Assignment

1
FSC522 The Regulatory
Framework
Assignment 1
Overview
This assessment assesses learning outcome 2:
• LO2: Apply legal obligations in a financial advice situation.
Note: You must submit your work through the assignment submission link in the course. Upload your assignment, then use the ‘Save’ and ‘Submit assessment’ buttons – or we will not receive your assignment.
You will get an electronic receipt and your work is then logged and tracked through our system. Open Polytechnic will not accept assignments emailed directly to lecturers.
Student Instructions
1. This assignment covers three hypothetical case studies that require you to apply legal obligations to a financial services situation.
You should read through Case Study 1 before attempting Task 1 and read through Case Study 2 before attempting Task 2.
You will find both cases studies - Appendix 1 and Appendix 2 – below this assignment on the Assignment 1 page.
2. You are required to answer all three tasks.
3. The topics covered in this assessment are:
• Task 1 – Case study 1: Aotearoa Insurance
• Task 2 – Case study 2: Aotearoa Bank
• Task 3 – Case study 3: Licensing
4. You will be assessed on your overall presentation. Each answer should be presented in a professional manner. This means:
• Minimal spelling and grammatical errors.
• Written in terms that an audience with little financial knowledge will understand.
5. For each task, we have provided you with a suggested word count. Note that the word count is for guidance only and you will not be penalised for being under or over the suggested word count, provided you fully answer the task.
Task 1
Read through case study 1 (Appendix 1) before attempting this task.
a) Regulated financial advice
Does David give regulated financial advice in this situation? Give reasons for your answer.
You are required to:
• State whether or not David gives regulated financial advice in this situation.
• Cite and explain the relevant section(s) of the Financial Markets Conduct Act 2013 that supports your view.
(50 words)
b) Privacy Act 2020
David collects personal information from Kate. Does he collect this personal information in accordance with the privacy principles?
You are required to:
• Identify the four privacy principles that cover the collection of personal information.
• For each of the four principles, illustrate, with reference to the case study, whether David complies with each principle.
(100 words)
c) Optional benefit – hiring a car
Kate is adamant that she made it clear she needed cover for the cost of hiring a car. Her comments suggest that Aotearoa Insurance may have breached consumer legislation. Which Act may it have breached and how?
You are required to:
• Identify the Act that Aotearoa Insurance may have breached.
• Cite the two key sections of the Act that may have been breached.
• Explain why these two key sections may have been breached.
(100 words)
d) Human Rights Act
Kate accuses Aotearoa Insurance of discrimination. Is there any
evidence that Aotearoa Insurance has practised discrimination in its dealings with Kate?
You are required to:
• State whether or not Aotearoa Insurance has practised discrimination in its dealings with Kate.
• Justify your decision with reference to the relevant section(s) of the Human Rights Act.
(80 words)
e) Complaints
Does David apply the correct process for handling complaints?
You are required to:
• State whether or not David has followed the correct process for handling Kate’s complaint.
• Justify your decision with reference to Aotearoa Insurance’s obligations as a member of the Insurance and Financial Services Ombudsman Scheme.
(50 words)
Task 2
Read through Case Study 2 (Appendix 2) before attempting this task.
a) Regulated financial advice
Does Serena give regulated financial advice in this situation? Give reasons for your answer.
You are required to:
• State whether or not Serena gives regulated financial advice in this situation.
• Cite and explain the relevant section(s) of the Financial Markets Conduct Act that supports your view. (50 words)
b) Anti-Money Laundering and Countering Financing of Terrorism Act
2009 (AML/CFT Act)
Serena tells Chris she needs personal information and documentation from him to satisfy Aotearoa Financial Planning’s’ obligations under the AML-CFT Act. What are these obligations?
You are required to:
• Identify the appropriate customer due diligence requirements in this situation.
• Explain the personal information and documentation Serena needs to meet those obligations.
• Cite the sections of the AML/CFT Act and Amended Identity Verification Code of Practice 2013 that apply in this situation.
(250 words)
c) Financial Markets Conduct Act (FMCA)(Part 2) and Fair Trading Act
(FTA)
In the process of checking if Chris understands how KiwiSaver works, Serena avoids a potential breach of the FMCA (Part 2) and the FTA.
• What is this potential breach and how does she avoid it?
You are required to:
• Explain the potential breach, and cite the specific section of the FMCA (Part 2) and the specific section of the FTA that apply.
• Identify the action Serena takes to avoid the potential breach.
• If there had been a breach, which regulator would most likely hear the case?
You are required to:
• State which regulator would most likely hear the case.
• Explain the arrangement between the two regulators of the FMCA (Part 2) and the FTA for hearing cases.
• Cite the document that details this arrangement.
(100 words)
d) Disclosure
During their first meeting, Serena provides Chris with a disclosure statement and explains key information. During their second meeting, Serena points out that information about complaints and dispute resolution processes is available on Aotearoa Financial Planning’s website. She also explains other key information.
• First meeting: What information must Serena disclose at this stage?
You are required to:
• Identify and explain three pieces of information Serena’s disclosure statement must include at this stage to meet obligations under the Financial Markets Conduct Regulations 2014.
• Include only information that is directly relevant to the case study.
• Second meeting: What information must Serena disclose at this stage and what information about complaints and dispute resolution processes will be displayed on Aotearoa Financial Planning’s website?
You are required to:
• Identify and explain two further pieces of information Serena’s disclosure statement must include at this stage to meet obligations under the Financial Markets Conduct Regulations 2014 (other than a statement that information about Aotearoa Financial Planning’s complaints and dispute resolution processes is available on their website).
• Explain what information about complaints and dispute resolution processes will be displayed on Aotearoa Financial Planning’s website.
• Include only information that is directly relevant to the case study.
(200 words)
e) Duties
Disclosure is one example of a range of duties that Serena must comply with. Apart from disclosure, which other duties are evidenced in this case study?
You are required to:
• Select three duties.
• For each duty selected, provide an example from the case study (background information and transcript) that illustrates compliance with that duty.
(100 words)
Task 3
Frank has many years’ experience giving financial advice. He returns to New Zealand after 8 years working in Australia in an adviser role. He wants to continue in an advice role now he’s back in New Zealand. Frank has reviewed the different operating models for giving financial advice in New Zealand and has narrowed his options to three:
• Single adviser business.
• Financial adviser engaged by an established financial advice provider.
• Nominated representative engaged by an established financial advice provider.
a) Explain the three models in terms of the different pathways Frank must follow before he can operate under that model.
You are required to:
• Identify the steps in the pathway for each model.
• Explain the key requirement(s) at each step.
(400 words)
b) If you were in Frank’s position, which model would you choose and why?
You are required to:
• Provide one advantage and one disadvantage for each of the three models.
• State your choice of model.
• Give one reason to support your choice.
(100 words)
Assignment Checklist
Have you completed each task?
Task Breakdown Words Checklist
Task 1
Case Study 1:
Aotearoa Insurance Regulated financial advice 50
Privacy Act 2020 100
Optional benefit – hiring a car 100
Human Rights Act 80
Complaints 50
TOTAL 380
Task 2
Case Study 2:
Aotearoa Financial
Planning Regulated financial advice 50
Anti-Money Laundering and
Countering Financing of
Terrorism Act 2009 (AML/CFT
Act)
250
Financial Markets Conduct Act
(FMCA)(Part 2) and Fair
Trading Act (FTA) 100
Disclosure 50
Duties 100
TOTAL 550
Task 3
Case Study 3:
Licensing Pathways 400
Model of choice 100
TOTAL 500