Ethical Framework, Best Interest & Record Keeping

Chapter 2,3,4

Affinia's Ethical Framework

Affinia Representatives embody our ethical framework which means always: 

Acting with Integrity

Respect the trust clients and the community have placed in the Representative by ensuring your advice is always in the best interests of the client and the fees always represent fair value.

Avoiding Conflicts of Interest
Be proactive about avoiding conflicts of interest and if you can’t, be quick to explain to the client what you’re doing to manage them.

Empowering your Clients
Equip clients with all the information they need to weigh risks and benefits, in language the client readily understands so they are empowered to make informed decisions about their financial future.

Being Diligent
Be thorough and timely in all you do for your clients. Expect the same from those you work with.

Maintaining your Skills and Knowledge
Be active about maintaining your skills and embracing opportunities to learn new ones. Ensure you’re only providing advice in the areas you’re qualified and authorised for.

Maintaining Confidentiality
Protect client information by only using it for the purpose for which the information was gathered. Make sure the systems are secure and information can only be accessed by authorised staff.

Being Professional
Demonstrate dignity, respect and courtesy in all you do. Be conscious of the public image of the financial advice community.

ASIC Considerations

Key Issue  Considerations
Prioritising the customer’s interests: s961J  

Does the advice, product and/or service create additional revenue or some other form of benefit for the adviser, their advice licensee or another related party?

  • If yes, can additional benefits for the customer be demonstrated?
  • If yes, what are these additional benefits and how do they prioritise the interests of the customer?
  • Would a reasonable adviser without a conflict of interest have provided this advice? Why/why not?

This information should be clear in the customer file. Any potential or actual conflicts of interest should be clearly set out in the SOA. Where appropriate, advisers should recommend solutions relevant to the customer’s situation that are not product specific (e.g. advice on debt reduction, estate planning, and Centrelink benefits).

Affinia's Our Obligations E-Book

The our obligations e book is a step by step guide to the legal obligations of providing financial advice. This has been designed to provide you a simple yet comprehensive guidance to;

  • The newly legislated Adviser Education standards
  • The Life Insurance Framework
  • Future of Financial Advice reforms (FoFA); including your responsibilities and Affinia’s responsibilities in regards to;
    • Best Interest Obligations
    • Conflicted Remuneration
    • Risk advice Remuneration
    • Asset based fees
    • Soft dollar benefits
    • Fee disclosure statements
    • Opt in
    • Scaled advice 

Representatives' Duty to Act in the Best Interests of the Client

When providing personal advice, Representatives have a duty to act in the best interests of the client.

To show you have acted in the client's best interest you must do each of the following:

1. Identify the goals, objectives, financial situation and needs of the client.

2. Identify:

  • The subject matter of the advice that the client is seeking
  • The objectives, financial situation and needs of the client that would be considered relevant to advice on this subject matter (i.e. the relevant circumstances).

3. If it appears that the information relating to the client’s relevant circumstances is incomplete or inaccurate, make reasonable inquiries to obtain complete and accurate information.

4. Assess whether the Representative has the expertise to provide the client with advice on the subject matter and, if not, decline to provide the advice.

5. If, considering the subject matter of the advice sought, it is reasonable to consider recommending a financial product:

  • Conduct a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client that are relevant to advice on that subject matter
  •  Assess the information gathered in the investigation

6. Base all judgements in advising the client on the client’s relevant circumstances.

7. 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.

ASIC Considerations

Key Issue Considerations
Acting in the best interests of the customer: s961B(1)

Advisers must act in the best interests of their customers. As a result, a reasonable adviser would believe that the customer is likely to be in a better position if they follow the advice, than at the time the advice is provided. See RG 175.224–RG 175.231, including Examples 1–6, for further information.

Advice provided by a Representative who has complied with the best interests duty is likely to leave the customer in a bette position if they follow the advice. ‘Better position’ dependson the circumstances and includes:

  • The position the customer would be in if they did not follow the advice
  • The facts at the time the advice is provided
  • The subject matter of the advice sought by the customer (both explicit and implicit)—that is, whether the scope of the advice is consistent with the customer’s relevant circumstances and the subject matter of the advice sought (and why/why not)
  • Whether the advice balances the need for strategic advice and/or financial product advice
  • Where relevant, the product features that the customer particularly values—provided that the customer understands the cost of, and is prepared to pay for, those features
  • Whether the benefits the customer receives as a result of the advice are more than trivial (and why/why not).

If an advice model produces a ‘one-size-fits-all’ outcome (i.e. the processes do not allow each customer’s relevant circumstances to be taken into account, or result in advice that does not reflect the customer’s relevant circumstances), it will be difficult to demonstrate that the best interests duty is being complied with.

Record Keeping 

Client Files

Representatives must maintain a separate file for each client. You must ensure that the files are secure and only accessible to those people who need to see the information in them.

A list of what should be included in each client file can be found in the Client File Checklist. As a simple example the ideal file structure and content should appear as follows:

Part A) File Notes

With a prescribed formula for taking these

Part B) Advice 

a) SOA
b) ROA
c) Reviews 
b) Strategy Paper

Part C) Research

a) Strategy
b) Product

Part D) Data Collection - Discovery Information

Part E) Product

a) Applications
b) Correspondence
c) Research

Part F) Client Correspondence

a) Calls
b) Emails
c) FDS
d) Opt-In
e) Newsletters
f) Invitations

All client files must be kept for at least 7 years.

File Notes

The Representative must make a file note each time you communicate with the client. File notes will vary in length and detail depending upon the nature of the contact, but should always include:

  • Date and time
  • Information about the substance of the contact
  • Where possible use the clients “own words.”

During meetings or phone calls with the client, the Representative should take notes of what was said by both you and the client. Other things that should be included as relevant are:

  • Any questions the client had and your responses
  • Any follow up actions and when you’ll complete them
  • Any follow up actions the client needs to do.

Save copies of any hard copy documents you send to clients as well as any emails you send to or receive from clients.

The ideal file note is a direct reflection of the client’s own words. Digital recordings are also recommended, provided the client has given specific permission.

IT Security

The Representative must have appropriate technology to support the safe keeping of client data and personal information ensuring access is only granted to those who have the
appropriate authority.

Cyber Security

Cyber crime is becoming increasingly sophisticated and adept at hacking into the systems of both large and small organisations. For this reason it is imperative that we have all reasonable safeguards in place to protect information about our clients, such as their financial and health information which could lead to loss or embarrassment to them if disclosed to an unauthorised recipient. Organisations that do not protect the information entrusted to them are likely to face loss of client trust, loss of business, adverse media coverage and potential investigations. Affinia has created a cyber security document to help you find out more about:

  • Common areas of vulnerability
  • Risk mitigation controls
  • Guide to terms
  • Data retention obligation
Client Engagement

Client Engagement

Section One - Affinia Advice Handbook

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