QUALITY REVIEW PROGRAM REVIEW OF FINANCIAL PLANNING SERVICES ENGAGEMENTS QUESTIONNAIRE

Transcription

1 QUALITY REVIEW PROGRAM REVIEW OF FINANCIAL PLANNING SERVICES ENGAGEMENTS QUESTIONNAIRE

2 2 Review of Financial Planning Services Engagements Questionnaire Review Code(s) Reviewer INTRODUCTION This questionnaire has been designed to help you assess whether financial planning services have been conducted in accordance with legislative requirements. All non-compliance with mandatory professional or legislative requirements is to be reported in the quality review report. The reviewer is advised to comment on all non-mandatory breaches in the Other Matters Report. INSTRUCTIONS TO REVIEWERS Members of CPA Australia who provide financial services are required to comply with the provisions of APES 230. Members who practice in this area may hold their own licence, hold a limited licence or be an Authorised representative (AR) of an AFSL holder. Members who are ARs for AFSL holders will be subjected to annual compliance reviews from the AFSL holder. Many elements of this compliance review will meet the requirements of APES 230. The compliance review can be relied upon as a substitute for a file review. Where the AFSL holder does not provide authority for files to be reviewed, the reviewer will examine the process by which the member relies upon to meet the requirements of the standard. Where authority for file review has been obtained, the reviewer should select and review files consistent with any other engagement type. Members who hold their own AFSL or hold a limited AFSL will be able to provide client authority for file review, however if an AFSL holder has completed an independent compliance review, the compliance report issued can be relied upon as a substitute for a file review. Members who hold a limited AFSL are not subjected to annual compliance reviews and therefore will need to demonstrate compliance with APES 230 via review of client files. LICENCE TYPE REVIEW CODE AUTHORISED REPRESENTATIVE FULL AFSL HOLDER LIMITED AFSL HOLDER REVIEWER Method of review Compliance report, documented templates, policies and procedures. Client files where authority has been obtained. Compliance report, file review Full file review PRIVACY In this Privacy Statement, Personal Information has the same meaning as in the Privacy Act 1988 (Cth). CPA Australia Ltd is committed to protecting the privacy and security of the Personal Information which it holds about you. The Personal Information which you provide us with in this Questionnaire will be used by CPA Australia Ltd to process your Quality Review; and may be used for aggregated statistics for monitoring and research. This information may be viewed by the CPA Australia Quality Review Advisory Committee and also the Financial Reporting Council and any other Regulatory authority. If you do not provide us with this Personal Information, we may not be able to process your review. You have the right to access any Personal Information which CPA Australia Ltd holds about you, subject to the exceptions in the Privacy Act 1988 (Cth). You may also request the correction of information which is inaccurate. Access and/or correction requests can be made at your local CPA Australia office. For more information on CPA Australia s Privacy Policy, visit our website at cpaaustralia.com.au/privacypolicy

3 3 Review of Financial Planning Services Engagements Questionnaire CLIENT AUTHORITY 1. Has permission been obtained from clients for the peer review of their file? If so, please specify in the table below the entity. Note: Please place the appropriate letter from the below list into the above box that corresponds with the type of file(s) being reviewed (i.e. a = Public Listed, b = Public Unlisted, etc). Type of engagement files to be reviewed: a. Public Listed b. Public Unlisted c. Disclosing d. Proprietary Large e. Proprietary Small f. Superannuation Fund g. Incorporated Association h. Unincorporated Association i. Partnership j. Joint Venture k. Unit Trust l. Discretionary Trust m. Trust Account n. Compliance Plan o. Individual p. Sole Trader q. Other (please list) * Each client s authority must be obtained before reviewing their file. This questionnaire has been prepared on the basis that client authority is unable to be obtained. If client authority has been obtained where a question asks for evidence of a process being in place the reviewer will instead be reviewing the client file to see that there is evidence of compliance with the mandatory requirement of the standard within the client file. INTRODUCTION 2. How has the member addressed the following? a. Date of last review by ASIC / AFS licence holder Sight copy of report/date of last report b. Professional Independence and other Ethical matters in respect of: method of charging (i.e. Fee or Commission) method of disclosure other fund manager incentives 3. Is there evidence in the compliance report/file(s) reviewed that the member had not performed their engagements in accordance with the fundamental responsibilities including Best Interest of the Client as required by Division 7.7A of Corporations Act 2001? (APES 230.3) Note: If answered Yes to the above, the member is in breach of APES

4 4 Review of Financial Planning Services Engagements Questionnaire 4. Is there evidence in the compliance report/file(s) reviewed that the member has not complied with Professional Independence as defined in APES 230 and, where applicable (ie the member has held themselves out to be an independent adviser), the independence requirements contained in laws or regulations, such as s.923a of Corporations Act 2001? (APES ) Note: If answered Yes to the above, the member is in breach of APES Is there evidence in the compliance report/file(s) reviewed that where the member provided a Financial Planning Service that was restricted in scope, including where the Financial Planning Service was restricted to particular areas, financial products or providers, the Member had not disclosed the extent of those restrictions and any resulting effect on the Member s objectivity and Professional Independence: a. prior to undertaking the Financial Planning Service; and b. at the time the Financial Planning Service was provided to the Client? (APES ) Note: If answered Yes to the above, the member is in breach of APES Is there evidence in the compliance report/file(s) reviewed that the member had not documented and communicated to their client(s) the terms of engagement to provide the Financial Planning Service in accordance with the Financial Planning Service in accordance with APES 305 Terms of Engagement and APES 230? (APES ) Note: If answered Yes to the above, the member is in breach of APES and APES

5 5 Review of Financial Planning Services Engagements Questionnaire 7. Is there evidence that the Member has a process to disclose in a written form to their Client(s) or a prospective Client, before commencing a Financial Planning Service, the following terms of engagement and will obtain the Client s written agreement to such terms: a. the identity of the person or the entity responsible for providing the Financial Planning Service; b. the nature and scope of Financial Planning Services to be provided or offered including any limitations of scope; c. significant factors that affect or may affect the Member s ability to provide the Financial Planning Service to the Client on an objective and independent basis; d. the details of the professional fees, including the basis on which the fees are determined and the services covered by the fees; e. information about any actual, potential or perceived conflicts of interest that have the potential to affect the Member s ability to act in the Best Interests of the Client; f. where the Member has adopted safeguards to eliminate or reduce to an Acceptable Level any identified conflicts of interest or other threats to the Member s ability to comply with the fundamental principles of the Code, information about the nature of those safeguards and an explanation of the reasons why the Member considers those safeguards to be effective; g. the need for the Member to obtain the Client s written Informed Consent, where the Member is to be remunerated for a Financial Planning Service in accordance with paragraphs 8.2(b) or 9.2(b); and h. information about the nature and extent of any interests, associations or relationships, including family, contractual or agency relationships, whether of a financial nature or otherwise, that have the potential to affect the Member s ability to act in the Best Interests of the Client? (APES ) Note: If answered No to any of the above, the member is in breach of APES Please note that some of these requirements are in addition to the mandatory Financial Services Guide Disclosure requirements and the Renewal notice (opt in requirement). 8. Is there evidence in the compliance report/file(s) reviewed that the Member had not established the basis for the Financial Planning Advice provided with reference to: a. information provided by the Client or agreed by the Client where otherwise sourced; and b. the Member s evaluation of various strategies and courses of action that could reasonably be expected to meet the Client s objectives, financial situation and needs, including the relative effectiveness of the various strategies and courses of action? (APES ) Note: If the member answered Yes to the above, the member is in breach of APES

6 6 Review of Financial Planning Services Engagements Questionnaire 9. Is there evidence in the compliance report/file(s) reviewed that the Member had not analysed and evaluated the Client s relevant circumstances that existed at the time of providing the advice and take reasonable steps to ensure that the Financial Planning Advice took into consideration: a. the agreed scope of the Financial Planning Advice including any limitations of scope; b. the Client s objectives, financial situation and needs, and other relevant circumstances; and c. significant assumptions used to develop the Financial Planning Advice? (APES ) Note: If answered Yes to the above, the member is in breach of APES Is there evidence in the compliance report/file(s) reviewed that the Member had not gathered sufficient appropriate evidence by such means as inspection, inquiry, computation and analysis to enable them to establish a reasonable basis for Financial Planning Advice and when they determined the extent and quality of evidence necessary, the Member had not exercised professional judgment, considered the nature of the Financial Planning Advice and the Member s understanding of the Client s objectives, financial situation and needs, and other relevant circumstances? (APES ) Note: If answered Yes to the above, the member is in breach of APES Is there evidence that the Member has a documented process which informs the Client(s) of all significant assumptions and their sensitivities that are reasonably expected to impact upon the Financial Planning Advice, that they will agree with the Client to the extent practicable all significant assumptions and their sensitivities that may impact upon the advice taking into consideration the Client s relevant circumstances and they will document the significant assumptions they will use to prepare the advice? (APES ) Note: If answered No to the above, the member is in breach of APES

7 7 Review of Financial Planning Services Engagements Questionnaire 12. Is there evidence that the Member has a process that where they use estimates, forecasts or projections in the Financial Planning Advice, they will ensure that those estimates, forecasts or projections are presented and communicated in a manner that will avoid the implication of greater certainty that would in fact exist? (APES ) Note: If answered No to the above, the member is in breach of APES Is there evidence in the compliance report/file(s) reviewed that the Member provided Financial Planning Advice where the information on which the Financial Planning Advice was based on contained false or misleading information or omitted material information? (APES ) Note: If answered Yes to the above, the member is in breach of APES Is there evidence that the member s template report (Statement of Advice) that will be issued to a client in written form includes: a. the name of the party engaging the Member; b. the date of the report; c. the purpose of the Financial Planning Advice; d. the name and qualifications of the Member(s) responsible for the Financial Planning Advice; e. the scope of the Financial Planning Advice, including any limitations or restrictions; f. the basis of the Financial Planning Advice, including all significant assumptions on which the Financial Planning Advice is based; g. the specific information on which the Member has relied and the extent to which it has been reviewed by the Member; h. the reasons why the Financial Planning Advice is considered to be in the Best Interests of the Client; i. the amount of the fee received or receivable by the Member, either from the Client or a third party, for the Financial Planning Advice; and j. that the Financial Planning Advice was provided in accordance with APES 230? (APES ) Note: If answered No to the above, the member is in breach of APES

8 8 Review of Financial Planning Services Engagements Questionnaire 15. Does the member have a Managed Discretionary Account authority to transact on behalf of the client? If yes, is there evidence that the member has complied with APES 310 Dealing with Client Monies? (APES ) Note: If answered No to the above, the member is in breach of APES and APES Please note that if a member has a Managed Discretionary Account Authority then the APES 310 Questionnaire will need to be completed. 16. Is there evidence that the Member takes reasonable steps to protect the security of a Client s information and property that is within their control in accordance with applicable law, regulations and APES 230? (APES ) Note: If answered No to the above, the member is in breach of APES Is there evidence that the Member has a process to return a Client s property, including records, to the Client upon request, or in accordance with the terms of the Financial Planning Service? (APES ) Note: If answered No to the above, the member is in breach of APES

9 9 Review of Financial Planning Services Engagements Questionnaire 18. Is there evidence in the compliance report/file(s) reviewed that the Member had not eliminated or reduced to an Acceptable Level the threats to the fundamental principles of the Code described in paragraph 8.1 by either: a. the Member charging a professional fee on a Fee for Service basis; or b. where the Member charged a professional fee solely determined or based on a percentage of the value of the Client s assets or funds under management1, the Member; i. obtained, prior to the commencement of the Financial Planning Service, written Informed Consent from the Client to charge and collect the professional fee on a percentage basis; ii. disclosed on an annual basis to the Client the amount collected for the Financial Planning Service and provided an explanation for any significant variation from previously advised fees; and iii. obtained thereafter on at least a biennial basis written consent from the Client to continue to charge and collect the professional fee on a percentage basis? (APES ) Note: If answered Yes to the above, the member is in breach of APES Is there evidence that the Member has a process where a material change is made to the basis upon which they charged professional fees, the Member will notify the Client and obtain the Client s written consent to the amend terms in accordance with APES 305 Terms of Engagement? (APES ) Note: If answered No to the above, the member is in breach of APES

10 10 Review of Financial Planning Services Engagements Questionnaire 20. Is there evidence that the Member has a process which eliminates or reduces to an Acceptable Level the threats to the fundamental principles of the Code described in paragraph 9.1 by either: a. (a) the Member charging a professional fee on a Fee for Service basis; or b. (b) where the Member will be remunerated by Third Party Payments, the Member; i. will obtain, prior to the commencement of the Financial Planning Service, written Informed Consent from the Client for the receipt of those Third Party Payments; ii. will disclose to the Client three comparative quotes, where available, in respect of Financial Planning Advice on new contracts for life insurance and other risk products and the procurement of new loans; iii. will disclose on an annual basis to the Client the amount or estimated amount of Third Party Payments to be received for the Financial Planning Service; iv. will disclose on an annual basis to the Client the amount of the Third Party Payments received for the Financial Planning Service; and v. where applicable, will disclose to the Client the impact of any proposed changes to existing life insurance, other risk contracts and loans including the impact on Third Party Payments received or receivable by the Member as a result of recommending changes to these contracts and loans? (APES ) Note: If answered No to the above, the member is in breach of APES Has the Member provided a Financial Planning Service in respect of life insurance, other risk contracts and the procurement of loans and were they remunerated on a Fee for Service basis in accordance with paragraph 9.2(a)? If so is there evidence of a process which fully rebates to the Client any Third Party Payments received as soon as is practicable? In the instance a Third Party Payment is unable to be related specifically to an individual Client, is there evidence of a process which apportions the amount amongst all relevant Clients in a fair and reasonable manner? (APES ) Note: If answered No to the above, the member is in breach of APES I s there evidence that the member has accepted Soft Dollar Benefits in relation to a Financial Planning Service provided by them? For example wine, entertainment, gifts, etc (APES ) Note: If answered Yes to the above, the member is in breach of APES

11 11 Review of Financial Planning Services Engagements Questionnaire 23. Where client authority has been obtained, has the member prepared working papers in accordance with APES 230 that documented the work performed, including aspects of the Financial Planning Services that have been provided in writing, including: a. providing a sufficient and appropriate record of the procedures performed for the Financial Planning Services; b. evidence that the work undertaken provides a reasonable basis for Financial Planning Advice, including any recommendations accompanying the Financial Planning Advice; c. demonstrating that the Financial Planning Services were carried out in accordance with APES 230 and other applicable Professional Standards, and ethical, legal and regulatory requirements; and d. evidence all relevant information concerning the Member s professional relationship with the Client, including: i. sufficient information to evidence that the Member has acted in the Best Interests of the Client; and ii. information about how the Member has disclosed and addressed any threats or conflicts of interest arising in the course of the Client relationship or the Financial Planning Services? (APES ) Note: If answered No to the above, the member is in breach of APES

12 12 Review of Financial Planning Services Engagements Questionnaire OVERALL FINDINGS BREACHES OF MANDATORY REQUIREMENTS IDENTIFIED POSITIVE FEEDBACK TO BE CONVEYED TO THE MEMBER(S) IN THE REVIEWER S SUMMARY OTHER MATTERS REPORT DEFICIENCIES IN THE QUALITY CONTROL SYSTEM THAT WILL BE NOTED IN THE REVIEWER S SUMMARY OTHER MATTERS REPORT WITH SUGGESTIONS FOR IMPROVEMENT

13 13 Review of Financial Planning Services Engagements Questionnaire CPAH2000_06.16 cpaaustralia.com.au