide cntact details fr the intended recipient, yur relatinship with a licensee must als be shwn. Because f this yur business card will need t identify yu in terms f yur authrisatin (individual r crprate) with SAN, alng with the licence number f the AFSL. Further, if yu have a lg fr yur business and have this n yur card the SAN lg must als appear with sme level f prminence. Ideally, a ptential client must be able t easily identify bth yur business and the licensee yu represent when prviding them with licensed advice. T ensure any business cards meet cmpliance requirements a prf f the prpsed card shuld be frwarded t SAN fr apprval befre ging t print. Letterhead Any letterhead must als be sure t disclse yur authrisatin with SAN. T cmply in this area, the letterhead must: Nte the name f the representative and the terms f authrisatin; Where authrised under a crprate entity disclse that entity als; and As well as yur wn business address and details, that f SAN must be prvided as well (including ABN and licence number). As with yur business card, if yu are including yur business lg then the SAN lg must als be displayed with prminence. Yur prpsed letterhead (whether a sft cpy r prf f a hard cpy) shuld be sent t SAN fr cmpliance apprval prir t it being prvided t any (ptential) client. Website In develping yur website yu will likely be prmting yur verall business services; it is likely that the fcus f this will be fr yur accuntancy practice. While the wrk yu d under the SAN licence will likely be derived frm accunting clients, when prmting this aspect f yur business yu must take care t identify yurself as yu have in the previusly discussed dcuments (business card and letterhead). In develping yur website, we wuld recmmend: The majr aspect f yur website discuss yur tax cmpliance ffering fr clients; A separate web page be created t discuss yur SMSF advice services; That SMSF advice nly be nted n this page; and This page set ut as yu wuld a letterhead as described abve, and treated as an extensin f yur Financial Services Guide (FSG nted later in this manual). As fr ther dcuments, develpment f yur website shuld include perusal by SAN fr cmpliance sign-ff. Advertising materials As such materials are fr the purpse f encuraging peple t cme t yu, where yu are disclsing yur details, as per yur business card and letterhead, yu must be sure t disclse yur relatinship t SAN. It fllws t that if yu are using yur lg, then the SAN lg must be shwn with prminence. SMSF Advisers Netwrk Pty Ltd Page 7 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual A further issue t d with advertising is nt t d with disclsure f the licensee relatinship, but rather the representatins that are being made as part f the advertising material. Because the material may be cnstrued as giving advice it is imprtant that the material be reviewed by SAN. This is because as the licensee we need t be sure that the material will nt be viewed as being misleading r deceptive. Care shuld be taken in this area when develping the materials. If a cmplaint against such material is made, the view f what the intended message was will be taken frm that f the cnsumer. While we might understand what was intended, this is n defence against a cmplaint that a cnsumer tk the message t mean smething else. In additin yu shuld nte that: Yu can make a misleading statement nt by what is said, but by what is nt said; and Even what are technically true statements can be misleading, if the statement des nt give the entire picture. SMSF Advisers Netwrk Pty Ltd Page 8 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Disclaimers There is a perceptin that having a disclaimer at the bttm f published material will prvide all the prtectin that is needed. This is nt the case, and there is increasingly a mistaken reliance n using disclaimers t avid liability. It is illgical t make a statement in published material, (fr example, abut the perfrmance f a prduct, r whether it is less risky ) and then effectively say that if yu rely n this infrmatin yu d s at yur wn peril. This will nt stand up in law. Qualifying a statement with an asterisk t cmments in fine print cannt be relied upn either. Qualificatins in small type ftntes are nt viewed favurably; if the qualificatin is that imprtant, it shuld be cnveyed in the main text where pssible. Finally, if yu use statements f facts, r use figures r statistics yu shuld be able t rely n bjective evidence t supprt these. Office Cmpliance Requirements Yur ffice premises needs t shw yur status as a representative f SAN t ensure that when peple enter they are aware f yur assciatin with the licence. We recmmend the fllwing measures are taken: Yur signage include the SAN lg and nte yu are a representative (crprate r individual) f the licence; Yur frnt-ffice area display the SAN lg and infrm yur representative status; Any advertising material regarding SMSF advice be placed near t the SAN lg display; and Yur Certificate f Authrisatin (prvided upn appintment) be displayed where it can be seen by clients. Independent, Impartial r Unbiased The Crpratins Act 2001 prhibits financial services licensees frm using the wrds 'independent', 'impartial' and 'unbiased' in relatin t the business r the service that the persn prvides. As we have discussed in the earlier sectin Licence limitatins, authrised representatives under the licence may nly prvide advice t trustees r ptential trustees f SMSF s Because f this restrictin in ur licence terms we cannt claim t prviding advice ver a wide range f prducts r financial services. With this restrictin in place n authrised representative f SAN can claim t be any f the terms abve. Als, because ur licence will allw advisers t be remunerated by cmmissin frm life insurance and ther plicies this further precludes the use f such terms. SMSF Advisers Netwrk Pty Ltd Page 9 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual The Planning Prcess In prviding advice t SMSF clients, SAN recmmends the use f the fllwing prcess: 1) Intrduce the advice prcess 2) Identify current situatin and bjectives 3) Determine and dcument strategy 4) Present and prceed with advice 5) Manage the implementatin prcess 6) Review nging recmmendatins Fr a mre detailed explanatin f these steps: 1. Intrduce the advice prcess It is likely that yu have acted as the taxatin adviser fr these clients prir t prviding advice under the SAN AFSL. Because f this situatin it is even mre imprtant t ensure that yu fully explain t them yur bligatins in this area and hw this prcess might be different t what they have experienced t this time. Intrducing this is an ideal time t: Give yu clients yur FSG; Discuss with them hw this service is charged fr; and Explain hw the verall prcess wrks. It is imprtant at this stage t ensure that the clients understand the prcess and that their expectatins are managed. This will ensure that any differences they may perceive in service levels are addressed befre they may turn int cncerns r (in extreme situatins) a cmplaint. 2. Identify current situatin and bjectives T ensure that yu are seen t be acting in the clients best interests it is imperative that yu are able t shw n file an understanding f: Where the clients are cming frm (their current situatin); and What they are seeking t achieve. These aspects are cvered by recrding the clients details in a fact finder/data cllectin frm. Withut these details n file it is difficult t demnstrate that yu have given these elements cnsideratin when making yur recmmendatins. Such a situatin culd give rise t a claim that yu were nt acting in the clients best interest when making yur recmmendatins. 3. Determine and dcument strategy Having ascertained the clients situatin and nted what they want t achieve yu are nw in a psitin t determine the best methd t hw this can be achieved. Yur strategy shuld clearly shw: Factrs used t determine why the recmmended strategy is the best ptin; Any wrkings/calculatins t supprt this scenari; and SMSF Advisers Netwrk Pty Ltd Page 10 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Any cnsideratin given t elements that may affect such a recmmendatin (such as exit fees, Capital Gains Tax, liquidity requirements, etc.). Having determined the strategy that will best suit the clients needs it shuld then be dcumented in an SOA. While an SOA needs t cver all the elements required t shw the client why yur recmmendatin is best suited t their needs, this des nt mean the dcument shuld be lng and difficult t understand. T the cntrary, ASIC believes that brevity and a cncise statement f what is required and why best suits the needs f the cnsumer. In their Regulatry Guide (RG) 175, when discussing the cnstructin f an SOA they use the term cncise t describe what they feel is the best manner f cmmunicating with the client in an SOA. Ultimately it will be yu as the authrised representative that determines what yu think best meets yur clients needs fr the advice dcument. As the licensee we wuld thugh cautin against dcuments being bth t shrt (with nt enugh infrmatin t supprt the ratinale fr yur recmmendatins) and t lng (with t much generic filler infrmatin). 4. Present and prceed with the advice Having determined yur strategy and prepared an SOA supprting this, the SOA shuld nw be presented t the client. While the SOA is a required dcument, we feel it shuld als be a presentatin tl t be used t help the client understand what yu believe is the best curse f actin and hw that curse f actin is t be implemented. Presentatin f the SOA in this manner prvides the pprtunity fr the client t ask questins, and als fr yu t cnfirm their understanding f what is being recmmended as well as if they are cmfrtable with what is being prpsed. Part f the SOA shuld be the actin steps required in rder t implement the advice. This shuld include: Hw the SMSF will be implemented; What the cst f the advice is and hw payable; and If investments and insurance are being recmmended, then What amunts; What cst; and Where payable t. Where investments and insurances are nt being recmmended, any referral shuld be clear, and that yu are nt respnsible fr the advice f that party shuld the client prceed with it. 5. Manage the implementatin prcess With the clients having agreed t the implementatin f the fund their expectatins shuld be managed in terms f hw lng the establishment prcess will take. While it may be that it is yur practice taking charge f establishment, given that it was yur advice t d s incurs a respnsibility t keep the clients infrmed f the prgress f this prcess. Shuld any situatin arise that sees the implementatin prcess falter we recmmend cntacting the client s that they hear abut it frm yu first. By being practive in this area the client will feel yu are wrking n their behalf and lking after their interests. SMSF Advisers Netwrk Pty Ltd Page 11 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual 6. Review nging recmmendatins As time passes, there will need t be adjustments t the SMSF and any such recmmendatins will need t take place under the licence requirements. Whether yu ffer such a review service will be ultimately yur decisin, hwever if yu are t ffer such a review yu will need t ensure that yu infrm yur clients; That this service exists; Why they wuld benefit frm this service; What they can expect frm such a service; What this service will cst; and The methd f remuneratin. The prvisin f the service is a business decisin as is the frmat it will take and what it prvides. Hwever, if ffering such a service it shuld be nted that: An nging service agreement shuld be prvided and signed ff by bth parties; The client will need t pt-in t this service every tw years (based n current legislatin); and Any nging fees will need t be disclsed each year in a Fee Disclsure Statement SMSF Advisers Netwrk Pty Ltd Page 12 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual SAN Internal Cmpliance Requirements As has been nted, the licensee is ultimately respnsible fr the advice yu are giving t clients. In recgnitin f this respnsibility we are charged with making sure the cnduct f its authrised representatives is mnitred and supervised. It is with this in mind that we have cnstructed ur cmpliance system and its requirements. Uplad f client files As yu cmplete a client advice file, it shuld be scanned int a single dcument and upladed nt the SAN server. This will be dne via the SAN website in the Fund Register sectin. A client advice file will cnstitute the fllwing dcuments: Signed acknwledgement f the Financial Services Guide (FSG); Cmpleted and signed Fact Finder; File Ntes; Strategy Ntes; Statement f Advice (SOA) with a signed Authrity t Prceed; and AML/CTF identificatin dcuments. These client files will be used fr the purpse f audit and spt checking n a regular basis by SAN cmpliance staff. Client Invicing As per the Crpratins Act and ASIC Regulatry Guide (RG) 36, nly a licensee may accept payment frm a client fr advice given. On this basis, a client may nly be prvided with an invice fr fees fr advice frm SMSF Advisers Netwrk Pty Ltd. T allw this t ccur, the SAN website allws fr the generatin f an invice frm and payable t the licensee. Under the Fund Register sectin an invice can be created using a list f services, and allwing yu t input what fee will be due and payable. This invice prvides a BPay number fr the client t make payment t, but payment can als be made by cheque. Upn payment being received by SAN, this will be remitted in the incme payment immediately fllwing (either the middle r end f mnth). Cntinuing Prfessinal Develpment (CPD) It is a requirement fr an authrised representative f a licensee t cmplete CPD t maintain the authrisatins they are prvided under the licence. While at this time there is n legislated r regulated figure n this, the generally accepted amunt f CPD t be cmpleted each year is 30 hurs/pints. Please nte: a pint is nrmally the equivalent f ne hur f CPD, therefre the number f pints is equal t the number f hurs and vice versa. CPD hurs crssver As taxatin practitiners there is a requirement t maintain CPE hurs as well, and an additinal 30 hurs is a great burden in time. SMSF Advisers Netwrk Pty Ltd Page 13 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual SAN recgnises this and als that many f the areas cvered in yur current CPE are als relevant t what yu are authrised fr under the SAN AFSL. With this the case, areas cvered in taxatin CPD that relate t superannuatin, depsit prducts and financial services general knwledge can als be credited tward yur CPD requirements under the SAN AFSL. CPD hur spread As yur authrisatin is fr specific areas f knwledge the requirement fr CPD hurs under the SAN licence is als specific in its requirements. Knwledge Areas Knwledge Target Hurs (Mins) Generic Knwledge 2 Financial Planning 1 Persnal Taxatin Issues (financial planning stream) 5 Superannuatin (including Retirement Incme Streams and SMSFs) 20 Skills 1 Ethics 1 Ttal Requirement 30 Fr example, while yu may have 28 hurs fr superannuatin, 8 hurs fr tax and 2 hurs fr generic knwledge this will be insufficient t meet yur nging authrisatin requirements even thugh this exceeds the 30 hurs required. This scenari abve will accunt fr nly 27 hurs (20 superannuatin, 5 persnal taxatin and 2 generic knwledge). Achieving these requirements T btain these hurs yur activities can include: NTAA Super Schls (13 hurs fr superannuatin) *CPD DVD s prvided by SAN Prfessinal Reading Financial Seminar attendance Other structured sessins that prvide a certificate itemising the hurs/pints the cntent prvides *Please nte that these activities are cmpulsry fr SAN Authrised Representatives. SMSF Advisers Netwrk Pty Ltd Page 14 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Crpratins Act Requirements Being licensed under an AFSL means that the advice activities yu are authrised fr must be practiced in line with the requirements f the Crpratins Act. Dcuments that must be prvided as part f yur activities are: Financial Services Guide (FSG) Prir t and during the advisry prcess, yu must clearly identify yurself t the client, wh must be left in n dubt that yu are an authrised representative. Yu must nt describe yurself in such a way as t create the impressin that yu are the hlder f the AFS Licence. When yu are prviding advice r making a recmmendatin yu must, at the earliest reasnable pprtunity during the prcess, advise the client in writing f the fllwing: Yur name and business address; The Licensee s name and address and clearly indicate that the Licensee is respnsible fr yur cnduct; That yur primary duty is wed t the custmer; Yur methd f remuneratin; The prducts yu are specifically authrised t advise n; and Prcedure fr reslutin f cmplaints. Essentially, yu must make it clear t the client that yu are an authrised representative f the Licensee and yu have a respnsibility t prvide apprpriate advice. The abve requirements are met by prviding t yur clients with an FSG. As part f being an authrised representative f SAN yu will be supplied with an FSG t use as part f yur advice prcess. This dcument shuld nt be altered in any way withut the apprval f the Respnsible Manager. Shuld any significant changes be required ver the licensee grup an updated FSG will be prvided t yu, frm which time n yu shuld use that versin. Please nte: upn being issued with a new versin f the FSG yu will be required t prvide that dcument t a client befre prviding any advice; even if they have received an earlier versin. The SAN FSG requires the client t sign an acknwledgement that they have received the FSG. This shuld be returned t yu and filed alng in the client s file. Fact Finder/Data Cllectin The Crpratin Act requires us t act in the Clients Best Interest. This aspect f the prvisin f financial advice has been a part f the financial services and insurance industries fr many years thrugh the Reasnable Basis fr Advice rule, and prir t that (befre the advent f financial services refrm in the early 2000 s) the Knw Yur Client, Knw Yur Prduct rules. After yu have clearly identified yurself, yu then need t get t knw the client and identify his/her financial circumstances, needs and bjectives. This prcess is generally referred t as knwing yur client and is undertaken by cmpleting a Client Data Frm / Fact Find. Clients will rely n yu and, therefre, when yu make a recmmendatin r prvide advice yu must have a reasnable basis fr ding s. SMSF Advisers Netwrk Pty Ltd Page 15 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual By knwing yur client, the prspects f prviding inapprpriate advice are cnsiderably diminished. Under the Act, it is a criminal ffence t prvide advice that is deemed inapprpriate t that f yur clients interests. When yu prvide a custmer with advice, a Client Data Frm / Fact Find must be cmpleted prir t the prvisin f that advice. This is essentially a prcess f cllecting infrmatin frm a client, which is designed t identify his/her financial needs. In particular, yu must analyse the needs, circumstances and bjectives f the client t ensure that advice is given will meet their bjectives and is nt inapprpriate t their situatin. The infrmatin cllected frm the custmer must be recrded in the Fact Finder/ Data Cllectin frm. Infrmatin t be btained frm Fact Finder/ Data Cllectin Yu must undertake a Client Data Frm / Fact Find t btain the infrmatin detailed belw frm the client (The list is nt exhaustive): Financial and family circumstances. Details f the client s needs and bjectives fr their superannuatin needs, including the need fr capital grwth, security, liquidity and what is the custmer s financial time frame. The client s investment preferences and aversin r tlerance t risk. The level and type f retirement benefit which the clients currently have in place. The client s emplyment security, age, partner s age, expected retirement age and partners expected retirement age. All Areas Must be Cvered All applicable areas f the Client Data Frm/ Fact Find shuld be cmpleted and n areas are t be left blank. Areas n the frm that are nt relevant t the client shuld be crssed ut and clearly marked with the ntatin N/A. If the client refuses t answer a particular questin, again rule a line thrugh it and make a ntatin client refuses t answer. Best practice wuld be t have the client initial alngside the crssed ut area. By adpting this prcedure f crssing ut and ntating, it cannt later be claimed that yu simply frgt r mitted t ask the questin. The Client Data Frm / Fact Finder must be dated and signed by the Authrised Representative and the client. It is clearly in yur interests and it is ur plicy t have the client sign the dcument and thereby frmally acknwledge that a fact find / needs analysis was undertaken. Yu must retain the Client Data Frm / Fact Finder n file fr future reference in the event f a cmplaint being made. The frm and client file, including the Statement f Advice, shuld be kept fr a minimum f seven years. Statement f Advice (SOA) The SOA is the dcument expressly fr the client and therefre acts as a basis fr the recmmendatins yu have given the client regarding hw they can achieve their bjectives. The preparatin f the SOA shuld include all infrmatin relevant t the client's current situatin and future gals and all infrmatin, which the representative used t frmulate the recmmendatins. The reprt shuld be prepared in such a manner that when lking back at advice given it can be clearly understd what the client was hping t achieve, what recmmendatins were made and why they were made. A Statement f Advice must cntain the fllwing: SMSF Advisers Netwrk Pty Ltd Page 16 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual the title Statement f Advice must be used n the cver r at r near the frnt f the Statement f Advice thereafter, it can be abbreviated t SOA a statement setting ut the name, licence number and cntact details f the authrising licensee a statement setting ut the name and cntact details f the authrised representative (if applicable) the scpe f the client inquiries undertaken e.g. the client s persnal infrmatin was btained via cmpleting the Client Data Frm and discussins held with the client if the advice is based n infrmatin relating t the client s circumstances that is incmplete r inaccurate, a statement warning the client that the advice: is r may be based n incmplete r inaccurate infrmatin relating t the client s relevant persnal circumstances; and because f that the client shuld, befre acting n the advice, cnsider its apprpriateness, having regard t the client s relevant circumstances the client s relevant persnal circumstances as ascertained thrugh the client enquiries the representative s recmmendatin in a clear and unambiguus manner the alternative ptins cnsidered and investigated by the authrised representative infrmatin abut the basis n which the advice is r was given, including the reasns why the recmmendatin is suitable and mre apprpriate than the alternative ptins cnsidered, but nt recmmended (hw the recmmended strategy and prducts meets the client s needs, gals and bjectives) infrmatin abut any remuneratin r ther benefits that: the authrising licensee, an emplyee r its directr; the authrised representative, its emplyee r directr; an assciate f any f the abve (including yur assciated accuntancy practice); r a referrer is t receive. the ttal amunt f the remuneratin and benefits payable stated as an amunt, r if the ttal amunt cannt be identified when the SOA is prvided, set ut a descriptin f the methd f calculating the remuneratin and benefits, including if apprpriate, percentages r wrked dllar examples; and written details f when and hw the remuneratin and ther benefits are payable if the advice prvided is based n infrmatin relating t a client s relevant persnal circumstances that the authrised representative knws r is reckless in nt knwing that the infrmatin is incmplete r inaccurate, a statement warning the client that the advice: is r may be based n incmplete r inaccurate infrmatin relating t the client s persnal circumstances; and because f that the client shuld, befre acting n the advice, cnsider the apprpriateness f the advice, having regard t the client s relevant persnal circumstances. Cnflict f Interest When giving advice under a Financial Services Licence, cnsideratin must be given t any cnflict f interest that is raised in prviding that advice. This will be an imprtant cnsideratin fr advice ffered when recmmending the set-up f an SMSF t a client and ptential trustee. In prviding such advice, nce the fund is established it is likely that the recmmendatin wuld be t use yur accuntancy practice t then prvide nging tax and administratin services. Accrding t the cnflicts pririty rule (Crpratins Act Part 7.7A Divisin 2) as utlined in ASIC s Regulatry Guide (RG) 175; SMSF Advisers Netwrk Pty Ltd Page 17 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual an advice prvider must nt recmmend a prduct r service f a related party t create extra revenue fr themselves, their AFS Licensee r anther related party, where additinal benefits cannt be demnstrated As yur wn accuntancy practice wuld be a related party t the advice being prvided, it fllws that: The relatinship between the tw parties shuld be disclsed, including any payment t be made; and The benefit f using the accuntancy practice t prvide services needs t be demnstrated in terms f yur recmmendatin. Details f this shuld be included in the Remuneratin disclsure sectin f yur SOA. Replacement f Prduct Where the advice includes a recmmendatin that the client dispse f r reduce the client s interest in all r part f a financial prduct (i.e.; anther superannuatin fund) and instead acquire all r part f, r increase the client s interest in anther financial prduct (i.e.; the SMSF being recmmended), r that a client switch between investment strategies available within a fund r between an accumulatin and pensin stage in a fund, t the extent knwn, r able t be reasnably fund ut: a statement that the client s existing financial prduct(s) has been cnsidered any charges the client will r may incur in respect f the dispsal, reductin, acquisitin r increase any pecuniary r ther benefits the client will r may lse (temprarily r therwise) as a result f taking the recmmended actin infrmatin abut any ther significant cnsequences fr the client f taking the recmmendatin that the authrised representative knws, r ught reasnably t knw, are likely if the representative knws that, r is reckless as t whether any f the abve charges r cnsequences might be incurred, but des nt knw and cannt reasnably find ut what thse cnsequences are r will be, the SOA must include a statement t the effect that there will r may be cnsequences, hwever the authrised representative des nt knw what they are. As licensee, SAN will be prviding yu with templates fr SOA s fr use in practice. These dcuments have been cnstructed taking all the abve pints int accunt t meet yur nging cmpliance. Hwever the SOA is a dcument yu need t feel cmfrtable in that it represents the advice yu are giving t yur clients. Because f this yu may wish t alter aspects f it and its presentatin. SAN allws fr adjustments t be made t this dcument prvided that befre using the adjusted dcument any changes are authrised by the Respnsible Manager fr the licence. SMSF Advisers Netwrk Pty Ltd Page 18 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Fee Disclsure Statement (FDS) Fr client with whm yu have an nging fee arrangement in relatin t the prvisin f advice under an AFSL yu are required t prvide them annually with a Fee Disclsure Statement (FDS). This FDS shuld disclse infrmatin abut the previus 12 mnths f their nging fee arrangement detailing: the amunt f fees paid by the client; the services that they were entitled t receive; and the services that they did receive This must be prvided t the client within 30 days f the client s Disclsure Day. The disclsure day, which will generally be the anniversary f cmmencement f the nging fee arrangement. Advisers shuld be aware that by nt prviding the FDS they may be liable fr penalties f up t $50,000 per adviser/$250,000 per Crprate Authrised Representative per breach f these regulatins. Best Interests Duty An imprtant aspect f the Future f Financial Advice (FOFA) legislatin was the intrductin f the Best Interests Duty. Sectin 961B f the Crpratins Act 2001 states that the prvider must act in the best interests f the client in relatin t advice given. In rder t prve this, the prvider must have dne each f the fllwing: 1. Identify the financial situatin, bjectives and needs f the client 2. Identify the subject matter f the advice sught by the client and the financial situatin, bjectives and needs f the client reasnably cnsidered relevant t the advice sught 3. Made reasnable enquiries where is it reasnable apparent that the infrmatin pertaining t the clients situatin is incmplete r inaccurate 4. Assess whether yu have the expertise t prvide the advice and decline t prvide advice if yu d nt 5. Where cnsidering it reasnable t recmmend a financial prduct, making reasnable enquiries as t what financial prduct might meet the bjectives f the client based n all judgements 6. Recmmendatins are based n the infrmatin gathered and the clients relevant circumstances 7. Taking any ther step, that that at the time the advice is prvided, wuld reasnably be regarded as being in the best interests f the client, given the client s relevant circumstances T cmply with this step ASIC suggest that planners may need t undertake the fllwing, if they have nt already dne s: explain clearly t the client the advice service that is and is nt being prvided; if the advice includes a prduct recmmendatin, prvide related strategic recmmendatins that benefit the client; depending n the subject matter f the advice, specify in the advice that the client shuld review any decisin made abut financial prducts within a certain time; and ffer t prvide advice (r refer the client t smene wh can prvide advice) n any ther key issues identified by the planner within the subject matter f the advice sught by the client. When lking at making recmmendatin f a financial prduct, the questin f what is a reasnable enquiry is raised. Accrding t sectin 961D, reasnable investigatin is defined as ne that: SMSF Advisers Netwrk Pty Ltd Page 19 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual might achieve thse f the bjectives and meet thse f the needs f the client that wuld reasnably be cnsidered relevant t advice n the subject matter sught by the client des nt require an investigatin int every financial prduct available In cnsidering meeting this requirement, SAN s interpretatin is that where an adviser has a preference fr a particular prduct there is nt the need in each instance t investigate a range f alternatives. An adviser thugh must ensure they are sufficiently aware f the range f alternatives available generally in the market place t substantiate the use f this prduct, and in particular be aware f what situatins an alternative prduct might be mre apprpriate (lwer accunt balances, ccupatin definitins, etc.) The advantages f the prduct must be stated in the SOA prvided t the client and related in terms f why it is apprpriate t the particular client, alng with hw it meets their needs, bjectives and financial situatin. It shuld be nted that sectin 961D als where a client requests use f a particular financial prduct that reasnable investigatin must ccur. Shuld that particular prduct be mst apprpriate t their needs and is NOT n the SAN Apprved Prduct List (APL), cntact shuld be made t determine whether: 1. It can be included n the APL 2. It will be given special cnsideratin in the single instance nly and nt included n the APL 3. That it may nt be recmmended fr the client, but yu may prvide an executin nly service n their behalf 4. That it may be nt be recmmended nr can yu execute Ultimately, the true test f whether r nt yu have acted in the clients best interest is whether r nt the client is placed in a better psitin than they were in prir t the cnsultatin. This des nt necessarily mean that an adviser must give perfect advice, but any benefit t the client must be mre than trivial t meet the requirements f this statute. SMSF Advisers Netwrk Pty Ltd Page 20 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Best practice The fllwing measures, while nt required by legislatin, are cnsidered t be best practice in terms f business risk management. Because f this, the fllwing elements are required aspects f the SAN Cmpliance Prcess and will be assessed when perfrming file audits. Signed fact finder In making recmmendatins an AR must d s in the clients best interest, part f which is t understand the clients current psitin. This will stem frm the infrmatin prvided by the client abut their psitin. The purpse f having the client sign the fact finder is t supprt the disclaimer that if the infrmatin prvided is nt crrect then the advice cannt be crrect either. By having the client sign the dcument infrms them f such and: Prvides prf that the client has bth been warned f the situatin; and That there can be n fault n the part f the adviser if recmmendatins made are nt apprpriate when the infrmatin supplied was incrrect t begin with. Written strategy ntes As every client s situatin is different it is expected that cnsideratin will need t be given t each client individually. The use f ntes n their situatin such as amunts, savings requirements, current plans and their exit fees, cst cmparisns, etc. demnstrate that such individual cnsideratin has been given and recmmendatins are made in the clients best interests. T simply nte that a client wanted an SMSF withut such cnsideratin breaches the duty f care that cmes with being authrised under an AFSL. Whether a client wants ne r nt, an AR has the bligatin t determine if an SMSF is the best curse f actin fr that client r nt. By an AR nting they have made investigatin and recmmended that this is nt the best curse f actin, if the client still insists this actin take place the AR is cvered shuld any issue arise in future and a cmplaint against them made. Signed authrity t prceed Having this dcument is anther way t manage business risk in this area. By having a client sign an Authrity t Prceed indicates that the client bth understd and was willing t implement the recmmendatins made. Shuld at any later time a client decide the recmmendatin was in fact nt suited t their needs, the prductin f a signed Authrity t Prceed lends weight t the argument that when the advice was implemented they were in fact advised crrectly and agreed with the advice at that time. File ntes The use f file ntes is an imprtant element f helping remember what yur dealings were with yur clients. SMSF Advisers Netwrk Pty Ltd Page 21 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual While these help mitigate business risk shuld yu ever be asked t recall yur dealings with a client, they are als an excellent way t help remember any issues r pints f discussin when preparing fr a review r ther fllw-up meeting. File ntes are best when cmprehensive and include detail f: Time f cmmencement and cnclusin f meeting; Wh was present at the meeting; Prgress/agenda f the meeting; Issues and questins raised (by bth client and AR); Nting cnfirmatin f infrmatin and understanding; and Nting any behaviural aspects f the client (pr bdy language, if they became quiet r nnrespnsive, qute f any particular statements made, etc.) Advice prcess Having all the required dcuments in place is certainly a gd way t supprt yur advice prcess and reduce business risk in the frm f a cmplaint. Hwever, the dcuments in islatin are nt always sufficient t shw yu have met the burden f crrect advice; questins may be raised as t whether r nt dcuments have cnveniently been created t ffset any claim against the AR. This is where having a strng advice prcess as part f yur business practice is a key element. Being able t state categrically hw yu have acted nt just in the cmplainant s case but in the way yu act fr all clients reduces the ability f any charge that may be laid against yu. Acting in the same manner each time yu advise in terms f: Gaining (r attempting t gain) client infrmatin; Making ntes as t strategy and whether apprpriate r nt; Dcumenting recmmendatins in full; Obtaining signatures; Drawing clients attentin t limitatins and ther disclaimers; and Making file ntes at cmmn pints thrughut the prcess This will prvide credibility t yur business, as well as ensuring yu are nt left wndering abut any aspect f yur dealing with clients. SMSF Advisers Netwrk Pty Ltd Page 22 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Reprting Requirements Part f yur rle as an authrised representative is t ensure the nging validity f the licence. Because f this there are several reprting bligatins included in yur rle as Authrised Representative. Cmplaints In accrdance with the Australian Standard f Cmplaint Handling (AS 4269-1995), we have frmalised the fllwing cmplaints handling prcedure. Our cmmitment t reslve cmplaints in a fair and efficient manner is essential. We must be active in ur apprach and seek feedback frm clients. Step 1: Advise clients in an initial letter acknwledging the cmplaint and explaining the prcedure t them. Cmplaints must be respnded t within 5 days f initial cmplaint. Cmplaints shuld be reslved within 6 weeks. If cmplaint unreslved cmmittee must advise client f their right t cntinue n t the External Reslutin Scheme. Step 2: Imprtantly it is essential that we cnvey a cmmitment t dealing with issues bjectively. Any cmplaint shuld he handled by an Internal Cmplaints Cmmittee member (this persn must nt be directly invlved in the dispute), wh shuld assess the issue and then meet with the cmmittee t make the final decisin. All cmplaint dcumentatin shuld be in plain English. Cmplainants shuld als be able t cmplain verbally in a meeting with the cmmittee and they shuld be assured that the matter wuld be fllwed up. Als if a persn is nt fluent in English, an interpreter may be required fr a verbal cmplaint. The adviser shuld ensure that the client has had every pprtunity t effectively state their pint f view. Step 3: Cmplaints must be addressed quickly and cmplaints shuld nt be left t drag n indefinitely. Being helpful and receptive t receiving a cmplaint will minimise any stress r tensin that the client may feel. Step 4: The persn with the help f the cmmittee reviewing the cmplaint must be in a psitin t reslve it. If that shuld mean a payment f mney, the cmmittee shuld be in a psitin t authrise such payment after cnsultatin with management. If the amunt invlves a prfessinal indemnity insurer the client shuld be advised immediately, and further advised f the prcess. Nt all remedies need be mnetary; nging services at nil cst r ther benefits may equally satisfy the client. Smetimes a simple aplgy will suffice. Step 5: A simple database/register needs t be established t cllect data n the cmplaints received and hw they were reslved (see appendix). Our in-huse internal cmplaints cmmittee is required t adhere t a set f prescribed standards. There must be a reprting functin t ensure that the cmplaints are being treated in accrdance with thse standards. SMSF Advisers Netwrk Pty Ltd Page 23 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual If a reslutin cannt be reached in this prcess then ur PI insurer shuld be ntified and the client ffered the chice f reslutin via the External Cmplaints Reslutin prcedure. We utilise the services f the Credit Ombudsman Service Ltd (COSL) fr external reslutin f cmplaints. Breaches Yu are required t ntify SAN immediately when yu becme aware f an incident that culd be a likely breach as part f yur respnsibilities as an AR. Examples f breaches which ASIC cnsider may be significant, and therefre which a licensee is required t ntify ASIC f, are: a prvisin f inapprpriate advice - If inapprpriate advice is prvided t a client, this may be regarded as a breach by the licensee itself f its bligatin t cmply with relevant financial services laws, r f its bligatin t ensure that its representatives cmply with thse laws; it is reprtable if it is seen t be a systematic prblem and repeated n mre than ne ccasin. a representative perating utside f his r her authrity - ASIC cnsiders that the prvisin f unauthrised financial services by a representative is likely t be a significant breach f the respnsibilities f hlding a licence because: It may impact upn the ability f the licensee t prvide the financial services cvered by its licence; and/r indicate that the arrangements t ensure cmpliance with the AFS bligatins are inadequate; and invlve actual r ptential financial lss t a client Fraud in the prvisin f financial services - Similarly, this can indicate a failure in the cmpliance arrangements and/r culd invlve lss t a client. Fundamental t any effective cmpliance system is a reprting prcedure which includes: A methd t identify and address breaches f the financial services laws (including systematic breaches); A clear, well-understd and dcumented prcess fr reprting breaches and fr escalating breaches fr apprpriate actin; and A regular cmpliance review prcess fcusing n breaches. Rules All reprtable breaches stem frm, r reflect a failure t act efficiently, hnestly and fairly which is ne f SAN s cre bligatins as an AFSL hlder. Under the law, we are under an bligatin t ntify ASIC f any significant breach. What ASIC and ur licence require is that we take reasnable steps t ensure cmpliance with the financial services laws. These are primarily, thse laws administered by ASIC and APRA such as the Crpratins Act and ASIC Act. Identifying Breaches As an AFSL hlder we are required t perate efficiently, hnestly and fairly. This requires us t prduce the desired utcmes fr ur clients and be capable, cmpetent and ethical. In simple terms, a breach represents ur failure t meet ur bligatins under the financial services laws r the cnditins f ur licence. But even this simple definitin raises additinal questins such as what laws and cnditins we need t cnsider. Clearly, we need t fcus n failures that represent a breach f ur: Obligatins under the financial services laws (and in particular ur bligatins as a licensee); Obligatins t mnitr, train and supervise ur representatives; SMSF Advisers Netwrk Pty Ltd Page 24 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Obligatins t perate efficiently, hnestly and fairly; and, Duties t ur clients. It is als critical t remember that the law requires us t be practive and vigilant. Because we have an bligatin t infrm ASIC if we are likely t breach ur bligatins, we have t clsely mnitr ur peratins and be alert t anticipated breaches. Defining a Breach It is impssible t create a final and definitive list f breaches, because despite the legal definitin, prper identificatin f breaches als requires independent judgment, intuitin and a subjective understanding f ur business. This said, a breach (r an anticipated breach) wuld likely have ccurred if there are: Repeated failures t prvide retail clients with regulated dcuments (such as Financial Services Guides, Statements f Advice and Prduct Disclsure Statements); Systematic failures t disclse fees and csts; Failures f ur cmpliance arrangements (r incidents that suggest a failure); Prblems r cnditins that are likely t impact n ur ability t service ur clients r run ur business (such as inadequate staff numbers, significant and prlnged staff absences and majr IT failures); Failures f ur dispute reslutin prcess r cessatin f ur membership f Credit Ombudsman Service Limited (COSL). Incidents f advice being prvided withut a reasnable basis r evidence f the adviser engaging in inapprpriate activity (particularly if it appears systemic); and Incidents suggesting fraud r market miscnduct. Our apprach t identifying breaches We cnsider the fllwing issues imprtant enugh that we expect yu t bring them t the attentin f SAN management as sn as yu becme aware f their ccurrence: Yu failed t prvide a retail client with yur Financial Services Guide; Yu failed t cnfirm yur advice t a retail client in a Statement f Advice; Yu frgt t disclse the risk f the investment/s t a client; Yu dn t have a cmpleted Fact Find n file; Yu dn t have an Authrity t Prceed frm the client; Yu didn t perfrm the scheduled client review; Yu recmmended prducts utside ur list; Yu released client infrmatin t a third party withut authrity; and Yu ve detected a suspect transactin that was placed n behalf f the client. A cpy f the SAN Breach Reprt is fund in the Appendix and is in the resurces n ur website. This shuld be cmpleted in detail and a cpy sent t SAN with a cpy retained at yur ffice. Assessing Significance Cnsidering the scpe f ur activities and the breadth f ur bligatins, effective incident mnitring culd be a full time jb fr a legally trained persn where the mst minr r mst technical f infractins are reprted t ASIC. This is nt what either ASIC r Treasury intend. What is intended is that we mnitr and reprt significant breaches r breaches that are likely t be significant. This is the cncept f materiality that underpins ur reprting bligatins. SMSF Advisers Netwrk Pty Ltd Page 25 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual As a licensee we need t fcus n thse breaches that are either substantial r cnsistent failures t meet ur bligatins. Nt all incidents are t be reprted t ASIC n breaches. It is hwever cmpulsry t reprt all incidents t SAN. Respnding t Incidents While we knw ur advisers run highly prfessinal businesses, we recgnise that breaches will ccur. Our cmmitment t prfessinalism as an AFSL hlder means that we are abslutely cmmitted t prperly respnding t breaches. While ntifiable breaches are addressed elsewhere, as an rganisatin we will respnd t breaches by: Aplgising in writing t the affected client (as apprpriate); Paying cmpensatin quickly (where apprpriate); Prviding ur representatives with additinal training and supprt; Imprving ur supervisin arrangements; and Amending ur cmpliance prgram. Althugh we cnsider cmplaints and breaches as key indicatrs f the health f ur business (and drivers f cntinuus imprvement), and we are mre interested in respnding t breaches psitively by learning frm the experience, we must take each incident seriusly. Althugh we have a n fault apprach t reprting breaches we will, where apprpriate, terminate, discipline r penalise a representative where we cnsider that the breach is a direct and freseeable result f their grss negligence, unprfessinal cnduct r illegal activity. Ntifying ASIC While we recrd all incidents in ur breach register, as an AFSL hlder we are required t reprt all significant r material (anticipated) breaches t ASIC within five (5) business days f us becming aware f the breach. Yur bligatin as ur representative If yu becme aware f a breach, r yu anticipate a breach will ccur, yu have t tell us. As sn as yu identify a prblem, cntact SAN t let us knw what the issue is. Often, anticipated breaches can be minimised r averted by a quick and apprpriate respnse, s any issue shuld be reprted immediately. As we have nted earlier we understand that breaches will ccur in the curse f ding business; what is imprtant is that we learn frm them, bth as a licensee and a business. Sft Dllar As part f the changes under the Future f Financial Advice, the acceptance f any benefit by way f gift r educatin must be recrded where the value f such benefit exceeds $100.00. In additin t this, n benefit may be received by an authrised representative where the value exceeds $300.00. Our appendices prvide a frm t recrd such Sft Dllar Benefits. This shuld be updated wherever a gift is received such as: Persnal use items (meals, wine, tickets t entertainment, etc.); Educatin; Sftware; Etc. SMSF Advisers Netwrk Pty Ltd Page 26 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual While SMSF Advisers Netwrk des nt prhibit the acceptance f gifts within the $300.00 limit we wuld bring t yur attentin that such gifts shuld nt impede n yur duty t act in the clients best interests (as per S961 f the Crpratins Act). N Cntact Since the intrductin f the D Nt Call Register it is nw illegal fr cntact t be made t an individual that has instructed yu that they d nt wish t deal with yur service in the future. T ensure cmpliance with this requirement SMSF Advisers Netwrk requires that each authrised representative maintain a N Cntact register. This register prvides a recrd f when a client has tld yu that they desire n further cntact frm yur business. While this is related t the area f authrity yu act upn as an authrised representative f SMSF Advisers Netwrk, we believe that it is best practice t include this als fr the peratin f yur accuntancy practice. This register ultimately serves as a reminder fr yur marketing activities that yu shuld exclude certain peple. Hwever where a cmplaint may arise that yu have cntacted a persn where yu have been asked nt t, being able t shw regular updates and entries t this register will demnstrate a prcess that is fllwed shuld a request f this srt be made. SMSF Advisers Netwrk Pty Ltd Page 27 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual Anti-Mney Laundering/Cunter Terrrism Financing Act The bligatins impsed under the AML-CTF Act are n lnger simply linked t suspicius cash transactins and cash transactins ver $10,000. Instead an activities based definitin is intrduced under which anyne wh prvides a designated service is subject t custmer due diligence and enhanced reprting requirements. Under s.6, Item 54 f the Act, a designated service is defined as the prvisin f a financial service in the capacity f hlder f an Australian Financial Services licence. Entities wh prvide designated services under the Act are defined as reprting entities (RE). The AFSL hlder is the RE and the bligatins are impsed n the licensee. Althugh in mst cases the bligatins are discharged by the representative/authrised representative, the licensee is liable if the bligatins impsed n it as a RE are nt adhered t. Identificatin and Verificatin REs must verify a custmer s identity befre prviding a custmer with a designated service. Nte that AFSL hlder s custmer identificatin bligatins cmmence when arrangements are made fr a persn t receive a designated service i.e. at the implementatin stage and nt at the advice stage. Superannuatin and RSA Exemptin. AFS licensees are nt required t carry ut identificatin f the persn where the designated service relates t arrangements fr: accepting a superannuatin cntributin, rllver r transfer; r accepting an RSA cntributin, rllver r transfer. Nte thugh that when the designated service is cashing in a superannuatin interest r the payment f a pensin/annuity, the custmer identificatin and verificatin bligatins d crystalise. It shuld be nted als that the purpse f the AML/CTF Act is t stp access t funds by suspect parties/rganisatins. By advising a persn t establish an SMSF we prvide the unique pprtunity fr suspect persns t gain access t superannuatin funds thrugh fraudulent activity as trustee f a fund. Because f this management f SAN requires all thse establishing an SMSF and acting as trustee t prvide identificatin fr the purpse f establishing such a fund. Certified Cpies/Extracts. A certified cpy is a dcument that has been certified as a true cpy f an riginal dcument. A certified extract is an extract that has been certified as a true cpy f sme f the infrmatin cntained in a cmplete dcument. As an authrised representative f an AFSL yu are able t certify the riginal dcument n the AML/CTF frm. Treatment f Existing Custmers Once a custmer has been identified by the Adviser, then t save having t cnduct a custmer identificatin prcedure every time interactin ccurs with the custmer and a new prduct issuer, the Adviser can meet his bligatins by cmpleting either: a cpy f a cmpleted custmer identity frm (where agreed with the prduct issuer); a relevant recrd f the prcedure cnducted; r by making a recrd f the prcedure. SMSF Advisers Netwrk Pty Ltd Page 28 f 34
SMSF Advisers Netwrk Pty Ltd Cmpliance Manual PI Insurance It is a requirement f all thse authrised under the SAN AFSL t hld PI Insurance. While yu hld cver with yur accuntancy practice, this cver nly extends t advice given n superannuatin under the accuntant s exemptin. The PI insurance fr advice purpses must take int accunt nt just the advice being given, but the manner in which the advice must be given (i.e. the need t prvide clients with an FSG, SOA, etc.). This market is very different t the envirnment in which yur accuntancy practice perates and extensin f cver fr this purpse has been fund t be prblematic. SAN has rganised a grup PI Insurance plicy fr its representatives thrugh the An grup that has been surced by them thrugh AXIS. Under the terms f this arrangement, each individual authrised representative must effect cver. The applicatin fr this cver des nt require statements f incme r earnings just t sign a disclsure regarding any cmplaints r claims made against yu fr advice given. This plicy must be renewed annually. If nt, authrisatin will be suspended until such time as the cver has been reinstated. SMSF Advisers Netwrk Pty Ltd Page 29 f 34