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 175.378

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 paragraph 38 of the Financial Planners and Advisers Code of Ethics 2019

 Question 11.

Answer 3 – Provided that the advertisement also states that the client should consider whether the financial product is appropriate for them, the advertisement does not need to contain the s949A warning (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 adviser remuneration over the interests of the client.  Refer to RG175.403 (conflicts priority rule)

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

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 s961B(2)(e).  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 adviser income s961B(2)(f).  The adviser failed to take any other step to ensure he acted in the best interests of the client s961B(2)(g).

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’?

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

Fairness – 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.

The adviser has not acted in the client’s best interests because the advice given and the products and services recommended were not appropriate to  the client’s objectives, financial situation and needs, taking into account the client’s broader, long-term interests and likely future circumstances. The decisions and actions of the adviser may also fail the Standard 2 best interests test – Will the advice and recommendations improve the client’s financial well-being?  (refer to Para 29 Explanatory Statement)

Whilst the adviser should have taken into account the client’s express wishes, these do not override the adviser’s duty to give advice that is in the client’s best interests (refer to Para 36 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 (refer to 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. (refer to Para 55 Explanatory Statement)

7. How has the adviser breached Standard 9 of the Financial Planners and Advisers Code of Ethics 2019?

Standard 9 requires that

  • all financial product advice, and all financial products, offered to a client be offered in good faith (refer to Para 58 Explanatory Statement)
  • all financial product advice, and all financial products, be offered “with competence” (refer to Para 59 Explanatory Statement)
  • reflecting current law, financial product advice given, and financial products recommended, not be misleading or deceptive (refer to Para 60 Explanatory Statement)

Question 15.

1. Standard 6

2. (a) You did not consider the potential care needs for the client or one of the client’s family members; in this case Bob.  This standard requires that you consider Bob’s future increasing care needs as his dementia worsens; and the possibility that he may need to enter full time care; and  (b) You did not consider whether your investment recommendations should be limited to “ethical” or “responsible” investments

3. You probably haven’t satisfied the s961B safe harbour.  It is hard to argue that Bob’s dementia doesn’t form part of Mary & Bob’s relevant circumstances (s961B (2) (b) (ii)). Also read ‘Scope of the advice’ RG 175.282 – RG175.284.

In addition s961B (2) (g) requires that you must take any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances.

In terms of your failure to consider whether your product recommendations should be limited to “ethical” or “responsible” investments, it seems that the Code of Ethics automatically includes this requirement if recommending investment, unless you specifically raise it with the clients and scope it out of your advice if appropriate.

Question 16.

Standard 2 paragraph 35 states that “you must treat all clients fairly, as between themselves. You should provide professional services to all clients, managing your business so that each client has a fair share of your attention, skills and time.” The purpose of this question is to bring it to your attention.  Note that there is another example of the application of Para 35 in CASE STUDY D of the Explanatory Statement – the Tom (provisional provider) and Sarah (supervising provider) example.

Question 17.

Answer 4 – RG 175.255 “We are more likely to take the view that processes for complying with the best interests duty are not effective, and that the best interests duty in s961B(1) is not being complied with, if an advice model typically leads to a one-size-fits-all outcome.”

Question 18

Answer 4. $0 (she fails the work test required for members aged 65 or more to make a contribution)


Question 19

Answer 9. private trust (RG 121.20)

Question 20

Which of the following is NOT considered to be a financial service?

Answer (b) – Factual information where no opinion or recommendation is expressed (RG121.24)

Question 21

Answer (a) – Inducement to deal (Corporations Act s1041F)

Question 22

No – Referral selling – The Australian Consumer Law makes it illegal for a business to persuade a consumer to buy goods or services by promising benefits if they help the business supply goods or services to other customers.

Question 23



FALSE (See standard 3 para 38 case 3 and para 39)

Question 24

No.  It is Third line Forcing

Question 25

All of the above

Question 26

Answer 3. Ignoring the conflict

Question 27

Barry has breached Code Item 10

Two actions Barry could have taken are:

  1. Refer Len to another appropriately skilled tax (financial) adviser, registered tax agent or legal practitioner
  2. Decline to provide the advice to Len
  3. Barry could defer to his licensee for assistance

REF: TPB Information Sheet TPB(I) 29/2016 – Code of Professional Conduct – Reasonable care to ensure taxation laws are applied correctly for tax (financial) advisers.

Question 28



TRUE REF: TPB Information Sheet TPB(I) 30/2016 – Code of Professional Conduct – Having adequate arrangements for managing conflicts of interest for tax (financial) advisers

Question 29

Karen is seeking advice on improving the performance of her superannuation fund. Her adviser is Margaret, an authorised representative of Super Duper Financial Planning Pty Ltd.

Margaret advises Karen to roll over her superannuation benefits from her current industry fund to a new retail fund.  Margaret and her licensee (Super Duper Financial Planning Pty Ltd) will receive a benefit from the retail fund provider when the rollover is implemented.

In preparing her advice, Margaret does not attempt to compare the investment asset allocation or likely returns in her existing industry fund with those in the recommended retail fund.  Also, she does not address the increased ongoing fees that Karen will have to pay in the replacement retail fund.

Margaret has failed to demonstrate, realise or promote the values of … Competence and Diligence

Margaret has breached Standard 2 for the following reasons:

  1. Her advice was not in Karen’s best interests
  2. She failed to act with integrity when providing advice to Karen
  3. She failed to conduct a reasonable investigation of existing and potential financial products
  4. She did not base her judgments on the client’s relevant circumstances

Two other standards that have been breached are

Standard 3—as Margaret received a benefit from the implementation of her advice to switch to the retail fund

Standard 10—Margaret’s failure to consider relevant issues (Karen’s likely returns, and ongoing fees) does not demonstrate competence

REF: Financial Planners and Advisers Code of Ethics 2019 Explanatory Statement – Appendix: Case studies, Case Study A

Question 30

TRUE REF: Standard 2, Financial Planners and Advisers Code of Ethics 2019 Explanatory Statement, Para 32 & 33

Question 31

Additional actions restraints or behaviours that are expressly required by the Code of Ethics standards, which are not specifically mentioned in the Corporations Act include (Read the Explanatory Statement -not an exhaustive list):

  1. Must act with integrity (Std 2)
  2. Must not act in the event of a conflict of interest and must not receive benefits for referrals, only for provision of advice (Std 3)
  3. Despite a s961H warning, you are never relieved of the duty to gather sufficient information for complete relevant circumstances (Std 2)
  4. You should take into account your client’s express wishes but these do not override your duty to give advice that is in the client’s best interests (Std 2)
  5. Take into account the broader, long-term interests and likely circumstances of your client, and take into account the broad effects of the client acting on your advice which are not limited to effects on the client (Std 6)
  6. Must satisfy yourself that the client understands your advice (Std 5)
  7. consider whether your product recommendations should be limited to “ethical” or “responsible” investments (Std 6)
  8. Should provide professional services to all clients, managing your business so that each client has a fair share of your attention, skills and time (Std 2)
  9. all fees and charges payable for acting for the client must be fair and reasonable, and represent value for money for your client. (Std 7)

Question 32

Standard 3 Financial Planners and Advisers Code of Ethics 2019 states that you must not advise refer or act in any other manner where you have a conflict of interest or duty.  Which two (2) of the following are NOT conflicts of interest?

Answer (a) – A fee or other benefit received directly from the client

Answer (d) – A commission received in relation to a risk insurance product

Question 33

The two (2) primary aims of the conflicted remuneration provisions are:

  1. to more closely align the interests of those who provide advice with the interests of their clients, and
  2. to improve the quality of advice these clients receive

RG 246.1

Question 34






Question 35

Two actions a financial planner can take to make risk profiling less challenging and more meaningful are:

  • Understand and be sensitive to the role of language in professional/client interactions
  • Planners can address potential difficulties relatively easily in advance of holding their consultations if they are aware of them
  • Allocate more client time to the risk profiling process to help their understanding


Question 36

Answer 3 – Emotional judgement

Question 37

Answer 1 – Emotions


Question 38

All of the Above

REF: Financial Planning Research Journal, Volume 2 – Issue 1 2016 • Characteristics of Trust in Personal Financial Planning, Michelle Cull, Terry Sloan –

Question 39

All of the above

REF: How financial literacy and demographic variables relate to behavioural biases –

Question 40

Answer (b) The free rider approach

Question 41


Question 42




How to Use the Choices Test –

Question 43

Robert should

  1. Robert should immediately report his findings to his licensee, Australia Wide Financial Pty Ltd who in turn should submit a Suspicious Matter Report (SMR) to Austrac within 3 business days
  2. If the licensee takes no action, Robert should immediately report the matter directly to Austrac via a SMR

It is against the law to tell the customer or anyone else that you have formed a suspicion or submitted an SMR to AUSTRAC.

Question 44

Welfare fraud

Financial planners told AUSTRAC that they often informed customers of the need to declare income and change of circumstances to Centrelink; however, financial planners are reminded that suspected welfare fraud by their customers – as an offence against a law of the Commonwealth – should be reported in an SMR to AUSTRAC. (Criminal Threat Environment section)

Question 45


Wholesale clients

Financial planners are required to submit SMRs with respect to wholesale clients. Although the Corporations Act 2001 differentiates between wholesale and retail investors, the AML/CTF Act does not. This means that for wholesale clients, there is a requirement to undertake customer due diligence as outlined in the Purpose section of this assessment. (Criminal Threat Environment section)