Question 1.

Answer 4 – All of the above

 Question 2.

TRUE – refer to RG 175.104

Question 3. 

Answer 4 – A communication tool that sets out and explains the advice (RG90.17)

Question 4.

FALSE refer to RG 175.218

 Question 5.

TRUE – refer to RG 175.189

Question 6.

Answer 3 – Scaled advice can be simpler but CANNOT be of lower quality where the subject matter is not complex (RG244.74 – RG244.76 and RG175.412 – RG175.416)

Question 7.

FALSE – refer to RG 175.339

Question 8.

TRUE – refer to Financial Planners and Advisers Code of Ethics 2019 para 34

 Question 9.

Answer 2 – you considered at least one aspect of the client’s relevant circumstances (RG175.41 – RG175.50)

 Question 10.

TRUE – refer to Standard 3 of the Financial Planners and Advisers Code of Ethics 2019

 Question 11.

Answer 3 – the advertisement MUST state that the client should consider whether the financial product is appropriate for them (RG175.59)

Question 12.

FALSE – there are not two sets of rules (RG 175.414)

Question 13.

Answer 4 – Information CAN BE incorporated by reference into the SoA provided that the document containing the information has already been given to the client and the SOA states that a copy of the information may be obtained from the providing entity on request, at no charge (s952(b) & RG175.180)

 Question 14.



The recommendation to set up an SMSF to a client with no interest or expertise in investment means that the client will always need the assistance of the advice provider. This creates ongoing remuneration for the advice provider and some of the advice provider’s related parties at a level of service that exceeds the simple solution the client was seeking. The client’s interests have not been prioritised when giving the advice.

1. Has the adviser acted in the best interests of the client?

No – In this situation, the advice provider has not complied with the best interests duty (s961B) and has breached s961J (i.e. conflict between client’s interests and those of provider, licensee, authorised representative or associates) because the advice provider has given priority to maximising the non-client source of remuneration over the interests of the client.

Also refer to RG175.365.  The advice is not fit for purpose and given the client’s relevant circumstances, the clients are unlikely to be in a better position if they follow the advice

Also refer to RG175.403 for ASIC interpretation of the Conflicts Priority Rule

2. Which of the seven (7) elements of the safe harbour (s961B) has the adviser failed to satisfy?

The adviser did not conduct reasonable product investigations.  He did not look past the SMSF structure (element 5).  The adviser’s judgment in advising the client was not based on the client’s relevant circumstances.  His judgment was skewed towards a SMSF structure which exposed the clients to a lot of unwanted liability in order to maximise non-client income (element 6).  The adviser failed to take any other step to ensure he acted in the best interests of the client (element 7)

3. In regard to the Financial Planners and Advisers Code of Ethics 2019, in what way has the adviser failed to demonstrate realise or promote the values of ‘trustworthiness’ and ‘fairness’?


The adviser has not acted in good faith and his unethical conduct has broken the client’s trust.


The adviser did not bring professional objectivity to the task of engaging with clients professionally and particularly when he recommended a financial product that doesn’t suit their needs.

4. How has the adviser breached Standard 2 of the Financial Planners and Advisers Code of Ethics 2019?

The advice given and the products and services recommend by the adviser are not appropriate to meet the client’s objectives, financial situation and needs, taking into account the client’s broader, long-term interests and likely future circumstances.

Para 29 Explanatory Statement

5. How has the adviser breached Standard 5 of the Financial Planners and Advisers Code of Ethics 2019?

The adviser does not have reasonable grounds to be satisfied that the client understands the advice and recommendations given; understands the benefits of the recommended products; and costs and risks involved in acquiring, holding and disposing of the recommended SMSF; and how the adviser recommended they be managed

Para 46 Explanatory Statement

6. How has the adviser breached Standard 7 of the Financial Planners and Advisers Code of Ethics 2019?

The fees and charges payable to the adviser and his principal are not fair and reasonable, particularly the self-interest creation of an ongoing fee regime for the clients.  It does not represent value for money for the clients, considering the much cheaper super fund alternatives.  The adviser has not been fair to the clients.

Para 55 Explanatory Statement