Consultum Financial Advisers

Professional Standards UpdateOctober 2007

Shanghai Dealer Conference

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• Dealer Policy Changes

• Anti Money Laundering

• FSR Update

• Board of Advice Feedback

• Outsourcing Compliance

Agenda

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Dealer Policy Changes

1. Super Switching Policy• You no longer have to send through an email to Research to confirm you

have completed the Mercer Comparison Table.

2. Execution Only

• You need to obtain approval from Professional Standards prior to execution.

• The funds you are executing need to be on the Approved Product List.

Reason for the change is to not be associated with any Products that have not been assessed by the Research department. Reduces the risks to you and Consultum. i.e. Westpoint and ACR.Commissions will not be paid on non-core approved products if this procedures have not been followed.

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Dealer Policy Changes

3. Non Core Approval

Two emails to be aware of:

• Non Core for existing clients; and

• Approval for a new product (not on the Approved Product List).

These can be located on Xplan, Inside Consultum or via your Regional Managers.

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Dealer Policy Changes

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Dealer Policy Changes

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Anti Money Laundering

4. What does this mean

• From the 12th of December, Anti Money Laundering applies where financial planners make arrangements for a person to receive a designated service from another reporting entity (such as product issuer or platform administrator).

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Anti Money Laundering

• Financial Planners will need to conduct Customer Identification procedures whenever a Financial Planner arranges for a client to:

• Obtain or be issued with a new or additional interest/units in a managed investment scheme.

• Open or make a deposit i.e. cash management trust.• Buy/sell shares in a listed company.• Pay a premium or be issued with investment life insurance policy.• Obtain or be issued with an Annuity, Pension,• Obtain an interest in or have the ability to transact through

Wrap/Platform/IDPS• Cash out all or part of Superannuation Interest.

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Anti Money Laundering

5. What do we have to do

• Conducting a domestic identification procedure involves:

• Obtaining the customer’s full name, date of birth and residential address, and

• Verifying the customer’s full name and either:• Date of birth; or• Residential address

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Anti Money Laundering

• Financial Planners will need to Verify the clients date of birth or their residential address which will involve obtaining an original or certified copy of a current:

• Australian drivers license containing a photograph of the person; or

• Australian Passport; or

• Card issued under State or Territory Law, for the purpose of providing a person’s age containing a photograph of the person in whose name the card is issued.

Note: This process will be more involved for individuals who are part of a partnership, Company or Trust (either Family or SMSF)

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Anti Money Laundering

• Maintaining records of conduct of the identification / verification process.

• Identifying and reporting any ‘suspect or threshold transactions.

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Anti Money Laundering

6. How will this effect your business

• Build this into your Processes.

• Advise clients on the outset of the changes.

• Ensure staff are trained in your office.

• Speak to your Relevant Business Development Manger or Regional Manager.

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FSR Update

7. The current ‘Record of Advice (ROA) threshold’ proposals were passed by Parliament and given Royal Assent on 28th June 2007.

• An ROA can now be given to client/s if the initial investment as well as any future amounts the client is going to invest is less than or equal to $15,000.

• The ROA still needs to include the following areas:• Reasonable basis for the advice and reasons for the recommended

strategy and products.• Replacement of Product information.• Disclosure requirements.

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FSR - Case Study

Example 1:Advice given in relation to switching superannuation funds.

A person earning $50,000 per annum is given advice to switch an existing superannuation fund balance of $12,000 to another superannuation fund and direct all future superannuation guarantee contributions to that same fund.

In this event the total of the superannuation guarantee contributions in the first 12 month period (i.e. $50,000 x 0.09 = $4,500) when added to the initial $12,000 transfer, would exceed the $15,000 threshold.

In this example the exemption, in section 946AA of the Act, from the requirements to provide a Statement of Advice would not apply.

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FSR - Case Study

Example 2:Advice given in relation to switching superannuation funds.

A person is given advice to switch an existing superannuation fund balance of $12,000 to an existing superannuation fund.

You are also of the understanding that the client will not place any future contributions (including Superannuation Guarantee or Undeducted contributions etc) into the superannuation fund.

Therefore in this example you will be able to use an ROA under section 946AA of the Act.

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Board of Advice Feedback

8. Feedback received from the Board of Advice regarding the Fact Finds and Risk Profile wording:

• Full Fact Find:• Inclusion of the Risk insurance analysis

• Review Fact Find:• Inclusion of the Risk Profile and Tax File Number Notification

• Risk Profile wording:• The Risk profile wording for the ‘Capital Safe’ option to not include the

terms guarantee or protection.

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Outsourcing Compliance

9. The Compliance services for Consultum are currently being outsourced to Holly Nethercote.

• Some of the Services they will provide include:

• Licence Audits and advice• SOA construction including disclosure• Due diligence• Advice on Regulatory changes in the Industry and • Anti Money Laundering

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Compliance Feedback

10. The overall Groups results from October 2006 to October 2007

• Increased Quality of the SOA’s

• Audit Findings and Follow ups

• Implementation of Procedures

• Feedback received

• Overall Congratulations