Question 1.

From the licensee’s point of view, which of the following is a mandated obligation in the provision of advice to a retail client, as opposed to a wholesale client?

  1. Only a retail client is required to be given a FSG, SoA, PDS
  2. Dispute resolution & compensation arrangements only apply to retail clients
  3. FOFA requirements concerning best interests obligations, ongoing fee disclosure and conflicted remuneration only apply to retail clients
  4. All of the above

Question 2.

An FSG is not required to be given to a client in certain circumstances, including where the client is not a retail client.  TRUE or FALSE 

Question 3. 

In its example Statement of Advice, ASIC points out that an SOA serves which of the following purposes?

  1. A compliance tool
  2. A mechanism to protect the providing entity against liability
  3. A complete record of all information that you would expect to find in the client file (i.e. the information kept about the advice provided to the client); or
  4. A communication tool that sets out and explains the advice
  5. A place to include additional information not required by law
  6. All of the above

Question 4.

A Statement of Advice can be combined into a single document with a Financial Services Guide TRUE or FALSE 

Question 5.

Ryan is an authorised representative and advice provider who recommends a replacement life insurance policy (product switch).  In determining whether his client is likely to be in a better position by following his advice, Ryan must take into account all of the circumstances, including the overall cost savings of the product replacement (i.e. making the switch).   In determining overall cost savings to the client, Ryan must include his fees if his fees are payable only if the switch is made.  However, his fees do not need to be included in the overall cost determination if his fees are payable regardless of whether the product switch is made or not.  TRUE or FALSE

Question 6.

  Which of the following statements is NOT true of scaled advice?

  1. The rules that apply to ‘scaled advice’ and ‘comprehensive advice’ are identical
  2. Scaled advice can include advice on a single topic or advice on multiple topics
  3. Scaled advice can be simpler and of lower quality where the subject matter is not complex
  4. When giving scaled advice, it should be very clear in your SOA what advice you have provided and what advice you have not provided

Question 7.

Authorised Representative and Advice provider Sarah recommends that that her client withdraws money from bank account savings and invest it in managed funds.  Sarah considers this to be an investment into a new product rather than a replacement product (i.e. product switch) and does not provide further disclosure (as required by s947D) in her Statement of Advice (SoA).  Sarah’s SoA is not defective.  TRUE or FALSE

Question 8.

In regard to the Financial Planners and Advisers Code of Ethics 2019, even if an adviser follows the steps set out in s961B of the Corporations Act (i.e. the safe harbour steps), that adviser may still not have complied with the duty under the Code (i.e. the Financial Planners and Advisers Code of Ethics 2019) to act in the client’s best interests.  TRUE or FALSE  

Question 9.

Which of the following is one of the main factors in determining whether or not you have provided personal advice rather than general advice?

  1. You provided a current FSG to the client
  2. You considered at least one aspect of the client’s relevant circumstances
  3. You asked general questions at the fact find interview
  4. You were in possession of at least two aspects of the client’s relevant circumstances

Question 10.

Standard 3 of the Financial Planners and Advisers Code of Ethics 2019 requires that you must not advise, refer or act in any other manner where you have a conflict of interest or duty.

Homer is an authorised representative and advice provider employed by a bank.  He recommends the bank’s own brand of risk insurance products to his client.  As part of Homer’s employment contract, he earns bonuses which are directly related to the volume of risk business he writes.  Homer has breached Standard 3?  TRUE or FALSE

Question 11.

In relation to general advice in advertisements, which of the following statements is true?  Financial product advertisements must:

  1. Not identify the issuer of the product
  2. Refer potential buyers to a contact telephone number.
  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
  4. Contain the s949A warning regardless


Question 12.

There are two categories of advice. They are. ‘scaled advice’ and ‘comprehensive advice’, and there are different best interests duty requirements for each.  TRUE or FALSE 

Question 13.

Which of the following does NOT make a Statement of Advice defective?

  1. There is a misleading or deceptive statement in the SoA
  2. There is an omission of one or more of the main SoA requirements required by section s947B, s947C
  3. There is a failure to provide the additional SoA information required by s947D where advice recommends replacement of one product with another
  4. Information has been incorporated by reference into the SoA and 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

Question 14.

Read the following scenario and answer the questions below.


A client couple approaching retirement meets with an advice provider to seek advice on what to do with their superannuation when they retire.

The clients have healthy superannuation balances because they have been contributing to their superannuation for the past 35 years. They have no experience with investing.

The clients’ existing superannuation fund has no pension option. The clients understands that they need to start making some decisions about their superannuation but, because they have no previous investment experience, they are nervous about this process.

They want a simple, cost-effective solution that they can easily understand and does not require too much of their time.  They have been told that SMSFs are an easy way to maximise the value of their superannuation but they are unsure.

They are looking forward to retirement and do not want the burden of watching the market every day, as they have seen some of their colleagues do.

The advice provider recommends an SMSF and reassures the client that they do not need to be too involved because the advice provider will look after it for them.


  1. Has the adviser acted in the best interests of the client? (provide at least one Corporations Act reference to support your answer)
  2. Which of the seven (7) elements of the safe harbour has the adviser failed to satisfy?
  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’?
  4. How has the adviser breached Standard 2 of the Financial Planners and Advisers Code of Ethics 2019?
  5. How has the adviser breached Standard 5 of the Financial Planners and Advisers Code of Ethics 2019?
  6. How has the adviser breached Standard 7 of the Financial Planners and Advisers Code of Ethics 2019?
  7. How has the adviser breached Standard 9 of the Financial Planners and Advisers Code of Ethics 2019?

Question 15.

Read the following scenario and answer the questions below.


Mary arranges a first appointment with you for retirement advice. She and her husband Bob are both 68.  Mary is in good health but Bob has been diagnosed with dementia.  They both worked as high school teachers before Bob was forced to retire 3 years ago due to his condition and Mary retired a year ago to look after him.  Between them, they have close to $1 million in accumulated super.

Your advice addressed the following areas:

  • Commence superannuation income streams from their respective accounts
  • Re balance their superannuation investment (your only consideration was to match their asset allocation to their respective risk profiles)
  • Nominate / Reversionary beneficiaries, Wills and Enduring Powers of Attorney
  • Eliminate the relatively small amount of debt they had
  • Their eligibility or otherwise for the Age Pension and carer’s allowance
  • Their primary short term goal to travel overseas while Bob is still able
  • Their primary short term goal to visit family interstate while Bob is still able
  • Their longer term goal to leave an inheritance to their two adult children

You didn’t pay much attention to scoping the extent of your retirement advice in your SoA, but at the time your clients were happy with the advice you provided and they paid your fees immediately.  Three months later, still worried about Bob worsening condition, Mary seeks a second opinion from another adviser.  She is told that not only is your advice incomplete, it is in breach of the Code of Ethics


1. Which standard of the Financial Planners and Advisers Code of Ethics 2019 have you primarily breached?

2. When you identify the correct standard, then go to the Explanatory Statement and identify at least two (2) additional issues that you should have considered in your advice?

3. Did you satisfy every element of the s961B safe harbour?  If not, why not?

Question 16.

Read the following scenario and answer the questions below.


You are referred to a new client, Jane by a long time loyal client and advocate, Betty.  You duly identify the subject matter and accurately scope your advice; and satisfy every other element of the s961B safe harbour.  Jane is happy with your advice, implements it and, in no time, improves her financial well-being.  So far you have acted in Jane’s best interest according to the Corporations Act, and you have satisfied the Code of Ethics best interests test in Standard 2, paragraph 29. (i.e. the test is, in short: will your advice and recommendations improve the client’s financial well-being?)

Jenny and Jane are close friends and discuss your advice and your service between them.  Your long time client and advocate, Betty becomes envious of the time you are spending with Jane, and of the increase in Jane’s wealth as a result of your advice.

To your astonishment Betty makes a complaint.

Then you recall that Standard 2 paragraph 34 states that “This Code does not have any equivalent provisions. So, even if you follow the steps set out in section 961B of the Act, you may still not have complied with the duty under the Code to act in the client’s best interests.”


1. As strange as this might sound, you may have breached the Code of Ethics.  If so, which Standard would you most likely have breached in this circumstance, and why?

Question 17.

In RG175.(252 – 257), ASIC sets out a number of processes for complying with the best interests duty.  In regard to those processes, which of the following statements is NOT true?

1. The scope of the advice includes all the issues that must be considered for the advice to meet the client’s objectives, financial situation and needs (including the client’s tolerance for risk)

2. If the scope of the advice changes, the change is consistent with the client’s objectives, financial situation and needs

3. The advice provider should focus on providing advice that is not product specific, or on a combination of advice that is both product specific and non-product specific, where this would better suit the client’s objectives, financial situation and needs.

4.  Processes for complying with the best interests duty can still be effective even if an advice model typically leads to a one-size-fits-all outcome

Question 18

On 31 March 2019, Maria retires from full time employment at age 64.  On 1 June 2019, Maria inherits $180,000 tax-free from the distribution of her late Mother’s estate.  On 1 July 2019, Maria turns 65 and on the following day she decides to make an online non-concessional (after tax) contribution into her superannuation fund via BPay.  From 31 March 2019 to 2 July 2019, Maria remains permanently retired and not gainfully employed; she is doing unpaid charity work only.  She signs a work declaration to that effect.

Before she completes the online contribution, she phones you to ask how much of the $180,000 she can contribute.  What is your advice?

  1. $180,000
  2. $100,000
  3. $25,000
  4. $0

Question 19

Which of the following is NOT considered to be a financial product as defined in RG121?

  • shares
  • debentures
  • interests in a managed investment scheme
  • derivatives
  • general insurance
  • life insurance
  • superannuation
  • basic deposit products
  • private trust
  • retirement savings accounts
  • margin lending facilities

Question 20

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

  • provide financial product advice
  • Factual information where no opinion or recommendation is expressed
  • deal in a financial product
  • make a market for a financial product
  • operate a registered managed investment scheme
  • provide a custodial or depository service; or
  • provide traditional trustee company services.

Question 21

Tom is a financial adviser.  In order to sell an investment financial product to a prospective client, Tom promises that the investment will make a minimum return of 17% per annum and provides the client a baseless forecast document to back up his claim.  He conceals the true performance history of the investment.

Which of the following is the correct term for this type of behaviour?

  1. Inducement to deal
  2. Bait and switch
  3. Market rigging
  4. Pyramid selling

Question 22

Fred is a risk insurance adviser.  He persuades a client named Andrew to purchase a life insurance policy on the promise that he will refund $500 commission if Andrew refers Fred 3 new clients to Fred, all of whom sign up to in-force life insurance policies with Fred.

Is this practice legal?

  1. Yes
  2. No

Question 23

Tony arranges risk insurance protection for his clients Mary and Doug.  He then refers them to mortgage broker, Ray who will arrange a mortgage for the home they wish to purchase.  For each successful referral that results in a home loan, Ray pays Tony $200.

This practice is legal under:

  • Australian Competition and Consumer laws TRUE or FALSE?
  • Corporations Act 2001 TRUE or FALSE?
  • Financial Planners and Advisers Code of Ethics 2019 TRUE or FALSE?

Question 24

Mortgage broker Ray arranges a home mortgage for Mary and Doug at a $500 discount on the strict condition that they purchase their mortgage insurance from Acme Mortgage Insurers.  Acme pays Ray $1,000 commission when Mary and Doug purchase mortgage insurance.

Is this practice legal?  Yes or No

What is this practice called?  _________________________________

Question 25

To be a tax (financial) advice service:

  1. The service must be provided by a financial services licensee or a representative of a financial services licensee
  2. The service must relate to ascertaining or advising about liabilities, obligations or entitlements that arise or could arise under a taxation law
  3. The service must be provided in the course of giving advice of a kind usually given by a financial services licensee or a representative of a financial services licensee
  4. The entity or person receiving the service can reasonably be expected to rely on the service for tax purposes
  5. All of the above


Question 26

Which of the following mechanisms may NOT be used by tax (financial) advisers to manage conflicts of interest:

  1. disclosing conflicts of interest
  2. controlling conflicts of interest
  3. Ignoring the conflict
  4. avoiding conflicts of interest

Question 27

Len engages Barry, a tax (financial) adviser, to provide advice on the tax implications of an inheritance Len is entitled to receive.  Barry does not have the expertise to advise on the tax implications of receiving an inheritance.

Barry decides to proceed with the engagement and provide advice on the tax implications of the inheritance based on his limited and inadequate knowledge of the relevant taxation laws.

Which Code Item has Barry breached?  _______________________________________

State two actions Barry could have taken to ensure that Len receives competent advice and to avoid breaching the TPB Code of professional Conduct.

  1. _____________________________________________________________
  2. _____________________________________________________________

Question 28

Determine whether the following comparisons are true or false

The primary distinction between the obligation under Code Item 5 and the best interests duty/conflicts priority rule is that Code Item 5 requires that the tax (financial) adviser has arrangements in place for managing actual or potential conflicts of interest that may arise.

In comparison, the best interests duty/conflicts priority rule under the Corporations Act is more narrowly focussed on how to deal with an actual conflict of interest.


The best interests duty/conflicts priority rule under the Corporations Act merely requires that the client’s interests be prioritised in the event of an actual conflict.

In comparison, Code Item 5 is broader and requires that arrangements must be in place to avoid, control and/or disclose actual or potential conflicts of interest in relation to the activities that a tax (financial) adviser undertakes in their capacity as a tax (financial) adviser


A distinction between the obligation under Code Item 5 and the best interests duty/conflicts priority rule is that Code Item 5 applies broadly to the personal and professional conduct of all registered tax practitioners (in relation to the activities that a practitioner undertakes in their capacity as a tax practitioner).

In comparison, the best interests duty/conflicts priority rule under the Corporations Act only applies to those providing personal advice to retail clients).


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.

Which values has Margaret failed to demonstrate, realise or promote? ____________________________

Margaret has breached Standard 2.  State two (2) reasons why:

  1. __________________________________________________________
  2. __________________________________________________________

State two (2) other standards that have been breached with one (1) reason why

Standard ?  ____________________________________________________________________

Standard ?  ____________________________________________________________________

Question 30

Is the following comparison true or false?

A distinction between the Corporations Act and Standard 2 Financial Planners and Advisers Code of Ethics 2019, is that the Act requires a s961H Warning advice be provided to a retail client in the event of personal advice that is based on incomplete or inaccurate information.

In contrast, Standard 2 requires that to comply with the ethical duty, it will not be enough to limit inquiries to the information provided by the client; you will need to inquire more widely into the client’s circumstances.  You are not relieved of the ethical duty merely because the client does not provide enough information, even when asked.


Question 31

A distinction between the best interests obligations set out in the Corporations Act and Standard 2 of the Financial Planners and Advisers Code of Ethics 2019 is that, according to Para 34, Standard 2 … even if you follow the steps set out in section 961B of the Corporations Act, you may still not have complied with the duty under the Code of Ethics to act in the client’s best interests.

(REF: Financial Planners and Advisers Code of Ethics 2019 Explanatory Statement Para 34)

State two (2) additional actions restraints or behaviours that are expressly required by the Code of Ethics standards, which are not specifically mentioned in the Corporations Act.

  1. ___________________________________________________________________
  2. ___________________________________________________________________

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?

  1. A fee or other benefit received directly from the client
  2. A fee received from a mortgage broker for referring clients
  3. You act for both parties in ongoing divorce proceedings with their written consent
  4. A commission received in relation to a risk insurance product
  5. A private hospitality benefit and gifts provided by an insurer valued at $1,000
  6. A discount on your monthly licensee fees in return for writing $500,000 of an in-house product each month

Question 33

What are the two (2) primary aims of the conflicted remuneration provisions?  That is, what do they achieve for the community?

  1. ____________________________________________________________
  2. ____________________________________________________________

Question 34

There are five factors that Goldberg identified as primary factors of personality.

  • Extroversion – is the ability to relate to others and enjoy their company. Extroverts like to have company and they feel comfortable in a group setting. They work well in teams and are optimistic and enthusiastic. When they are with other people they are like a fish in water.
  • Agreeableness – This is primarily related to a person’s capacity for empathy. Those who score high in this factor are understanding and tolerant with other people. They are very good at understanding the needs and feelings of others.
  • Conscientiousness – refers to the capacity for self-control and the ability to act effectively. It is related to planning, organizational, and execution skills. Conscientiousness is also related to persistence, the ability to follow through on goals and objectives, and punctuality.
  • Neuroticism – addresses the ability or inability to deal with difficult situations in life. People who score high in this factor tend to behave unpredictably. They don’t display consistent behaviour and their reactions vary widely, though it’s not clear why.
  • Openness to experience – People who are highly open to experience are imaginative and appreciate art. They cooperate well with other people. They are also curious and prefer variety to routine.

Are the following statements true or false?

In predicting who is the head of the household in regard to financial matters it is likely to be the spouse with the higher score on Conscientiousness trait and lower score on Agreeableness.


In part at least, a lack of money management skill is fuelled by reduced conscientiousness and increased belief that material things can lead to happiness.


A lower score in the traits of conscientiousness is more likely to lead to an increased risk tolerance.


Having regard to Goldberg’s five personality traits and economic locus of control – extraversion, agreeableness, conscientiousness, emotional stability, intellect, internal locus of control, and external locus of control, people whose personality traits relate to intellect and internal locus of control tend to have higher level of financial literacy than those with other personality traits.


Openness, conscientiousness and agreeableness are positively related to financial culture whilst extraversion and neuroticism are negatively related to financial culture.


Question 35

Investment risk profiling is central to the work of financial planners. Determining the risk profile of a client is a high-stakes task, made all the more challenging in one-issue telephone-based financial consultations which lack an ongoing (or preceding) engagement between a particular planner and client.

What are two actions a financial planner can take to make risk profiling less challenging and more meaningful?

  1. ________________________________________________________
  2. ________________________________________________________

Question 36

Which of the following psychological errors are likely to derail financial behaviour?

  • Optimism
  • Confidence
  • Emotional judgement
  • Self-control

Question 37

Evidence shows that the moral principle or theory a person chooses to apply is often based on:

  • Emotions
  • Logic
  • The desire to not conform
  • The truth

Question 38

Research has found seven (7) primary characteristics of trust evident in personal financial planning that are essential to the client-adviser relationship.  Which of the following characterises are they?

  • vulnerability and risk
  • feeling
  • honesty
  • faith
  • best interests
  • accountability
  • competence
  • All of the Above

Question 39

A study in India into how financial literacy and demographic variables relate to behavioural biases, which was NOT one of the results found?  Which of the following are amongst those findings?

  1. A negative association with the disposition effect and herding bias
  2. A positive relation with mental accounting bias
  3. No significant relation with overconfidence and emotional biases
  4. Age, occupation and investment experience are the most important demographic variables that relate to the behavioural biases of individual investors
  5. Males tend to be more overconfident than are females about their knowledge of the stock market
  6. Younger inexperienced investors are more likely to consult peers whereas older more experienced investors are not
  7. All of the above

Question 40

Philosophers have developed five (5) different approaches to values to deal with moral issues.  Which of the following is NOT one of these approaches?

a) The utilitarian approach

b) The free rider approach

c) The rights approach

d) The common good approach

Question 41

Research shows fairness to be one of the most fundamental ethical instincts in humans. TRUE or FALSE

Question 42

The question underpinning the Ethical choices test is “Are the people affected by this decision able to make their own free choices?”

Are the following related statements True or False?

  1. The Ethical Choices test reflects one of the fundamental ways of showing respect for the equality of other humans; that is respecting their freedom and ability to determine the course of their own lives by making choices based on what they think is valuable. TRUE or FALSE
  2. One of the weaknesses of the Ethical Choices test can reinforce a complex view of human decision making that people are clear about what they value and make rational choices based on those values. TRUE or FALSE
  3. Another of the weaknesses of the concept of freedom which underpins the Ethical Choices test is the subject of much disagreement TRUE or FALSE

Question 43

Easy Mark Financial Services Pty Ltd is a Corporate Authorised Representative of Licensee, Australia Wide Financial Pty Ltd.  Easy Mark FS was engaged by the director of New Zealand Company NZ Ethical Investments, to recommend and facilitate investments on behalf of the company in Australian assets, including property and ordinary shares.

Peter, owner and principal financial adviser of Easy Mark Financial Services Pty Ltd, was observed by employee and Authorised Representative Robert, making regular cash deposits into an intelligent deposit ATM at the bank across the road from the office.

When Robert asked Peter about it, Peter replied that he was depositing money into an investment trust on behalf of the firm’s New Zealand client, NZ Ethical Investments.  He added that it was all part of Easy mark’s comprehensive service to clients.

Robert conducts a Google search on NZ Ethical Investments and sees that it is not a listed company.  He becomes suspicious when he finds they have been in the news for alleged criminal activity in the past.  Robert is suspicious that his boss Peter is involved knowingly or unknowingly in money laundering activity with NZ Ethical Investment. 

What are two actions that Robert should take?

  1. _______________________________________________________________
  2. _______________________________________________________________

Question 44

You are conducting the first interview with a recently divorced female aged 63 who has engaged you to help her get back on her feet financially after the end of her 30 year marriage.    When you ask her about her income, she tells you that her only source of income is her Centrelink Wife Pension which she has been receiving since 1994.

What are two actions that you should take?

  1. _______________________________________________________________
  2. _______________________________________________________________

Question 45

Like the Corporations Act 2001, the AML/CTF Act differentiates between wholesale and retail clients. This means that for wholesale clients, financial planners are not required to undertake customer due diligence or submit Suspicious Matter Reports with respect to wholesale clients.