FOFA Update Pas Bueti

View > Header and Footer to update Tagline Page 2 | Agenda This is a Question and Answer session, aimed at providing the latest information on:  FDS  Best Interests Duty  Conflicted Remunerations

The elephant in the room 1. Removal of the opt in legislation 2. Fee Disclosure Statements not to apply retrospectively 3. FDS statements can be more general rather than specific 4. Step 7 of BID to be removed 5. Risk commissions allowable in super where advice is given 6. Ban on risk commissions in super only to apply to automatic cover arrangements Page 3 |View > Header and Footer to update Tagline

Page 4 | Fee disclosure statements Where we are now? What do we need to do from here?

View > Header and Footer to update Tagline Page 5 | Best interests duty The tools you should be using to embed BID in your businesses BID Checklist BID Working Papers BID QAF BID Guide to what’s changed

FOFA update Benchmarking Your licensee is obligated to ensure the APSL is constructed in an appropriate manner for your licensee’s client base and has been benchmarked. This will be provided to you shortly. You can rely on the benchmarked APSL and there is no need to go off it (even where you know or suspect there may be a cheaper or more suitable off APSL product) provided that: –You understand the benchmarking process –You understand the features of the products on the APSL (know your product) –You make a genuine assessment of the APSL product in light of your client’s needs –The client does not have an existing product not on APSL –APSL not limited to a single class of products (not the case for AMP licensees) –The client hasn’t specifically requested you look at a product not on the APSL Obligations on review Best interests duty applies Scope driven by contractual relationship between you and your client If scope is not clear, reset with your client’s consent Duty of care still applies

FOFA update Alternative products and strategies The need to consider alternative strategies is based on the complexity of the strategies and products under consideration: –Non-complex strategies / products –Superannuation rollover and consolidation –Insurance recommendations –Retirement income streams –Complex strategies / products –Gearing strategies –SMSFs –North guarantee options –Structured products / derivatives –Existing product viable but strategy is complex –Existing product not viable and strategy is complex Scoping Driven by what you agree with your client Risks associated with proximate or adjacent areas to be considered

FOFA update Better position statement There is no requirement to consolidate this into one paragraph The SoA / RoA needs to clearly articulate why the client is in a better position, taking into account the client’s goals, but this need not be in a single place. Recording client instructions There is no requirement to record this in the client’s own words The instruction should state the client’s goal, not the strategy to get to the goal Fact find, file notes and the SoA must tell the story, linking the recommended strategy to the client’s goals Fee disclosure statement data We had some data issues. Impact was either contract data completely missing or immaterial misstatement (eg RITC errors) The one remaining known issue was resolved over the weekend If you identify a data concern please report it with the specific details

Best interests duty – a summary of the additional requirements and where to find more information Significant RequirementDocumentation RequirementsQAF reference Raw Client Need Fact Find or file notes. Reflected in Advice documents pp10/11 Expertise to adviseIn File notes or working papers.pp13/14 Better Position Statement In Advice document with accompanying modelling pp18-20 BenchmarkingNo documentation requirementsp23 ScopingFact Find, file notes and advice documentpp11/12 Alternative products and strategies File note or working papers. Reflected in the advice document p28 Page 9 |

View > Header and Footer to update Tagline Page 10 | BID – Whats next? Case Studies Guidance on Ongoing Reviews Revised QAF and FAQ’s Resource centre on Portal Upcoming PD Days