Authorised Representative Manual

Libertas Financial Planning Pty Ltd., ABN 27 160 419 134

Australian Financial Service License no. 429 718

Authorised Representative Manual

Authorised Representative Manual [Version 2]

Libertas Financial Planning

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Section Index

SECTION 1 ..... INTRODUCTION ............................................................ 2

SECTION 2 ..... POLICY AND PROCEDURES ........... PART 1 ........... 12

SECTION 2 ..... POLICY AND PROCEDURES ............ PART 2 ......... 140

SECTION 2 ..... POLICY AND PROCEDURES ............ PART 3 ......... 149

SECTION 3 ..... THE ADVICE PROCESS .................... PART 1 ......... 158

SECTION 3 ..... THE ADVICE PROCESS .................... PART 2 ........ 163

SECTION 4 ..... CODE OF .................................................................. 197

SECTION 5 ..... PROHIBITED CONDUCT .......................................... 201

SECTION 6 ..... LICENSEE OBLIGATIONS ....................................... 208



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Section 1 - INTRODUCTION -

INTRODUCTION .................................................................................................................................................. 3

PURPOSE OF THIS MANUAL ............................................................................................................................ 3

RESPONSIBILITY FOR MANUAL ...................................................................................................................... 3

ACCESS TO SOURCES ...................................................................................................................................... 3

REQUIREMENT TO COMPLY WITH FINANCIAL SERVICES LAW .................................................................. 4

CONSEQUENCES OF FAILURE TO COMPLY WITH FINANCIAL SERVICES LAWS ..................................... 4

INDUSTRY REGULATORS AND THEIR POWERS ........................................................................................... 4

LIBERTAS FINANCIAL PLANNING LICENCE .................................................................................................. 6

AUTHORISATION TO PROVIDE ADVICE ON, AND/OR DEAL IN, FINANCIAL PRODUCTS ......................... 9

NATURE OF THE LICENSEE-REPRESENTATIVE RELATIONSHIP .............................................................. 10



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Introduction Congratulations on becoming a Representative of Libertas Financial Planning. It is hoped that you and Libertas Financial Planning will utilise this relationship to achieve expected commercial outcomes that are beneficial to both parties. The Licensee-Representative relationship is based on certain legal obligations and industry best practice principles and obligations. As a result, both parties are required to comply with these principles and obligations at all times. The Corporations Act recognises four (4) types of Representatives:

Libertas Financial Planning Employees and Directors;

Employees and Directors of Libertas Financial Planning related bodies corporate;

Authorised Representatives (those not employees) or directors of Libertas Financial Planning or its

related bodies corporate;

Any other person acting on behalf of Libertas Financial Planning .

In this Manual, the term “Representative” is used to refer to any of the above categories of representatives.

Purpose of this Manual The purpose of this Manual is to:

Summarise the legal and industry best practice obligations of Libertas Financial Planning and its

Representatives;

Document and implement policies and procedures to regulate your conduct when acting as

Representative of Libertas Financial Planning ;

Provide resource material for the training of newly authorised Representatives;

Demonstrate Libertas Financial Planning commitment to a compliance culture in the provision of financial services to retail clients.

By reading this Manual, you will understand the nature of the obligations under the Corporations Act 2001 and other relevant industry legislation and codes.

Aspects of this Manual may be amended from time to time depending upon changes to the requirements in sources from which it has been compiled. You will be notified about any changes to the Manual and how the changes will affect you as a Representative.

Responsibility for Manual The responsibility for the preparation and maintenance of this Manual belongs to Libertas Financial Planning Professional Standards team. If you have any queries in relation to the Manual, please contact Libertas Financial Planning head office by telephone on 1300 133 511 or by email at [email protected].

This Manual is not intended to be, and should not be, regarded as a complete summary of your obligations under the Corporations Act, industry codes and the other sources. It is only intended to provide a practical overview of your obligations and to link those to Libertas Financial Planning overall objective of providing professional and efficient financial services advice to clients.

Access to Sources You may access and download reading material on the relevant source material for this Manual via the Internet, as follows:

Corporations Act and Regulations - www.treasury.gov.au

ASIC Regulatory Guides - www.asic.gov.au

Where internet facilities are not available or the material sought is not available online, you may direct a request for relevant material to Libertas Financial Planning .



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Requirement to Comply with Financial Services Law As a participant in the financial services industry you must comply with all financial service laws. This obligation applies in the first instance to all licensees including Libertas Financial Planning (Corporations Act 2001, paragraph 912A (1) (c)). However, the obligation is extended to include all Representatives of a Licensee through the requirement that all licensees must take reasonable steps to ensure that their Representatives comply with the financial services laws (Corporations Act 2001, paragraph 912A (1) (ca)). “Financial services law” means any provision of:

Chapter 7 (as enacted by the Financial Services Reform Act 2001) or of Chapter 5C, 6, 6A, 6B, 6C or 6D of the Corporations Act 2001; or

Chapter 9 of the Corporations Act 2001 as it applies in relation to a provision referred to above; or

Division 2 of Part 2 of the ASIC Act 2001; or

Other Commonwealth, State or Territory legislation that covers conduct relating to the provision of financial services (whether or not it also covers other conduct), but only in so far as it covers conduct relating to the provision of financial services.

Other Commonwealth financial services legislation includes:

Life Insurance Act 1995;

Insurance Contracts 1995;

Financial Transactions Report Act 1988;

Retirement Savings Accounts Act 1997;

Superannuation Industry (Supervision) Act 1993;

Superannuation (Resolution of Complaints Act 1993);

Trade Practices Act 1974;

Income Tax Assessment Act (as amended);

Privacy (Private Sector) Amendment Act 2000;

Equal Opportunity legislation;

State and Territory legislation includes:

o Fair Trading laws

o Equal Opportunity laws

Consequences of Failure to Comply with Financial Services Laws Failure to comply with any financial services law may result in Libertas Financial Planning , and/or you as its

Representatives, being liable for certain prescribed criminal or civil penalties. These include:

Heavy fines and jail sentences;

Revocation of Libertas Financial Planning AFS licence;

Revocation of your authorisation by Libertas Financial Planning ;

Being banned or disqualified by ASIC from future participation in the financial services industry;

Liability for civil penalties damages and other orders.

Note that in some cases, action may be commenced against a Representative under more than one law. In addition to the above, Libertas Financial Planning may take action against Representatives where they have acted in contravention of their obligations to the Licensee as detailed in any agreements entered into between the parties. Also, Libertas Financial Planning may commence action against the Representative under the common law, if necessary.

Industry Regulators and Their Powers As a Representative in the financial services industry, you should be aware of the bodies that regulate the conduct of the participants in the industry. The following is a summary of the powers and functions of the major industry regulators.



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Australian Securities and Investments Commission (ASIC) The Australian Securities and Investments Commission (ASIC) has primary responsibility for administering and ensuring compliance with the Corporations Act 2001, the ASIC Act 2001 and other relevant legislation that confer significant enforcement powers on ASIC. The following is a summary of ASIC’s powers:

Australian Financial Services License ASIC has the power to:

Grant or decline an application for an Australian Financial Services Licence (AFSL);

Impose conditions on licences at the time of, or after granting a licence;

Suspend, vary or cancel a licence.

Banning and disqualification orders ASIC has the power to:

Ban any individual from future participation within the financial services industry after a hearing. ASIC determines the duration of the ban, which can be permanent in some cases;

Apply to a Court for a disqualification order against any person.

Surveillance & Investigation ASIC has the power to:

Conduct surveillance of, or conduct investigation into any licensee and/or its representatives on a regular basis to ensure that they are complying with the requirements of the law

Conduct a surveillance visit of any licensee or Representative, either as a response to a complaint received by ASIC about the licensee or as part of its day-to-day review of the industry.

Licensees and Representatives are obliged to provide ASIC any assistance it reasonably requests in the course of the exercise of this power.

Regulation of Credit Although there is no requirement in the Corporations Act (as amended by the Financial Services Reform Act 2001), for licensees to obtain an AFSL to offer credit facilities or products, ASIC has the power to regulate consumer protection standards in the provision of credit facilities or products. Registers ASIC has power to establish and maintain registers relating to financial services, including registers in respect of:

AFS licensees;

Authorised Representatives;

Banned or disqualified persons;

Any person may inspect, make copies or take extracts of any of the above registers.

Communications about Representatives In some circumstances, ASIC may give information about you to Libertas Financial Planning . The circumstances are if ASIC:

Believes you are or will become a representative of Libertas Financial Planning ; and

Believes on reasonable grounds that the information is true.

Libertas Financial Planning may only use that information for certain limited purposes, including determining whether:

To appoint you, or continue your appointment, as a Representative; or

Varying the terms of your authorisation.

Libertas Financial Planning may provide the information to any Australian or foreign court in specified circumstances.



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ASIC Policy Documents ASIC has the power to do anything that is necessary for, or in connection with, or reasonably incidental to, the exercise of its powers. Accordingly, ASIC often releases regulatory guides, guidelines, and practice notes on the interpretation of aspects of the empowering legislation.

Whilst these are not enforceable as law, the participants in the financial services industry have accepted and complied with their terms. References and explanations of the Regulatory Guides are provided throughout this Manual, where applicable.

Australian Prudential Regulation Authority (APRA) The Australian Prudential Regulation Authority (APRA) is the prudential regulator of banks, insurance companies, superannuation funds, credit unions and building and friendly societies.

Prudential regulation is essentially for the prudent management of financial institutions to ensure the financial soundness of these institutions. As a regulator, APRA sets standards, including capital requirements for financial institutions to maximise the likelihood that they will remain financially sound. In the case of superannuation funds, APRA ensures that trustees are aware of their obligations to members and manage their funds in their care prudently in the interests of its members. APRA co-operates closely with ASIC and the Reserve Bank of Australia. With these bodies, APRA is a member of the Council of Financial Regulators. APRA and ASIC have entered into a Memorandum of Understanding in September 1998 to assist with managing overlaps between the two regulators.

Australian Taxation Office (ATO) The Australian Taxation Office is also a regulator in the industry.

Its relevant regulatory powers as such are limited to Self Managed Superannuation Funds, that is, funds with fewer than five (5) members of the fund.

The ATO also has the power to issue rulings in relation to products, e.g. tax effective investment schemes. Product Rulings assist participants in schemes by providing certainty on claimed tax benefits. Such rulings do not sanction or guarantee any product as an investment. Furthermore, rulings do not give an assurance that the product is commercially viable, that charges are reasonable, appropriate or represent industry norms, or that projected returns will be achieved or are reasonably based.

Industry Professional Bodies There are a number of industry professional bodies whose rules and codes of conduct regulate their members when acting as a participant in the financial services industry. These include:

Financial Planning Association Ltd of Australia (FPA);

Securities Institute of Australia (SIA);

Investment and Financial Services Association (IFSA);

Association of Financial Advisers (AFA);

Certified Practicing Accountants (CPA);

Institute of Chartered Accountants in Australia (ICAA).

Libertas Financial Planning has drawn guidance from industry bodies and industry best practice in putting together a Code of Ethics and Rules of Professional Conduct. As a Representative of Libertas Financial Planning , you must also comply with this Code of Ethics and the Rules of Professional conduct. A summary of the Code and the Rules are provided at Section 5 of this Manual.

Libertas Financial Planning Licence Type of licence As an organisation that provides financial services with system, repetition and continuity, Libertas Financial Planning carries on a financial services business in Australia. As a result, it is required under the Corporations Act 2001 (as amended by the Financial Services Reform Act 2001) to hold an AFS licence at all times.

The above licence allows Libertas Financial Planning to:

Provide advice on certain financial products; and

Apply, acquire, vary or dispose of financial products on behalf of another

Financial Product Advice “Financial product advice” is provided if a recommendation, a statement of opinion or a report is:



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Intended to influence a person in making a decision in relation to:

o a particular financial product; or

o class of financial products; or

o an interest in a particular financial product; or

o class of financial products;

Or could reasonably be regarded as being intended to have such an influence.

Dealing in a Financial Product The following activities constitute “dealing” in a financial product, unless an exemption applies (s.766C of the Corporations Act 2001):

Applying for or acquiring a financial product, e.g. buying shares; or

Issuing a financial product, e.g. implementing an investment in a managed fund; or

In relation to securities or managed investment schemes, underwriting the securities or interests,

e.g. providing insurance for a stockbroker in relation to a share issue; or

Varying a financial product, e.g. changing the investment profile of a managed fund; or

Disposing of a financial product, e.g. selling shares.

Arranging for a person to engage in any of the above types of conduct is also considered dealing, unless the actions concerned amount to providing financial product advice in itself (s766C (2)) or if an exemption applies.

Libertas Financial Planning dealing authority allows representatives to apply, vary, acquire or dispose of a financial product on behalf of another. That is, arrange to deal on behalf of another.

Types of Financial Products Libertas Financial Planning AFS licence allows Libertas Financial Planning and its Representatives to provide advice on and arrange to deal in certain financial products.

In general, a financial product is a facility through which, or through the acquisition of which, a person or a customer:

Makes a financial investment; or

Manages a financial risk.

The types of products Libertas Financial Planning AFS licence allows it to provide advice on and/or deal in are:

Basic Deposit Products

Deposit products other than basic deposit products

Debentures, stocks or bonds issued by government

Life products including;

o Investment life insurance products

o Life risk insurance products

Managed investment schemes including:

o Investor directed portfolio services

Retirement Savings Accounts

Securities

Standard margin loan facilities

Superannuation: to retail and wholesale clients



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Definition of Securities For the purposes of Chapter 7 of the Corporations Act, “securities” is defined as:

A share in a body;

A debenture of a body;

A legal or equitable interest in the share or debenture of a body; or

An option to acquire by way of issue, a security as defined in any of the above situations.

The meaning does not apply to an “excluded security” as defined in section 9 of the Act (in relation to a retirement village scheme). As a Representative of Libertas Financial Planning , you must only provide advice or apply, acquire,

vary or dispose of the above products, or a subset of the above products (dependent on your authorisation) on behalf of Libertas Financial Planning .

Failure to comply with this requirement may result in the revocation of your authorisation.

Obligations and Conditions of the Licence Libertas Financial Planning AFS licence is subject to certain obligations and conditions. As a Representative of Libertas Financial Planning you must understand these obligations and conditions since Libertas Financial Planning compliance with these obligations is essential to the maintenance of the licence.

”Obligations” are “general” in the sense that the Corporations Act and other laws have imposed them on all licensees.

There are two categories of conditions.

1. Conditions imposed by ASIC These conditions” are primarily intended to be specific, in the sense they are imposed on a licensee by ASIC when it grants, or after it has granted, the licence. This does not mean that ASIC will not impose the same condition or conditions on more than one licensee.

It only means that the same condition or conditions will not necessarily apply to all licensees. Conditions imposed by ASIC can be revoked or varied at any time by ASIC.

2. Conditions imposed by Regulations Conditions may be imposed by Regulations. Conditions imposed by Regulations become compulsory conditions, in the sense that they will apply to all licensees or a specified class of licensees. Conditions imposed by Regulations cannot be revoked or varied by ASIC.

Your continuing to be a Representative of Libertas Financial Planning is subject to Libertas Financial Planning complying with the obligations and conditions and imposed in future by law (including Regulations) or ASIC. You are required to comply with any lawful and reasonable request by Libertas Financial Planning that is necessary to ensure that Libertas Financial Planning meets the requirements of these obligations and conditions.

A copy of the full licence issued to Libertas Financial Planning is contained at Appendix 1 of Corporate Documents.

Obligations The following is a summary of the key general licensee obligations imposed under s.912A of the Corporations Act 2001:

Do all things necessary to ensure that all financial services covered under the licence are provided efficiently, honestly and fairly;

To comply with licence conditions;

To comply with the financial services laws;

Take reasonable steps to ensure that Representatives comply with the financial services laws;

Have, among others, adequate financial, human and technological resources available at all times to provide the financial services and supervise representatives;

Maintain the competence to provide the financial services;

Adequately train Representatives;

Have a complying dispute resolution system if the services are provided to retail clients;

Have adequate risk management systems;



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Have adequate arrangements to manage conflicts of interest that arise from the provision of a

financial service;

Have compensation arrangements in place if the services are provided to retail clients;

Maintain certain advice records including SOA’s and FSG and date version for a period of

7 years;

Notify ASIC of breach of, or inability to comply with, any general obligation;

Provide ASIC with certain information regarding Authorised Representatives.

Conditions ASIC may impose conditions on an AFS licence at the time the licence is issued or after it is issued. Also, it has power to revoke or vary existing conditions. Further under s.914A, regulations may impose additional conditions on a licensee which cannot be revoked or varied by ASIC. ASIC conditions The specific conditions of Libertas Financial Planning licence are noted on the actual licence. Information on licence conditions, or a full copy of the licence can be obtained from Professional Standards or viewed at Appendix 1 of Corporate Documents. Conditions imposed by Regulations As far as is relevant in the present context, Regulation 7.6.04 as amended requires all licensees to:

Before authorising any person or body corporate, conduct reasonable inquiries to establish the identity of that person or body corporate and determine whether the person or body corporate has previously been allocated a number by ASIC as an Authorised Representative.

Lodge with ASIC particulars of any change in a register of Authorised Representatives, if the change is not required to be reported in accordance with section 916F of the Act; and the change is not a direct consequence of an act by ASIC.

Provide a copy of an authorisation of any Representative on request by any person free of charge and as soon as practicable after receiving the request and, in any event, within 10 business days after the day on which the request is received.

Maintain a record of the training relevant to the provision of financial services that Representatives have undertaken before and after they have become Representatives.

Authorisation to Provide Advice on, and/or Deal in, Financial Products

You must not act as a Representative of Libertas Financial Planning unless you have been given a written Authorisation Certificate by Libertas Financial Planning to act in that capacity. Acting as a Representative without a written Authorisation Certificate is an offence under s.916A of the Corporations Act 2001.

Your written Authorisation Certificate has been provided to you upon your appointment. Among other things, the authorisation states:

The Licensee’s name and AFS licence number;

Your name and Authorised Representative number assigned by ASIC, if applicable;

The types of financial services you are authorised to provide;

The types of financial products you can provide advice on or arrange to deal in on Libertas Financial Planning behalf;

Other terms and conditions to which your authorisation is subject to.

You must take immediate steps to understand the contents of your Authorisation Certificate.

Availability of Authorisation Certificate for Inspection Your Authorisation Certificate is an important document. Ensure you keep it in a safe, but accessible location. If you choose it can be displayed in your office.

Regulation 7.6.04 requires you to provide a copy of your Authorisation Certificate free of charge to any person who requests it not more than 10 business days after the day on which you receive the request.



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Prohibited conduct under Authorisation You must not engage in any conduct that is not authorised in your Authorisation Certificate In particular, you must not: -

Hold yourself out as the holder of an AFS licence;

Provide advice on any type or class of financial products that is not included in your Authorisation Certificate;

Deal in any type or class of products that is not included in your Authorisation Certificate;

Authorise, expressly or by implication, another person, organisation or body corporate to provide advice on, or deal in, any type or class of financial products mentioned in your Authorisation Certificate;

Become an Authorised Representative of another AFS licensee without first obtaining the written consent of Libertas Financial Planning Management.

Revocation of Authorisation Your authorisation may be revoked by Libertas Financial Planning at any time by giving you written notice. Engaging in any of the above types of prohibited conduct may provide sufficient reason for Libertas Financial Planning to revoke your authorisation.

Lost or stolen Authorisation Certificate If your Authorisation Certificate is lost or stolen you must contact Head Office immediately for reissue.

Intention to cease to act as Authorised Representative If you decide to cease to act as Libertas Financial Planning Representative, you must notify Libertas Financial Planning in writing immediately of your intentions. This is to enable Libertas Financial Planning to complete Libertas Financial Planning termination of authorisation procedures including relevant notification to ASIC.

Nature of the Licensee - Representative Relationship Representative acts on the Licensee’s behalf Under the licensing regime introduced by the Corporations Act 2001, a Representative must only act on behalf of an AFS licensee when providing financial product advice or conducting a financial services business (subsection 916A(1)).

The law approaches the Licensee-Representative relationship as that of a Principal-Agent relationship. The Principal-Agent relationship operates on certain basic principles including: -

An Agent must only act within the scope of the authority given by the Principal

When acting within the scope of the authority, an Agent must disclose to clients in easy to understand terms that the Agent is acting on behalf of the Principal

The Principal is responsible for the Agent’s conduct when the latter is acting within the scope of the authority.

Acting within scope of Your Authority When appointing you to act as a Representative of Libertas Financial Planning , you have been specifically Authorised to provide specific services. These services are detailed in your Authorisation Certificate.

You must at all times refrain from engaging in conduct that is not included in your Authorisation Certificate. Subsections 916A(1) and (2) of the Corporations Act empower Libertas Financial Planning to specify in your Authorisation Certificate the financial services you are authorised to provide on Libertas Financial Planning behalf. You must not provide financial services that you are not specified in your Authorisation Certificate or provide advice on financial products that are not included in your Statement of Authorisation.

Libertas Financial Planning is responsible for your conduct when you are acting on Libertas Financial Planning behalf in the provision of authorised services. This imposes certain obligations on Libertas Financial Planning including the obligations to ensure you are trained and competent to provide the authorised services and monitor and supervise your conduct when providing the authorised services. Responsibility for your conduct may include making Libertas Financial Planning liable to any client in respect of any loss or damage suffered by the client as a result of your conduct when providing the authorised services.

However, note that the above responsibility of Libertas Financial Planning for your conduct does not relieve you of all liability to either the client or Libertas Financial Planning . As a Representative, you and Libertas Financial Planning are jointly and severally liable to the client in respect of any remedies the client may have (see s.917 of the Corporations Act 2001).



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This is particularly the case if you act outside the terms of your Authorisation as you may be held personally liable for conduct that is outside the scope of authorisation.

Furthermore, you may be required to indemnify Libertas Financial Planning to the extent of any compensation paid by Libertas Financial Planning to a client or other persons as a result of your conduct.

Additionally, you may be liable for breach of the terms of your authorisation. Finally, as mentioned above, Libertas Financial Planning may take disciplinary actions against you which may lead to, among other things, the revocation of your authorisation.

In addition, any breach of financial services laws must result in ASIC banning or disqualifying you from future participation in the financial services industry.

Disclosure of Capacity You must at all times disclose the capacity in which you are acting. This means that you must let your clients or the public know in easy to understand terms that you are acting as a Representative of Libertas Financial Planning when conducting authorised business activities.

ASIC Regulatory Guide 117.58 and 117.59 provide specific guidance on these requirements. In summary, investor protection requires that a Representative must clearly disclose to investors that they are acting in a representative or agent capacity by disclosing all relevant details of the principal and themselves. ASIC considers this is important because under the law, the licensee is responsible for the Representative’s conduct when acting within the scope of his/her authority.

Disclosure of your capacity as a Representative must be done on all key business documents including business cards, letterheads, fax cover sheets, Financial Services Guide and Statement of Advice. Promotional material, whether in written or digital, format must also contain this disclosure. For further information regarding identification requirements, see section 4 of this Manual. You must comply with all Libertas Financial Planning procedures on the disclosure of capacity and the preparation of corporate documents.

Other business activities you conduct Libertas Financial Planning does not permit you from engaging in other business activities without advising and discussing this beforehand with the Licensee.

Furthermore, note that Libertas Financial Planning Professional Indemnity insurance only covers the provision of authorised financial services. Accordingly, you are required to obtain additional and separate Professional Indemnity insurance to cover the provision of unauthorised activities. In order to comply with the requirements regarding other business activities, you must use separate business documents including business cards, letterheads, fax covers, promotional material, etc for your other business activities.

Business documents used for unauthorised activities must not mislead your clients or the public that you are conducting those business activities on behalf of Libertas Financial Planning . Personal liability may be established even if the documents are only likely to mislead clients or the public that you are engaging in those business activities on Libertas Financial Planning behalf.

Libertas Financial Planning requires that you must disclose to clients and to the public that you are conducting those business activities independently of the authorisation granted by Libertas Financial Planning and that as a result, Libertas Financial Planning is not responsible for your conduct when engaging in those activities.

You will need to maintain separate client files in relation to unauthorised business activities. Libertas Financial Planning has procedures to assist you in the preparation and use of business documents for your other business activities. (Refer to Section 4 of this Manual for additional information).

Professional Indemnity Insurance Reference is made throughout this Manual to the correct procedures that are to be implemented and diligently carried out in order to prevent litigation involving the Licensee and its representatives.

Libertas Financial Planning requires that all advisers take out Professional Indemnity insurance, as arranged through the licence, to ensure all activities undertaken as an authorised representative are covered.



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Section 2 Policy and Procedures

Part 1 AUTHORISED REPESENTATIVES RESPONSIBILITIES ................................................................... 13

AGRIBUSINESS INVESTMENTS ........................................................................................................ 15

BASIC DEPOSIT PRODUCT ADVICE ................................................................................................. 17

CLIENT FILES ...................................................................................................................................... 18

CLIENT INDENTIFICATION ................................................................................................................. 21

CLIENT REVIEW PROCESS ................................................................................................................ 24

CLIENTS WITH SPECIAL CIRCUMSTANCES AND NEEDS ............................................................. 26

COLLECTION, USE, DISCLOSURE, AND SECURITY OF CLIENT PERSONAL INFORMATION ................ 30

CONFLICTS OF INTEREST ................................................................................................................. 34

DERIVATIVES ....................................................................................................................................... 39

DIRECT PROPERTY ............................................................................................................................ 42

EMPLOYER SPONSORED SUPERANNUATION ............................................................................... 44

EXECUTION ONLY .............................................................................................................................. 48

EXTERNAL PORTFOLIO ADMINISTRATION SERVICES ................................................................. 50

FACT FINDING AND OTHER INVESTIGATIONS....................................................................... ....... .52

FEE FOR ADVICE...................................................................................................................... ......... .55

FINANCIAL SERVICES GUIDE ........................................................................................................... 59

GEARING .............................................................................................................................................. 61

GENERAL ADVICE .............................................................................................................................. 67

IMPLEMENTING RECOMMENDATIONS ............................................................................................ 69

INTERNALLY GEARED FUNDS .......................................................................................................... 71

INVESTMENT PROTECTION PRODUCTS ......................................................................................... 72

LIMITED ADVICE ................................................................................................................................. 77

LIMITED RECOURSE BORROWING BY SELF MANAGED SUPERANNUATION FUNDS .............. 77

LISTED SECURITIES ........................................................................................................................... 82

MARKETING VIA TELEPHONE AND EMAIL ..................................................................................... 86

MANAGED DISCRETIONARY ACCOUNTS ........................................................................................ 88

NON APPROVED PRODUCTS ............................................................................................................ 95

OTHER BUSINESS ACTIVITIES ........................................................................................................ 101

PERSONAL AND BUSINESS INSURANCE ADVICE ...................................................................... 105

PROMOTION AND IDENTIFICATION OF ADVISERS AND THEIR PRACTICES ............................ 108

RECORD OF ADVICE ........................................................................................................................ 114

REFERRAL ARRANGEMENTS ......................................................................................................... 118

REVERSE MORTGAGES ................................................................................................................... 122

STATEMENT OF ADVICE .................................................................................................................. 124

STRATEGY PAPERS AND PRESENTATIONS ................................................................................ 133

TIME CRITICAL ADVICE ................................................................................................................... 135

WHOLESALE CLIENTS ..................................................................................................................... 136



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The following is an overview of Libertas Financial Planning Policy and Procedures on various issues relating to the provision of financial planning advice to clients.

This section will be updated as company policy is amended or varied. Updates to policy will be distributed by Libertas Financial Planning . To ensure that your manual remains current and relevant it is your responsibility to update the appropriate sections of the manual as soon as you are provided with the updated information.

AUTHORISED REPRESENTATIVES RESPONSIBILITIES Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).

To ensure advice is in the best interests of the client, Libertas Financial Planning must be able to demonstrate that there has been adequate investigation into the financial products and strategies on which the advice to the client is based. Breach of this requirement by either an authorised representative or a licensee, is a strict liability offence under the Criminal Code.

Libertas Financial Planning Policy This Policy outlines the core requirements of Libertas Financial Planning Authorised Representatives including training requirements, the complaints process and specific legal obligations.

Compliance with this standard is mandatory.

A breach of this Policy by a Representative or any associate of the Representative may lead to the following actions:

implementation of a supervision program requiring submission of all SOAs for vetting;

the Representative being required to contact all affected clients in order to reconstruct their recommendation in accordance with Libertas Financial Planning Policy and Procedures;

Libertas Financial Planning initiating and implementing a comprehensive supervision and monitoring program covering all aspects relating to the provision of advice (and other related commercial activity of

the authorised representative) and notifying ASIC;

Libertas Financial Planning temporarily suspending the Authorised Representative and notifying ASIC;

Libertas Financial Planning permanently terminating the Authorised Representative and notifying ASIC.

Advisory Guidelines The following advisory guidelines must be adhered to by Representatives who provide advice:

Definitions

Unusual Activity

In broad terms, unusual activity is where, in providing or arranging for a designated product or service, you are concerned that an actual or prospective client:

is not who they claim to be; OR

may be involved in actual or potential evasion of a federal or state tax law; OR

may be involved in an actual or potential offence against some other federal or state law (e.g. fraud, theft, other crime, etc.); OR

may be involved in money laundering; OR

may be involved in terrorism financing.

This concern may arise from information you receive from the client’s behaviour or from their transactions.

Designated Service

Refer to Libertas Financial Planning Client Identification Procedures for a list of designated products or services.



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Authorised Representative Conditions

In accordance with the terms of your appointment as a Libertas Financial Planning Authorised Representative, you are required to:

1. Have completed DFP 1-4 or the Diploma of Financial Services (Financial Planning), or their equivalent. An Authorised Representative Certificate cannot be issued unless these requirements are met.

2. Have an Authorised Representative Certificate issued by Libertas Financial Planning prior to providing any financial advice and services.

3. Provide financial advice and services in accordance with the list of classes of financial products and services detailed in Libertas Financial Planning Australian Financial Services License (AFSL).

4. Only recommend those products/strategies for which the required competencies/accreditations have been attained. For product competency requirements, refer to the Approved Products List.

5. Seek prior written approval from Libertas Financial Planning to being an Authorised Representative of another Australian Financial Services Licensee.

Training requirements

6. Undertake Specialist Accreditations and Product Competencies from time to time as directed by Libertas Financial Planning .

7. Prepare and comply with an Individual Training Plan each year that includes completion of Libertas Financial Planning Policy and Procedures Accreditation.

Legal obligations

8. Conduct all dealings with your clients in an honest, efficient and fair manner.

9. Ensure all dealings with your clients are always in the best interest of your clients.

10. Comply with the requirements of the Corporations Act, ASIC Regulatory Guides and all other obligations imposed by law, including common law obligations that apply to the fiduciary relationship between an Authorised Representative and client.

11. Immediately report any unusual activity by a client, their agents, third parties or employees, by contacting Libertas Financial Planning .

Note: it is important that you do not warn or ‘tip off’ the client or any other party that an unusual activity report has been raised.

12. Ensure that all clients receive confirmation of recommended financial product transactions via the issuer of the financial product, platform provider or a stockbroker. That is, Authorised Representatives are NOT permitted to receive these original client documents as either the Authorised Representative or as a personal agent of the client through any other business they operate.

13. Ensure that all staff (whether employee or contractor) who are not authorised to provide advice are aware of their legal obligations to avoid any activity which requires the holding of an Australian Financial Services License or a Letter of Authority from the Licensee.

14. Not use the term ’independent’, or words with similar meaning such as ‘impartial’ or ‘unbiased’, to describe the services or advice provided by you or the Licensee.

Complaints

15. Follow Libertas Financial Planning complaints procedures as set out in the Dispute Resolution Process (page 146).

16. Maintain a advice Complaints Register in Libertas Financial Planning approved format.

17. Promptly notify Libertas Financial Planning of any client complaint that is unable to be resolved within 3 working days.



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Reporting breaches to the Licensee

18. Where breaches or potential breaches are identified by Authorised Representatives or their staff they must be reported to Libertas Financial Planning Compliance within 24 hours. Despite this timeframe, Authorised Representatives and their staff should wherever possible report the breach or potential breach immediately once identified.

General

19. Maintain an Alternative Remuneration Register which records any ‘soft dollar’ benefits received.

20. Comply with all Guidelines, directives and instructions issued by Libertas Financial Planning (this includes all Policies and Procedures).

Additional Information – Legislation and Regulations

Corporations Act – particularly Part 7.7

Reg 7.9.75A and section 1017B(3) and 1017D(6)

Corporations Act – Section 12 – Misleading and Deceptive Conduct

Privacy Amendment (Private Sector) Act 2000 in particular Schedule 3 National Privacy Principles

All ASIC Regulatory Guides but in particular the following:

RG146 Licensing: Training of financial product advisers

RG175 Licensing: Financial product advisers – conduct and disclosure

RG 36 Licensing: Financial Advice and Dealing

AGRIBUSINESS INVESTMENTS ** Only if approved and on the APL* Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


The purpose of this Policy is to provide an operating framework for Libertas Financial Planning Authorised Representatives in order to manage the risks associated with the recommendation of agribusiness Managed Investment Schemes to their clients.

Libertas Financial Planning Policy Libertas Financial Planning recognises that agribusiness/tax effective investments are high risk products due to the nature of the investments and the taxation implications. Accordingly, Libertas Financial Planning has created comprehensive due diligence guidelines in relation to the selection, advice and recommendations of these products provided to clients.

A breach of this Policy by an Authorised Representative or any associate of the Authorised Representative may lead to the following actions:-

Libertas Financial Planning withdrawing accreditation;

the Representative having to resit the accreditation requirements;


the Representative being required to contact all affected clients in order to reconstruct their recommendation in accordance with the policy requirements outlined above;

Libertas Financial Planning initiating and implementing a comprehensive supervision and monitoring program covering all aspects relating to the provision of advice and other related activity of the authorised representative and notifying ASIC;

Libertas Financial Planning temporarily suspending the authorised representative and notifying ASIC;

Libertas Financial Planning permanently terminating the authorised representative and notifying ASIC.



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Advisory Guidelines The following advisory guidelines must be adhered to by Authorised Representatives who provide advice on agribusiness investments:

Accreditation

1. Authorised Representatives must have successfully completed the full ADFS (or equivalent).

2. Only those agribusiness investments approved by Libertas Financial Planning may be recommended to clients.

3. Approved investments will be communicated via written notice from Libertas Financial Planning .

Approval

4. Authorised Representatives must obtain written approval from Libertas Financial Planning Compliance before providing advice to any client on agribusiness investments via the Approval to Provide Agribusiness Investment Advice form.

5. Should a client (without the Authorised Representative’s prompting) seek an execution only/no advice service for either an approved or non-approved agribusiness investment, the Authorised Representative must ensure compliance with Libertas Financial Planning Execution Only Services Policy and obtain written approval from Libertas Financial Planning Compliance for the implementation of the agribusiness investment for that client.

6. The Authorised Representative must ensure that the risk profile of the agribusiness investment, timeframe and expected yield are appropriate for the client, having regard to the client’s age, own risk profile, existing investment portfolio and tax position.

7. Authorised Representatives must adhere to any maximum commission/fee levels set by Libertas Financial Planning Compliance.

8. Authorised Representatives must comply with any Libertas Financial Planning directives and requirements for per each agribusiness investment approved by Libertas Financial Planning Research.

Exposure restrictions

9. No more than 10% of the client’s total investment portfolio (including superannuation) OR provided the client's net taxable income (after deductions) caused them to be taxed at the highest marginal rate no more than 15% of a client's net taxable income (after deductions), may be invested in agribusiness investments.

10. No more than 5% of the client's total investment portfolio (including superannuation) may be invested in any single agribusiness investment.

Please Note: A client is an individual not a couple. For example if the agribusiness investment is to be held in the wife’s name then the 5% requirement applies to her total investment portfolio.

Written advice

4. A detailed Statement of Advice (SOA) must be prepared in accordance with Libertas Financial Planning Statement of Advice Policy and presented to the client. Particular emphasis must be placed on explaining the risks of the investment and the SOA must clearly demonstrate why agribusiness investment(s) is an appropriate inclusion in the client’s investment portfolio.

5. The SOA must include Libertas Financial Planning approved Agribusiness Schemes template.

6. The SOA must include the Client Acknowledgment – Agribusiness Investments, to be signed by the client, and a copy retained on the client file. This acknowledgment must be used as an adjunct to, not a replacement for, the client signing the Authority to Proceed.

Non- approved products

7. Libertas Financial Planning Research authorisation is required when recommending a non-approved agribusiness investment, as outlined in Libertas Financial Planning Non Approved Products Policy.

Internal finance facilities

14. Internal finance facilities available through the product may be approved for use. Advisers should check with Libertas Financial Planning Research as to whether this is the case and, if applicable, whether any restrictions apply. Where the internal finance is not approved, clients will need to separately arrange



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their own finance facility. Where borrowing is recommended, the adviser must ensure that all requirements outlined in Libertas Financial Planning Gearing Policy are met.

Related Libertas Financial Planning Policies

Libertas Financial Planning Non Approved Products Policy

Libertas Financial Planning Gearing Policy

Libertas Financial Planning Statement of Advice Policy

Libertas Financial Planning Execution Only Services Policy


Corporations Act – particularly Part 7.7




BASIC DEPOSIT PRODUCT ADVICE Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy applies when advice relates only to basic deposit products (BDPs), such as cash management trusts, Term deposits or bank accounts. It does not apply when advice involves a combination of BDPs and other financial products. For example when advising that a client switches from a managed fund into a BDP (or vice versa).

A breach of this Policy by a Representative or any associate of the Representative may lead to the following actions:-







Advisory Guidelines

Definitions The following advisory guidelines are for Representatives who provide advice on monies relating to Basic Deposit Products only. BDP’s include:

Cash management trusts

Term deposits (up to a 5 year term)

Bank accounts (savings and cheque accounts)

Capital guaranteed First Home Savers Accounts

1. Authorised Representatives do not need to provide clients with a Statement of Advice (SOA) or Record of Advice (ROA) when their advice to the client relates only to BDPs. However, they are still required to act in the best interest of the client when providing advice and certain disclosure obligations still apply as outlined here.



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2. Authorised Representatives must provide the client with advice in accordance with the requirements below and an appropriate offer document such as a Product Disclosure Statement or Terms and Conditions document and Fees and Charges Guide before arranging the BDP.

3. A file note of your verbal advice must be made and kept which summarises the advice provided, the basis of the advice and what was disclosed to the client. Alternatively, a letter can be sent to the client that contains this information.

4. In any event, the file note of the verbal advice or the letter to the client must include:

A summary of the recommendation made;

The basis for the advice;

Where recommending clients move funds from another cash or deposit product, details disclosed to the client relating to:

o any costs and charges in both percentage and dollar terms that will or may be incurred (e.g. exit penalties);

o benefits that may be lost temporarily or permanently in both percentage and dollar terms where these have a value (e.g. loyalty payments or fee discounts); and

o other significant consequences for the client that are likely to occur if they proceed with the replacement (e.g. accessibility to funds without penalty).

Full details of remuneration, ‘other benefits and interests’ relating to the advice disclosed to the client; and

The name and version number of the PDS that has been provided to the client.

5. To meet the required disclosure of ‘other benefits and interests’, Representatives have the option of either:

Providing the FSG to the client (or confirming the client has the current FSG); or

Disclosing these details either verbally or in the recommendation letter.


Corporations Act – sections 761A, 763D, 764A(1)(i) and 946B (5) and Regulations 7.7.10 and 7.7.10(j)

CLIENT FILES Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy If the client file is well maintained and current, both Libertas Financial Planning and the Authorised Representative can be confident that the records are complete and can be used to defend for example, a complaint. It is therefore essential that client files contain appropriate documentation.

This Policy outlines the content and format requirements for client files including record keeping and electronic file responsibilities. It is Libertas Financial Planning policy that Authorised Representatives must adhere to the following advisory guidelines.









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General Requirements

1. Libertas Financial Planning has made available to advisers a Client File Checklist to assist advisers in meeting Libertas Financial Planning Policy requirements.

2. A client file must be kept in hard copy and/or electronically, the only exception being that SOAs are required to be held electronically.

3. Authorised Representatives must create a separate file for each client following the first interview that must be maintained regardless of whether the client proceeds with the recommendations. If the client has a partner and the partner has signed the same Client Profile/Fact Find then one client file can be created.

4. Storage and security of client files must be carried out in accordance with Libertas Financial Planning Collection, Use, Disclosure and Security of Client Personal Information Policy.

Content and Format of files

5. The client file must contain originals or copies of the following documents:

Working papers relating to advice

All correspondence received from the client

All correspondence sent to the client

All correspondence to or from third parties relating to the client

File Notes

Client Profiles/Fact Finds or equivalent documents

Client acknowledgements, Declarations and Authorities

All advice documents including the initial and subsequent Statements of Advice (SOAs) and Statements of Additional Advice (SOAAs) and all attachments

All Records of Advice (ROAs)

Progress/Review Reports and all attachments

Any other correspondence and all attachments

Copies of completed application/proposal forms with either signatures or alternative client confirmation for online applications as set out Libertas Financial Planning Implementing Recommendations Policy.

Copies of client cheques and/or money orders

Photocopies of client documents obtained prior to and during the advice process (for example, copies of investment certificates, insurance policies, superannuation statements and documents evidencing any client identification process under Anti-Money Laundering/Counter Terrorism Financing legislation as set out in Libertas Financial Planning Client Identification Procedures

6. Original documentation (such as Trust Deeds and Tax Returns) provided by the client or their agent must not be retained on the client file and must therefore be copied and returned back to them.

7. As a matter of best practice Libertas Financial Planning recommends segmenting of client files as this makes it easier to quickly access specific information.

File notes

8. Authorised Representatives must use a file note to record the substance of any conversation with a client at the time of the conversation or in any event on the same day. Good file notes are invaluable in the event of a client complaint and are essential to enable third parties such as ASIC and external complaints resolution schemes to understand the reasons for your recommendations and any subsequent transactions.

9. File notes must include the following details:

Client Name

Adviser/staff member's name present at the client contact

Date of conversation

Whether this was via telephone or a face to face meeting



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Subject of the conversation

Outline of the discussion

Outstanding Action (if applicable)

Signature (as a matter of best practice)

Templates are available for a First Appointment File Note, Client Contact File Cover Sheet and Client Contact & Administration File Note.

Please Note: File Notes are not required where client conversations are fully recorded and stored electronically as audio files or are converted to text. Advisers must however obtain the client’s prior consent to have their conversation recorded. Consent can be verbal however this must be noted on the client file by way of a file note.

Retention of client files

10. The entire content of client files (including all advice documents) must be retained for 7 years from the latest amendment or endorsement to a file. This will usually be 7 years from the date of the last contact or correspondence.

Electronic files

6. Authorised Representatives must have a documented Electronic Files Process detailing the following:

How documents are scanned or placed into an electronic system;

What checks and systems are in place to ensure that electronic documents are not altered or tampered with. Please note some electronic filing systems provide an audit trail of documents that have been altered and have the capability of assigning the right to alter documents to one person only. Libertas Financial Planning would consider these systems as being ideal for the purposes of meeting this requirement;

An appropriate back up and disaster recovery procedure. Please note that all back up data must be stored securely and available for viewing for 7 years on 24 hour notice; and

How documents are to be disposed of and/or archived.

Please note: SOAs are required to be held electronically.

Archiving files

7. Documents that must be retained in the current file for at least one year prior to archiving are:

Copies of any advice related documents including portfolio reviews, client reviews and associated SOAs, SOAAs and ROAs together with all attachments; and,

File notes.

8. All archived documents must be available to retrieve/produce within 48 hours.



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Loss of client files

9. Authorised Representatives must notify Libertas Financial Planning in writing immediately if a client file or file document is lost.

10. Authorised Representatives must then reconstruct as near as possible the lost file/document by undertaking the following procedures in relation to documents that were retained on the client file:

Re-document contact dates and client discussions (where possible) using the adviser's diary;

Copies of SOAs, SOAAs and ROAs containing recommendations held electronically must be printed off and placed on the client file;

Where possible copies of application forms/proposals and other relevant documents should be obtained from the relevant product issuer or platform provider;

Print off any other documentation stored electronically; and,

Ask the client for another copy of documents previously provided by them.

11. At the first available opportunity (or in any event prior to providing additional advice and services) the client must complete a new Client Profile/Fact Find.

12. A file note explaining that the file is a reconstruction and the date of reconstruction must be inserted at the front of the file.

13. If a file or document is stolen, the adviser must report this to Libertas Financial Planning who will provide the adviser with further instructions.


Libertas Financial Planning Collection, Use, Disclosure & Security of Client Personal Information Policy

Libertas Financial Planning Client Identification Procedures Policy

Additional Information – Regulations

RG 175 Financial Product advisers – Conduct and Disclosure

RG 36 Licensing: Financial Product Advice and Dealing

CLIENT INDENTIFICATION Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy The introduction of Anti Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006 places an obligation on all Authorised Representatives to verify the identity of clients where an Authorised Representative makes arrangements for a person to receive a “designated product or service”.

A breach of this Policy by a Authorised Representative or any associate of the Authorised Representative may lead to the following actions:









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Definitions

Designated Product or Service

Activity Representative Arranges for Client Designated Product or Service Provided

Obtain or be issued with new or additional *

* Does not apply to existing clients as at 12/12/2007 making additional contributions

Interests/units in a managed investment scheme

Open or make a deposit… Cash management trust

Buy/sell… Shares/options in a listed company or trust

Pay a premium or be issued with…

Investment life insurance policy –

Regular premium policy: with an annual premium greater than $1,500; or

Single premium policy: with a single premium greater than $3,000.

Obtain or be issued with… Annuity

Obtain or be issued with… Pension

Obtain an interest in or have the ability to transact through…

WRAP / Platform / IDPS

Cash out all or part… Superannuation interest

Advisory Guidelines The following Policy applies when an Authorised Representative arranges for a new or existing client to receive a Designated Product or Service:


Authorised Representatives must notify Libertas Financial Planning within 24 hours if they are not reasonably satisfied that a client is the individual or entity they claim to be after conducting reasonable enquiries.

Identification Procedures

1. Authorised Representatives must verify the client’s identity prior to arranging for a Designated Product or Service. The identification procedure depends on the client type and whether the client is an Australian or foreign resident. Client types and processes are as follows:

Resident Individual – refer to Resident Individual Standard Identification Procedure below

For all other client types – Complete the relevant IFSA form

Individuals and Sole Traders

Partnerships & Partners

Trust & Trustees

Australian and Foreign Companies

Registered Co-operatives

Associations

Government Body

2. Identification procedures fall into two categories:

Standard

Non Standard

Authorised Representatives are to conduct a standard Client identification procedure in all cases where possible.

Resident Individual Standard Identification Procedure

3. To conduct a standard identification procedure using Australian documents, Authorised Representatives are required to:

Collect the Client’s full name, date of birth and residential address; and



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Verify the Client’s full name and either their date of birth or residential address from either an original or certified copy of one of the following current documents:

a) Australian driver’s licence containing a photograph of the person. Please Note: This must show the client’s full name not initials;

b) Australian passport (it is also permissible for a passport to be issued by the Commonwealth to have expired within the preceding 2 years);

c) Card issued under a State or Territory law, for the purpose of proving a person’s age, containing a photograph of the person in whose name the card is issued.

d) Pension card issued by the Department of Human Services / Centrelink

4. The above obligation must be met by the Authorised Representative by either:

a) Photocopying the identification document and ensuring that the following information can be clearly read:

Name of issuer of the document; Date of issue; Date of expiry (where applicable); Document number (where applicable); and Whether the client’s identity has been verified from an original document or a certified copy.

OR

b) Completing the Individuals IFSA form.

Note: Product issuers may have specific requirements around client ID information in product application forms or which client identification process they require to be undertaken.

Resident Individual Non Standard Identification Procedure

5. A non-standard Client identification procedure should only be conducted where:

A standard Client identification procedure was unable to be conducted eg. the Client did not have the required documents; or

A discrepancy arose from the information collected and verified during a standard Client identification procedure; or

Having conducted the standard Client identification procedure, the Representative is not reasonably satisfied that the Client is the individual he or she claims to be.

6. An acceptable non-standard identification procedure using Australian documents is to be based on an original or certified copy of;

Australian birth certificate; or

Australian citizenship certificate; or

Health card issued by Department of Human Services / Centrelink; and

An original notice issued to an individual, of a kind listed below, that contains the name of the individual and his or her residential address:

o issued by the Commonwealth or a State or Territory within the preceding 12 months that records the provision of financial benefits; or

o issued by the Australian Taxation Office within the preceding 12 months; or

o issued by a local government body or utilities provider within the preceding 3 months that records the provision of services to that address or to that person.

Minors or Clients under 18

7. Acceptable forms of identification include, a notice that:

was issued by the school principal within the preceding 3 months;

contains the name of the client and his or her residential address; and

records the period of time that the client attended at school.

Keeping the Customer Identity Form and Identification Documents on file

The original Customer Identity Form or the copy of the identification documents must be retained on the client’s file and be easily retrievable.

Ongoing Identification Procedure Requirements

8. The copy of the identification document remains current until the source document becomes invalid (eg. driver’s licence expires). Therefore, prior to providing a further Designated Product or Service,



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Representatives must take reasonable steps to ensure Client details are current. Where these are not current, Representatives are required to update the client’s details and if verification details have changed (eg. name), re-verify the client’s details.

9. If the source identification document remains current, there is no need for the Representative to re-identify the client. Re-verification is required if the Representative has reason to doubt that a previously identified client is not the person they claim to be or at the request of the product issuer. It is expected that a Representative would assist the product issuer meet obligations under AML/CTF to the extent that is reasonable to do so in the circumstances.

10. If the Authorised Representative has reason to doubt the identity of the client, they must:

notify Libertas Financial Planning within 24 hours; and

re-verify the client’s identity via the standard identification procedure requirements.

CLIENT REVIEW PROCESS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy The client review is one of the key service components delivered by a financial services business. Furthermore, the review of a client’s personal circumstances and all previous advice is an integral part of the financial planning process that aims to ensure that the client’s lifestyle and financial goals are achieved.

A breach of this Policy by an Authorised Representative or any associate of the Representative may lead to the following actions:


the Authorised Representative being required to contact all affected clients in order to reconstruct their

recommendation in accordance with Libertas Financial Planning Policy and Procedures;








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Commission Only clients

1. Authorised Representatives must ensure that in any dealings with these clients, there is no wuncertainty about the extent of the service to which they will be entitled, as a result of payment of commission to the Representative. The Authorised Representative should document whether the client will receive:

a) ongoing advice proactively provided by the Authorised Representative (and if so whether this will be provided by scheduled review), or

b) an annual review if requested by the client; or advice only as and when requested by the client.

Libertas Financial Planning recommends as a matter of best practice that this is recorded in a document signed or acknowledged by the client, such as a client agreement or Statement of Advice.

All clients that fit this criteria and have existing financial products should be offered, at least annually, the opportunity of a review, unless they have expressly instructed the Authorised Representative that they do not wish to have reviews. A Biz-e-Newsletter newsletter is to be used as an education tool which forms part of the review process for these clients.

Fee for Advice clients

2. Where an Authorised Representative charges an annual review/service fee (regardless of how this is collected), there is a contractual obligation to provide annual ongoing advice services in accordance with the client’s existing service agreement. Please refer to Libertas Financial Planning Fee for Advice Policy.

3. Clients that meet these criteria must be offered, at least annually, the opportunity of a review. Clients must be contacted either by telephone or a personal letter to advise them of their upcoming review. A copy of the letter or a file note of the telephone call must be retained on the client file.

4. If the client instructs the Authorised Representative that they do not wish to have a review, the preferred form of record is a written instruction from the client. However, if this cannot be obtained, the Authorised Representative must retain a file note of their conversation with the client that reflects their instruction to not have a review.

5. The Authorised Representative must have a system in place to track when clients are due for a review to ensure that reviews are conducted on time in accordance with their service agreement.

Updating the client’s details

6. Before providing advice the Authorised Representative must obtain updated information on the client’s personal and financial circumstances in accordance with Libertas Financial Planning Fact Finding and Other Investigations Policy.

Review Appointment

7. During the review appointment the Authorised Representative should as appropriate in the Authorised Representative’s judgment undertake the following steps. This may be done using a formal Review Agenda document:

Update the client’s details if this has not already been done;

Discuss any changes in the client’s circumstances;

Review the client’s cash flow over the previous year & prospective needs including a review of the client’s cash account to meet administration and other costs for wrap and trust accounts;

Review all objectives;

Review the client’s time horizons and capital inflows/outflows;

Present the client with a report detailing the overall value of the investment portfolio ;

Discuss the investment performance and investment market environment;

Measure portfolio performance against lifestyle and current financial goals and the client’s risk/return profile;

Revisit portfolio risk;

Review the client’s portfolio to ensure consistency with the approved product list, for example, a product in the client’s portfolio may have been given a sell status;

Review taxation and superannuation issues;

Discuss any legislative changes;

Analyse the client’s debt funding arrangements;

Reassess wealth and asset protection strategies and present a current insurance policy schedule;

Review estate planning needs;



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Review appropriateness of all current strategy(ies);

Discuss how the client is tracking towards achieving their goals and objectives and highlight any shortcomings;

Discuss current services and fees;

Schedule next client review appointment;

The value of any Government payments entitlements & draw attention to any discrepancies.

Careful consideration should be given to changes that the client may not necessarily have identified, especially their position in relation to social security, wealth protection needs, taxation, legislative change and estate planning needs.

8. The outcome of the client review process will always be advice and normal SOA and Record of Advice (ROA) obligations apply as outlined in Libertas Financial Planning Record of Advice Policy and Libertas Financial Planning Statement of Advice Policy. Please note a recommendation to retain existing insurances and investments (for example a hold) is advice.


Libertas Financial Planning Record of Advice Policy


Libertas Financial Planning Fact Finding and Other Investigations Policy

Libertas Financial Planning Fee for Advice Policy


Corporations Act – particularly Chapter 7 and associated Regulations

RG 175 – Financial product advisers – Conduct and Disclosure

RG 36 – Licensing – Financial Product Advice and Dealing

ASIC FSR Section of website – www.asic.gov.au – see FAQs

ASIC Act – particularly Section 12 – misleading and deceptive conduct

CLIENTS WITH SPECIAL CIRCUMSTANCES AND NEEDS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Extra care is required when making recommendations to clients with special circumstances and needs. Ultimately, the Authorised Representative is responsible for ensuring the advice provided does not exploit or discriminate against the client in any way.

This Policy provides guidance to Authorised Representatives when dealing with clients where English is not their first language, illiterate, financially unsophisticated, influenced by alcohol or drugs, mentally or physically challenged, minors, non superannuation trustees, where powers of attorney have been granted or where the adviser and client normally communicate in a language other than English.

A breach of this Policy by an Authorised Representative or any associate of the Authorised Representative may lead to the following actions:







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Initial appointment/contact

1. The major consideration for people with special circumstances and needs is that they may not be able to clearly express their needs, objectives and personal situation and/or understand the implications of recommendations. It is therefore essential that at the first meeting (before providing any advice to the client) the Representative assess whether or not a representative or translator is required.

2. Authorised Representatives are not permitted to conduct appointments with, provide advice to or obtain the signature from a client on any document where the adviser suspects that the client is influenced by alcohol, drugs or otherwise incapacitated.

3. In any situation where the Representative is unclear about the appropriate form of action to be taken, Libertas Financial Planning Compliance must be contacted for guidance.

4. If the Representative considers that a client representative or translator interpreter is required, they must explain to the client that it is in their best interests to have another independent party attend interview(s) or translate documents to verify and interpret what is being documented and said by the client and the Representative.

5. Where the Authorised Representative has assessed that a client representative or translator is required and the client chooses not to have one present at interviews, the Representative should consider declining to offer advice.

6. The Authorised Representative must obtain the client’s agreement at the first appointment (if possible) to copy the translator or client representative into all communications including file notes of all telephone conversations where the client representative or translator was not present.

7. The Authorised Representative must also confirm with the client and gain their consent at the first meeting (if possible) to be able to call the client representative or translator if they are unsure that the client has understood a conversation where the translator or client representative is not in attendance for whatever reason.

Translators, attorneys & representatives

8. The client representative, Attorney or translator does not have to be a professional. A family member or friend may be adequate.

9. If the Authorised Representative has a reasonable basis to believe that there appears to be a potential conflict of interest with the client (For example, a relative who is communicating instructions or making financial decisions that favour them or another related person) they should insist upon an independent professional representative (For example, accountant or lawyer). In this situation, the Representative must decline to provide advice until an independent representative is appointed.

Documentation requirements

10. The Authorised Representative must clearly document the presence and the role of the nominated client representative or translator at interview(s) via a file note.

11. All Correspondence (including written recommendations) to the client must include the client’s special circumstances, the name of the client representative or translator and the capacity in which they are acting (for example, relative, friend, Lawyer).

12. The Authorised Representative must obtain the signature of a representative or translator (where applicable) on the Fact Find/Client Profile and any other related documents verifying the information provided by them is true, complete and accurate.

13. Any alterations to documents must be signed by the client and their representative or translator to acknowledge the additional information has been noted and is correct.

14. Any original written declarations (including a current Power of Attorney) referred to in this Policy must be sighted by the Representative and a copy made and permanently kept on the client file.

15. Once nominated the translator must be present at all interviews and meetings.



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Clients where English is not their first language

16. The Authorised Representative must ensure that the translator certifies in writing that they have accurately translated all conversations and documents to the client and that they believe that the client can make an informed decision about their financial affairs. The client must also sign the declaration.

17. The Authorised Representative must ensure that any documentation received from a client or any other source in a foreign language is translated to English by a certified translator and both documents must be maintained together on the client’s file.

Authorised Representatives and clients who communicate in a language other than English

18. This section deals with the particular circumstances where:

the client and the Authorised Representative speak the same language;

discussions are conducted in that language;

the client does not read English proficiently;

documents are provided in English; and

a translator is not engaged.

19. In these circumstances a same day sale i.e. signing application forms on the same day an SOA has been presented, is not permitted.

20. Prior to, or at the start of the first meeting the Authorised Representative must provide the client with the document in the client’s native language.

21. An FSG must be provided to the client at the first meeting and explained to the client in their own language. The client must be advised that the document is not being translated word for word. The explanation may be conducted in a face to face meeting or over the phone.

22. If using an SOA, the Authorised Representative must present the SOA and explain the purpose and details.

23. For all advice ensure the client understands:

the purpose of any advice document;

the client’s stated needs, objectives and attitudes to risk (as recorded);

how the advice and recommendations meets their objectives;

any risks associated with the advice;

any applicable warnings; and

all commissions and fees associated with the advice.

24. When using an Authority to Proceed, the Authorised Representative must explain the details and that, by signing it they agree to proceed with implementation of the recommendations in whole or in part and/or wish to vary the recommendations.

25. When providing a PDS the Authorised Representative must explain any risks and costs they have not already discussed and advise the client that the product issuer will correspond with them in English.

26. Authorised Representatives must keep thorough file notes of all conversations with the client and note in which language the conversation was conducted. This can be recorded on the ROA in the notes section if providing ongoing advice.

Visually impaired

27. For visually impaired clients, where possible, a sighted representative of the client should be present at initial and subsequent interviews with the client, however this is not mandatory.

28. However the Authorised Representative should encourage the client to seek independent confirmation of the written document(s) prior to any application forms or the Authority to Proceed being signed by them.

29. Where a professional representative or family member has been engaged by the client they must declare in writing that all written documentation has been read to the client verbatim and the client has confirmed the information and the suitability of the recommendation.

Hearing impaired

30. Once nominated the representative must be present at all interviews and meetings.



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31. For clients who are hearing impaired the client and nominated representative, must make a declaration at the bottom of all file notes of meetings that states that all significant issues discussed verbally are noted in the file note and are a true and accurate account of any discussions.

Minors

32. The Authorised Representative must ensure that a minor’s legal guardian is present at all interviews.

33. The Fact Find/Client Profile and any other associated documents must be completed with the minor’s details, and signed by both the minor (where possible) and their legal guardian.

34. Any written advice must be addressed to the legal guardian. The legal guardian must sign the Authority to Proceed.

Power of attorney

35. The Authorised Representative’s duty of care is to the client and not to any person holding a Power of Attorney from the client.

36. The Authorised Representative should establish whether the Power of Attorney is a General or Enduring Power of Attorney.

37. An Authorised Representative cannot rely on a General Power of Attorney where the client is assessed as being of unsound mind as a General Power of Attorney is revoked once the client has lost the capacity to make decisions through unsoundness of mind.

38. The grant of Power of Attorney is regulated by individual State Acts and where the adviser is unsure about their obligations they should refer to the National Australia Trustees office in that state for further information.

39. The Authorised Representative must ensure that they have a current Power of Attorney (POA) document on the client file and should confirm with the client or their legal representative that the Attorney has not been revoked prior to providing advice or providing any of the client’s details to the Attorney where possible. If the adviser has any doubt as to whether the POA has been revoked they must contact Libertas Financial Planning Compliance for guidance.

Trustees

40. For advice to Trustees of Self Managed Superannuation Funds please refer to Libertas Financial Planning Self Managed Superannuation Funds Policy.

41. Where interviews are conducted with trustees, the Fact Find/Client Profile must be completed taking into account the purpose for which the trustee is investing, and other relevant circumstances. Those relevant circumstances will include all beneficiaries (including potential beneficiaries), the trust’s purpose, as set out in the Trust Deed or the trust’s rules. Representatives must comply with all requirements set out in Libertas Financial Planning Fact Finding and Other Investigations Policy.

42. Authorised Representatives must keep a copy of the Trust Deed on the client file.

43. Authorised Representatives must review the Trust Deed in terms of the investment powers being vested in them, and for any restrictions on the type of investments permitted.

44. Authorised Representatives must consider the anticipated impact of their advice on the interests of the beneficiaries and any potential beneficiaries and must specifically record this is any written advice to the Trustee

Client identification procedures

45. Authorised Representatives must comply with Libertas Financial Planning Client Identification Procedures to ensure their obligations when dealing with a client’s agent are met. For example, if the client was existing client prior to 12/12/2007 and they wanted to add to or withdraw from an existing financial product held at that time then they are exempt from the client identification requirements. However if they became a client after 12/12/07, then the client identification requirement falls on the recipient of the money. For example, if payment or contribution is to the client's bank account, then advisers must identify and verify the client or alternatively if the payment or contribution is to the Power of Attorney for example, then the Power of Attorney would need to be identified and verified.



Libertas Financial Planning Self Managed Superannuation Funds Policy

Libertas Financial Planning Client Identification Procedures



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COLLECTION, USE, DISCLOSURE, AND SECURITY OF CLIENT PERSONAL INFORMATION Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This standard outlines Authorised Representatives obligations relating to the management of client personal information in accordance with the ten (10) National Privacy Principles contained within the Privacy Act, Income Tax Assessment Act and the Superannuation Industry (Supervision) Act. The key requirements for the way client personal information is collected, used, disclosed, secured and accessed are outlined below however Authorised Representatives should refer to the relevant legislation for further clarification.

The principles in this standard apply regardless of whether Authorised Representatives are working:

within their practice,

from home on a home PC or office laptop, or

remotely with a laptop or other networking device.









Advisory Guidelines The following advisory guidelines must be adhered to by Representatives:

Definitions

Personal information

Information or an opinion about an individual whose identity is apparent or can be ascertained from the information or opinion. Personal information relates to a natural living person (i.e. this is an individual and does not include company or SMSF information).

Sensitive information

Information or an opinion about an individual’s racial or ethnic origin, political opinions, membership of a political association, religious beliefs or affiliations, philosophical beliefs, membership of a professional or trade association, membership of a trade union, sexual preferences or practices, criminal record or health.

Primary purpose

The collection of personal information in order to provide financial planning advice and services.



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Related secondary purpose

Administration, audit, and newsletters and seminars content of which are related to providing financial planning advice and services.

Consent

Informed, voluntary express or implied agreement provided by a client who is competent to do so.

Consent to collect and hold personal information

1. Consent is not required to collect personal information necessary to provide the financial planning advice and services the client is requesting unless it is sensitive information or in the case of a Tax File Number (TFN).

2. Sensitive information about an individual must not be collected unless the individual has consented or the collection is required by law or the collection is required to establish or defend a legal claim. There are only limited circumstances when an Authorised Representative would need to collect sensitive information, for example, protection product proposals. This consent must be obtained via Libertas Financial Planning approved fact find/client profile or a Standalone Privacy Acknowledgement Form.

3. Authorised Representatives who need to collect or hold a client’s TFN on file must obtain the client’s authority via the Option to Quote Tax File Number section of Libertas Financial Planning approved fact find/client profile or the standalone equivalent form. If the client does not want their TFN to be retained on file the Authorised Representative must make the TFN illegible or physically remove it from the file.

4. Authorised Representatives who hold TFNs for existing clients without written authority must obtain the client’s consent via the Option to Quote Tax File Number Form the next time they have contact with the client or within twelve months from collection whichever is sooner.

Collection

5. Client personal information must be recorded in accordance with Libertas Financial Planning Fact Finding and Other Investigations Policy.

6. Where it is reasonable and practical to do so, personal information should only be collected directly from the individual to whom it relates.

7. Where this is not possible the individual providing personal information about a third party must provide that party with the licensees FSG that includes privacy notification in accordance with their signed Standalone Privacy Acknowledgement Form.

Use and disclosure

8. If the Authorised Representative is unsure of the identity of the client they must verify the client’s identity prior to providing personal information by obtaining their full name and date of birth.

9. Generally, personal information must not be used or disclosed for any purpose other than for that required to provide a financial planning service requested by the client unless the client has consented to another purpose.

10. There are some limited exceptions to this rule, for example, Authorised Representatives may be required by a Court Order to provide personal information or ASIC or FOS may request details contained on a client file. Any request for such information must be referred to Libertas Financial Planning prior to disclosing personal information.

11. In addition, Authorised Representatives are permitted to disclose a client’s Tax File Number (TFN) if they have an appropriately completed and signed TFN Authority:

When lodging an investment on behalf of the client; or

To the Australian Taxation Office with the client’s permission to locate their superannuation accounts.

12. Consent is required prior to Authorised Representatives providing client personal information to a third party for a purpose that is unrelated to the financial planning advice and services the client has requested. Consent can be obtained via the following methods:

Verbal consent outlined in a file note containing the date, time and the details of the consent;

A Tailored Consent Letter signed by the client;

A Tailored Consent Letter that allows the client to “opt out” within a specified period of time – usually two weeks.



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13. Where the client has crossed through sections of the Standalone Privacy Acknowledgement Form that they do not agree with the Authorised Representative must ensure that processes are put in place to ensure that the client’s personal information is only used and disclosed for those purposes agreed to.

14. Authorised Representatives must only use or disclose sensitive information for a primary purpose.

15. In the case of spouses/partners, Authorised Representatives are only permitted to disclose personal information on the spouse or partner of a client if agreed to in writing via a Standalone Privacy Acknowledgement Form signed by both parties.

16. Authorised Representatives must contact Libertas Financial Planning prior to providing personal information about a client to a third party located in a foreign country.

Security

17. Authorised Representatives must have procedures in place to protect personal information they hold from misuse, loss, unauthorised access, modification or disclosure.

18. Access to client files (either hard copy or electronic) must be restricted to authorised staff who have read and understood this Policy.

19. For hard copy files it is essential that these are not left unattended in any area of the practice that is accessible by the public or any other person that is not authorised to access client personal information.

20. Client personal information held electronically must be protected by a password to enable only authorised staff to access the computer system and all computers should have a lock function where the computer has not been used for a period of time.

21. Destruction of records should be by secure means, for example shredding if hard copies or overwriting backup tapes for electronic files. Destruction of records must only occur in accordance with Libertas Financial Planning Client Files Policy.

Client access to personal information

22. Access does not have to involve providing a client with a copy of documents. The client can be given the opportunity to always inspect documents at the Authorised Representatives office.

23. The Authorised Representative may charge for the costs associated in providing personal information (such as photocopying and staffing costs) however the charge must not be excessive.

24. An Authorised Representative must provide a client with access to any personal information about the client that the Authorised Representative holds, if the client specifically requests this under the Privacy Act. There are some exceptions where access must be denied for example if providing access:

Would pose a serious threat to the life or health of any individual; or

Would have an unreasonable impact upon the privacy of other individuals.

For a full list of exceptions Authorised Representatives should refer to National Privacy Principle 6.

25. Any decision to deny access to personal information must be referred to Libertas Financial Planning .

26. Authorised Representatives are required to provide reasons to the client for denial of access to their personal information in writing.

27. Request for access to personal information applies to all personal information, regardless of the medium in which it is stored. This will include for instance, any fact finding documents, file notes, advice documents, service agreements, emails, and quotes or working documents containing personal information.

However, if a client does not specifically state that they are requesting information under the Privacy Act, the Authorised Representative is only required to provide documents that the client has paid for (e.g. SOA’s), documents previously provided to the client (e.g. FSG, service agreement and brochures) and information previously provided to the Authorised Representatives by the client (e.g. the fact find/client profile).

Privacy Policy

28. Authorised Representatives are required to develop a Privacy Policy for their own practice and make a copy available to clients on request.

29. The Licensee also has a Privacy Policy which must be made available to clients who request a copy of it. This is available on Libertas Financial Planning website.



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Libertas Financial Planning Client Files Policy


Additional Information – Regulations

Privacy Amendment (Private Sector) Act 2000 in particular Schedule 3 National Privacy Principles

Superannuation Industry (Supervision) Act 1993

Income Tax Assessment Act 1997

CONFLICTS OF INTEREST Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy addresses the potential conflicts of interest that can arise when an Authorised Representative is given authority to act on a client’s behalf, enters into a business relationship with a client, or where Authorised Representatives receive any benefits(financial or otherwise) which relate to the provision of a financial service to clients.

These situations expose Authorised Representatives and Libertas Financial Planning to commercial risk when managed inappropriately.









Definition A ‘conflict of interest’ is defined as any circumstances relating to the provision of financial services, where the interests of clients are inconsistent with the interests of Libertas Financial Planning and or representatives of Libertas Financial Planning .

Conflicts of interest can include actual, perceived and potential conflicts of interest.

Client Authorities and Relationships

Non discretionary authorities

1. An Authorised Representative may accept an authority from a client which authorises a product provider, margin lending facility, stockbroker or investment facility manager (master fund; wrap account; portfolio management service or superannuation fund) to act on investment instructions given by the Authorised Representative on behalf of the client, provided:

It is clear that the authority does not require the Authorised Representative to exercise any level of discretion in carrying out any task under the authority, and the Authorised Representative does not in fact exercise any level of discretion in carrying out any task under the authority;

The client is informed of, and gives prior verbal or written approval for the transaction(s). Written approval for recurring transactions or ongoing transactions that the client has previously agreed to (for



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example rebalancing client portfolio’s via Navigator Wrap back to the original asset and product provider allocation) can be made via the Authority to Proceed attached to the written advice document detailing that advice and therefore no additional verbal or written approval is required; and

A copy of the dated file note(s) relating to the transaction where verbal instructions were provided are maintained on the client file; and

Confirmation of the transaction is sent to the client following completion of the transaction and a copy of this confirmation maintained on the client file.

This principle applies to telephone, electronic and paper based transactions.

Authorities requiring Licensee Approval

2. An Authorised Representative must not, without prior written approval from Libertas Financial Planning , do any of the following:

a) Borrow money from, or lend money to, any client, or any company or trust partnership, super fund or associate of the client. This requirement extends to the Authorised Representative’s business, company or associated company. In exceptional circumstances, Libertas Financial Planning may give approval for such an arrangement if the transaction can be clearly demonstrated to be a commercial, arms-length arrangement;

b) Accept appointment as a client’s Attorney. This applies to all types of Power of Attorney, for example. sole, joint, limited, unlimited, general or enduring;

Libertas Financial Planning approval may be granted where the client wishes to appoint the Authorised Representative and another person as joint attorneys, with both attorneys having to act together. The joint attorney must not be a person associated with the Authorised Representative. Approval of Appointment as a sole attorney may be considered by Libertas Financial Planning in exceptional circumstances.

Authorised Representatives considering an appointment as attorney should be aware of the following issues:

An Authorised Representative who accepts appointment as a client’s attorney does so in a personal capacity: that is, the appointment does not depend on the adviser being an Authorised Representative/Representative of Libertas Financial Planning . The appointment therefore continues indefinitely until the client revokes it;

An attorney is required to comply with regulatory and common law obligations. Authorised Representatives who accept appointment as attorney should seek independent legal advice on their obligations;

Existing professional Indemnity insurance may not cover any liability arising from action taken as a client’s attorney;

Although the appointment as a client’s attorney is in a personal capacity, this relationship with the client falls within the scope of ASIC scrutiny. ASIC is of the view that an Authorised Representative always wears the “adviser hat” when dealing with a client, irrespective of any personal relationship that may exist. It follows that an Authorised Representative who inadvertently or intentionally fails to act “efficiently, honestly and fairly “as a client’s attorney is likely to face punitive action by ASIC.

c) Act as a Settlor for a client’s trust. Authorised Representative s are reminded that Settlors should be a natural person. The role of the Settlor is to legally create the Trust by feeding in the initial assets (the settled sum) and executing the Trust Deed. Once the Trust has been formed an Authorised Representative acting as a Settlor must have no other obligations within the operation of the Trust;

d) Accept nomination as Executor of a client’s estate.

Libertas Financial Planning approval may be granted where the appointment is as a joint executor (with joint executors having to act together). The joint executor must not be a person associated with the Authorised Representative. Approval of Appointment as a sole executor may be considered by Libertas Financial Planning in exceptional circumstances.

Authorised Representatives considering an appointment as executor should be aware of the following issues:

An Authorised Representative who accepts appointment as a client’s executor does so in a personal capacity: that is, the appointment does not depend on the Authorised Representative being an Authorised Representative/Representative of Libertas Financial Planning . The



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associated responsibility therefore continues indefinitely until the Authorised Representative resigns his/her position (in some cases with court approval);

Acting as executor is often a time-consuming and difficult task. Death can be a catalyst for disputes and legal action and both the Authorised Representative as executor, and Libertas Financial Planning , may be drawn into these conflicts;

An executor is required to comply with regulatory and common law obligations. Authorised Representatives who accept appointment as executor should seek independent legal advice on their obligations;

Existing professional Indemnity insurance may not cover any liability arising from action taken as a client’s executor;

Although the appointment as a client’s executor is in a personal capacity, this relationship with the client falls within the scope of ASIC scrutiny. ASIC is of the view that an Authorised Representative always wears the “adviser hat” when dealing with a client, irrespective of any personal relationship that may exist. It follows that an Authorised Representative who inadvertently or intentionally fails to act “efficiently, honestly and fairly“, as a client’s executor is likely to face punitive action by ASIC.

e) Accept any form of authority from a client that permits the Authorised Representative to sign cheques on, or withdraw funds from, a client’s bank account, cash management account or similar investment account (cash transaction authority). Licensee approval will not be provided in these circumstances.

Accept any form of authority from a client that would enable the Authorised Representative to buy/place or sell/redeem financial products on behalf of the client without the client’s prior knowledge of and consent to transaction(s) unless the Authorised Representative is authorised by Libertas Financial Planning to provide Managed Discretionary Account Services.

Client relationships which create a conflict of interest

3. An Authorised Representative must obtain prior written approval from Libertas Financial Planning before entering into any of the following relationships:

a) Accepting appointment as a trustee, administrator or auditor of a trust or director of a company that is a client or is associated with a client;

b) Entering into a business or investment arrangement jointly with a client or any company, or trust associated with a client;

c) Offering a client the opportunity to invest in his/her business or associated company of the Authorised Representative;

d) Engaging in any other activity that results, or may result, in conflict between the Authorised Representative’s interests and those of the client.

4. Authorised Representatives should avoid any other relationship or situation which may be construed as the result of exercising undue influence over their clients’ affairs, including (but not limited to):

acceptance of gifts from clients (other than token gestures); and,

nomination as a beneficiary under a client’s will (unless such nomination is made without the Authorised Representative’s prior knowledge).

Family clients

5. The restrictions that apply under Key Principles 2, 3 and 4 do not apply where the client is:

an immediate relative of the Authorised Representative, for example, father, mother, spouse/partner, child, sister or brother, grand-child or companies or trusts controlled by any such person;

a father-in-law, mother-in-law, sister-in-law, brother-in-law, daughter-in-law or son-in-law of the Authorised Representative, or companies or trusts controlled by any such person; or,

the Authorised Representative’s own family company/trust.

Please Note: Whilst the restrictions above do not apply to family clients, Authorised Representatives are still required to treat family clients as retail clients for the purposes of providing advice and services and therefore must comply with all relevant Licensee Standards. This includes providing family members with a Financial Services Guide (FSG), fact finding, having and demonstrating in the advice document a reasonable basis for advice, documenting the advice and provision of a Product Disclosure Document (PDS).

The approval process

6. An Authorised Representative wishing to obtain Licensee approval of an appointment, authority or relationship must provide Libertas Financial Planning with full details, in writing, of the nature of the



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proposed arrangement using Libertas Financial Planning Approval of an Appointment, Authority or Relationship Form.

7. Licensee approval will not be automatically granted. Libertas Financial Planning decision will be based on assessment of the relevant risks associated with the arrangement.

8. Where written Licensee approval of an appointment, authority or relationship has been granted, the Authorised Representative must:

strictly comply with any conditions, reporting requirements or supervision arrangements outlined in the written approval; and

advise Libertas Financial Planning when an approved appointment, authority or relationship is terminated.

9. Licensee approval, where granted, is client specific and does not authorise the Authorised Representative to enter into similar arrangements with other clients.

Transition of existing authorities and relationships

10. An Authorised Representative who holds an authority, appointment or an existing relationship that falls within the scope of Key Principles 2 and 3 and does not have Licensee approval has the option of terminating the arrangement or seeking Licensee approval for its continuation.

11. If the arrangement is to be terminated, the Authorised Representative is required to:

provide Libertas Financial Planning with full details, in writing, of the arrangement;

organise the termination of the arrangement as soon as practicable, or as instructed by Libertas Financial Planning ; and

inform Libertas Financial Planning , in writing, when the arrangement has been terminated.

Alternative Remuneration and Other Benefits

In this context, Libertas Financial Planning has identified areas of potential or actual conflict as those areas where Libertas Financial Planning or Authorised Representatives receive any benefits and/or remuneration which relate to the provision of a financial service to clients.

Disclosure On the condition that they did not represent a serious conflict, Libertas Financial Planning has determined that most a benefits and associations that lead to conflicts of interest in the provision of advice to clients can be adequately managed through ‘clear, concise and effective disclosure’ within the Financial Services Guide and Statement of Advice documents.

Accordingly, all disclosure documents utilised by Libertas Financial Planning includes ensuring that disclosure is made in dollar terms where practicable, or as a percentage or worked example and inclusive of:

A statement as to how the association or benefit effects the consumer, and the nature of the benefit or association.

Any qualifying criteria in terms of volume targets/criteria for provision of benefit.

Details of who is to receive the benefit (e.g. licensee or representative)

In line with the Industry best practice on Rebates and Related Payments, all volume bonuses, marketing allowances and fee rebates must also be referred to and disclosed as commission within disclosure documents.

General Advice

Where general advice is provided to retail clients, a Financial Services Guide is to be provided prior to providing the advice, in line with Corporations Act requirements. This will ensure that relevant conflicts of interest relating to the provision of general advice are disclosed to the client (within the FSG), prior to the provision of advice.

Where advice is given in a public forum, disclosure is to be inclusive of information about the way in which representatives are remunerated, as well as information that further disclosure is provided within the Financial Services Guide and Statement of Advice if the client is to proceed with personal advice. A copy of the General Advice Disclaimer for advice in a public forum is contained at Appendix 3 of Corporate Documents.

Personal Advice

Where personal advice is provided to retail clients, a Financial Services Guide and Statement of Advice will be provided, inclusive of all relevant disclosures relating to potential, actual or perceived conflicts of interest. The Statement of Advice will include disclosure relevant to the specific advice provided.



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It is a requirement under s. 961 of the Corporations Act that personal advice must at all times be in the best interest of the client and appropriate for the client. In addition to ensuring all conflicts of interest in the form of remuneration, benefits or associations are disclosed, Libertas Financial Planning must also ensure that where personal advice is provided to retail clients, that there is a reasonable basis for products selection, and that the product is in the best interest of the client and the product is appropriate in light of the client’s needs, circumstances and objectives.

Recommendations must also include a summary of alternative products considered, and why this wasn’t appropriate, as well as full disclosure of the advantages and disadvantages of the product recommendation.

Maintenance of Register In addition to the regulatory requirement to disclose, Libertas Financial Planning has also adopted industry best practice to maintain a Public Register for certain benefits received.

Accordingly, from 1 January 2007, Libertas Financial Planning and its representatives must maintain a Register of Alternative Remuneration. In line with industry requirements, the receipt of the following benefits must be included on the Register:

Non-volume related conferences

Sponsorship payments for client seminars, licensee functions, PD days, conferences, etc >$300

Entertainment > $300

It is Libertas Financial Planning Policy that all representatives must maintain an up-to-date Alternative Remuneration Register where they are in receipt of the above benefits.

The Register must be updated at least quarterly, and must be made available for inspection by Libertas Financial Planning , or upon request, by a client. Clients must be made aware of the existence of the Register, as well as their ability to sight the Register. Accordingly, Libertas Financial Planning has included this information within both the Financial Services Guide and Statement of Advice templates.

Banned Benefits Libertas Financial Planning has determined that certain benefits received by Libertas Financial Planning or representatives create an undue conflict of interest that must be managed through avoidance of the conflict.

Libertas Financial Planning has adopted the industry best practice Code of Practice stance on avoidance of conflicts, and subsequently has adopted the policy that the following benefits cannot be received (or provided where relevant) by representatives:

Volume based conferences, travel and accommodation

Cash/gifts valued over $300

Provision of hardware and office accommodation

Unbundled business tools, e.g. commercially available software.

Where benefits of this nature were provided (or contracted to provide) prior to 1 August 2004, there is a transition period until the 31 December 2005 for these benefits to be ‘wound up’. However, where an Authorised Representative has or will receive benefits under this arrangement, they must be listed on the Authorised Representative’s Non-Complying Register.

Monitoring Representatives will be reviewed on at least an annual basis as part of Libertas Financial Planning Supervision Program to ensure conflicts of interest is being adequately managed. Monitoring will include a review of:

The maintenance of an Alternative Remuneration Register

The provision of appropriate disclosures within Statement of Advice documents.

Authorised Representatives will also be asked questions to ensure that no ‘banned’ benefits have been accepted.

On an ongoing basis, recommendations will be vetted and reviewed to ensure that all personal advice provided to retail clients is appropriate to the client’s needs, and inclusive of all relevant disclosures of interests.

Non-compliance Where non-compliance with conflicts of interest arrangements is identified via supervision and monitoring, the matter may be addressed via a warning, and revocation through amending disclosure, or updating register. If the non-compliance has resulted in a serious conflict of interest, then the breach will be noted as significant, and ASIC duly informed.



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In line with the Supervision and Monitoring policy, identification of a serious breach by a Representative may lead to the implementation of a Supervision Program, or revocation of authorisation.





Libertas Financial Planning Fee for Advice Policy


Corporations Act – particularly Chapter 7

RG 181 – Licensing – Managing Conflicts of Interest



DERIVATIVES Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of Libertas Financial Planning , and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy outlines the approval and accreditation procedures for Derivatives and process required by Libertas Financial Planning when Authorised provide advice and/or financial services relating to Derivative products.

This Policy must be read in conjunction with Libertas Financial Planning Derivatives Guidelines and Libertas Financial Planning Listed Securities Policy.

A breach of this Policy by a Authorised Representative or any associate of the Representative may lead to the following actions:




Libertas Financial Planning initiating and implementing a comprehensive supervision and monitoring program covering all aspects relating to the provision of advice (and other related commercial activity of the authorised representative) and notifying ASIC;




Definition Derivatives for the purpose of this standard include:

Warrants;

Exchange Traded Options (ETOs);

Low Exercise Price Options (LEPOs); and

Futures



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The Derivatives Guidelines sets out the acceptable use of Derivatives and the approved strategies including the risk parameters.

This Policy does not apply when Self Managed Superannuation Funds are borrowing via an Instalment Warrant structure. Please refer to Libertas Financial Planning Borrowing by Self Managed Superannuation Funds Policy.

Approval and Accreditation Process

1. Authorised Representatives must obtain specific approval from Libertas Financial Planning Compliance prior to providing any financial service on Derivatives by completing a Derivatives Approval Form. Approval is not guaranteed and will be granted on a case by case basis giving consideration to the Authorised Representative’s previous compliance record, their office procedures and processes and their existing skills, experience and knowledge in this area of advice.

2. Authorised Representatives must read and understand the Derivatives Policy before completing and signing the Derivatives Approval Form.

3. Authorised Representatives must successfully complete the Specialist Accreditation for Derivatives and Listed Securities.

4. Authorised Representatives providing advice on Derivatives may be reviewed by Libertas Financial Planning Compliance more frequently than annually.

Permitted use of Derivatives

5. Derivatives must only be recommended in accordance with the terms of the Derivatives Policy.

6. Authorised Representatives must maintain a current Derivatives Register and make this available to Libertas Financial Planning Compliance on request.

7. Derivatives must only be recommended where the Authorised Representatives has an ongoing service agreement with the client.

Approved and Non Approved Derivatives

8. Authorised Representatives must only recommend Derivatives on the Derivatives Approved Products List. For clients with existing non approved Derivatives Authorised Representatives must follow the process for existing clients with non approved products contained in Libertas Financial Planning Non Approved Products Policy.

9. If there is any doubt as to whether a Derivative product is approved or not, Authorised Representatives must seek guidance from Libertas Financial Planning Research.



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The Advice Process

Authorised Representatives must comply with all other applicable Licensee Policies. Some of the key and specialist requirements include:

10. If making a borrowing recommendation to Self Managed Superannuation Fund members or Trustees additional requirements apply. Please refer to Libertas Financial Planning Borrowing by Self Managed Superannuation Funds Policy.

11. As Derivatives are complex and sophisticated products Authorised Representatives must take particular care with clients who have special circumstances and needs in accordance with Libertas Financial Planning Clients with Special Circumstances and Needs Policy;

12. Providing the client with a Financial Services Guide (FSG) prior to providing any financial service please refer to Libertas Financial Planning Financial Services Guide Policy;

13. Using an appropriate Fact Find or Client Profile in accordance with Libertas Financial Planning Fact Finding and Other Investigations Policy. The data collected in relation to the client’s risk tolerance must demonstrate that Derivatives are a suitable financial product in order to achieve the client’s goals and objectives in line with their tolerance to risk;

14. Having and demonstrating that the advice is in the best interest of the client. The client must have a risk profile that can tolerate the volatility associated with having 70% or more of their investments in income producing growth assets. Authorised Representatives should consider the recommendation of a Derivative on a client by client basis. The fact that a particular Derivative or type of Derivative is approved does not mean it is appropriate for all clients;

15. Authorised Representatives must comply with Libertas Financial Planning Investment Guidelines and Asset Allocation Guidelines. Please refer to Libertas Financial Planning Statement of Advice Policy for the permitted variances and the action required by Authorised Representatives where these limits are exceeded.

16. Preparing and providing the client/s with appropriate advice via a Statement of Advice (SOA) in accordance with Libertas Financial Planning Statement of Advice Policy. In addition the Derivatives Strategy template and the Costs and Risks of Derivatives must be included. Please note Authorised Representatives are not permitted to use Records of Advice (ROAs) or provide limited advice for Derivatives.

17. Providing the client/s with a current Offer Document for primary issues and managed self funding instalment warrant products. In the case of secondary issues, the Authorised Representative should direct the client to the specific location on the ASX website to access the relevant Offer Circular or PDS and if it is not listed there then refer them to the direct location on the issuer’s website.

18. Authorised Representatives must provide their clients with the relevant ASX educational “Understanding” series of booklets relating to Warrants, Options and Futures depending on the specific recommended strategy before providing advice to the client. These booklets are available on the ASX website at www.asx.com.au

19. Ensure the client completes and signs the appropriate ASX forms or Risk Disclosure Statements as set out in their Operating Rules. Copies of these must be kept on the client file.

20. Clients must be provided with six monthly open position statements and offered a review each six months (unless the client has advised the Authorised Representative in writing they do not wish to be offered a review). All requirements of Libertas Financial Planning Client Review Process Policy must be met.

Please Note: Six monthly open position statements are not required for clients invested in managed self funding instalment warrant products.

Ongoing Review

21. Clients need to appreciate the potential for a trading decision before the expiry of a Derivative. Accordingly Authorised Representatives must ensure that expiry dates are closely monitored and that recommendations are made in time for the client to make a decision regarding their position (and complete any required paperwork), which may include a market transaction to close out the position.

22. In the case of certain Derivatives, such as Futures and written Options, margin obligations will apply. Whilst many clients may be asked to lodge collateral to cover ongoing margin calls, it is nevertheless important that the Authorised Representative request the mark to market margin amounts for their particular client from the executing broker in order to monitor the overall change in value of the clients’ position.



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23. Authorised Representatives must therefore have written procedures in place to ensure that expiry dates are closely monitored, regular information from the approved brokers are obtained on the level of liquidity in the market so that the client can exit the strategy if required and that mark to market margin accounts are obtained if margin obligations apply.

Gearing

24. Authorised Representatives are not permitted to recommend a gearing strategy for Derivatives. Internally geared instalment warrant products such as the Macquarie Self Funding Instalment Warrants fund are permitted. When recommending these products Authorised Representatives must also comply with the requirements set out in Libertas Financial Planning Internally Geared Funds Policy.

Execution Only Transactions

25. Execution only transactions are permitted when carried out in accordance with Libertas Financial Planning Execution Only Services Policy.


Libertas Financial Planning Listed Securities Policy

Libertas Financial Planning Borrowing by Self Managed Superannuation Funds Policy




Libertas Financial Planning Clients with Special Circumstances and Needs Policy

Libertas Financial Planning Client Identification Procedure Policy

Libertas Financial Planning Internally Geared Funds Policy


Libertas Financial Planning Financial Services Guide Policy



RG 36 Licensing – Financial Product Advice and Dealing

RG 146 – Licensing:Training of financial product advisers

RG 175 – Licensing: Financial product advisers – Conduct and Disclosure

DIRECT PROPERTY Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).




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Libertas Financial Planning Policy Libertas Financial Planning believes it is important Authorised Representatives are able to provide their clients with strategic advice about direct property in the context of their overall financial strategy.

However, Authorised Representatives are not real estate specialists. This area of advice exposes Authorised Representatives and Libertas Financial Planning to significant risk if inappropriate advice is given or where the advice is not in the best interests of the client. To reduce the business risks in relation to this area of advice, this Policy outlines the advice process, documentation and financial modelling requirements when providing Direct Property advice.

Libertas Financial Planning strongly suggests that Authorised Representatives engage the services of a licensed real estate specialist to execute the purchase and/or sale of any direct property.

Definitions

In this Policy, Direct Property means real estate assets held directly by the client, or proposed to be acquired by the client, including the following:

vacant land (residential and/or commercial);

commercial or industrial real estate;

international real estate;

residential real estate (investment and/or owner occupied).

excluding real estate purchased for development/redevelopment.

Direct property advice means Strategic Advice to a client to buy or to sell, or not to buy or not to sell, either a specific direct property asset or direct property as an asset class.

In this Policy, Strategic Advice means advice about the benefits or disadvantages of buying, retaining or selling a specific direct property asset or direct property as an asset class in the context of the client’s overall financial circumstances and objectives. Strategic advice will generally address one or more of the following issues: cash flow, liquidity, diversification and taxation purposes. The following are examples of strategic advice:

Sale or transfer of a direct property:

it might be beneficial for a client to have the transfer of a business property to a Self Managed Superannuation Fund for tax purposes;

the sale of a property to reduce concentration risk and use of the net proceeds to diversify into other asset classes;

the sale of a property because it doesn’t produce sufficient income to fund pension payments; or

the sale of a property so the client can invest the net proceeds to generate enough income to meet their living expenses.

Purchase of direct property:

a self managed superannuation fund may consider the acquisition of commercial premises for taxation purposes;

A client that has a large percentage of their portfolio in shares may consider purchasing direct property for diversification purposes.

Strategic advice does not include advice about the individual features of a specific direct property, other than capital expenses, ongoing costs and income.

Advisory Guidelines

1. Authorised Representatives are permitted to provide Strategic Advice on direct property where the client has specifically asked for advice in relation to direct property, or where the client has existing direct property assets.

2. Authorised Representatives must not give advice on the individual features of a specific direct property. Advice must not, for example, canvass the merits or otherwise of a specific direct property in relation to likely purchase or sale price, location, neighbouring properties, structures, contents, or future town planning projects. Authorised Representatives must recommend clients deal only with a reputable registered real estate agent for advice in this area.

3. Any direct property advice must take into account the client’s personal and financial circumstances, risk profile, any preference to direct property as an asset class, income and growth projections, depreciation allowances (where applicable), any acquisition or disposal costs and ongoing



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maintenance and other costs where applicable and comply with all requirements consistent with Knowing Your Client (section 3 –The Advisory Process).

Written Advice Requirements

4. Where the direct property advice involves borrowing funds to purchase a direct property outside of superannuation then the Authorised Representative must also meet the requirements of Libertas Financial Planning Gearing Policy.

5. Where the direct property advice involves borrowing by a self managed superannuation fund to purchase direct property the Authorised Representative must also meet the requirements set out in Libertas Financial Planning Limited Recourse Borrowing by Self Managed Superannuation Funds Policy.

6. Where recommendations are being made in relation to international property, Authorised Representatives must make reference to the fact that the client must consider any applicable international tax laws, residency issues and currency risk. Clients must be advised to confirm proposed tax outcomes and residency issues with their tax Representative.

7. Rental income projections must be based on actual figures, the clients requested assumptions or on 48 weeks rather than 52 weeks income to factor in the possibility of the property not being fully rented all year.

8. The cost of purchasing a direct property must be included in any financial modelling projections where relevant. For example, stamp duty, legal fees and loan establishment costs must be added to the purchase price to determine the total cost of the direct property.

9. The cost of selling a direct property must be factored into any financial modelling projections where relevant. For example, real estate agents fees, capital gains tax, legal costs and any other disposal costs must be deducted from the sale price to determine the net sale price of the direct property.

Financial Modelling

10. Projections for ongoing property ownership must include rental income, capital growth, land tax, interest on loans, insurance, rates, depreciation allowances (where applicable), repairs and any other relevant holding costs.

11. Authorised Representatives must provide annual financial projections based on a minimum of 7 years.




Libertas Financial Planning Limited Recourse Borrowing by Self Managed superannuation Funds Policy


EMPLOYER SPONSORED SUPERANNUATION Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its Authorised Representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by Authorised Representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).

To ensure advice is in the best interests of the client, Libertas Financial Planning must be able to demonstrate that there has been adequate investigation into the financial products and strategies on which the advice to the client is based. Breach of this requirement by either an authorised or a licensee, is a strict liability offence under the Criminal Code.



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Libertas Financial Planning Policy This Policy outlines the advice process and documentation required when providing Employer Sponsored Superannuation advice to both corporate clients and members.



the Authorised Representative being required to contact all affected clients in order to reconstruct their recommendation in accordance with Libertas Financial Planning Policy and Procedures;

Libertas Financial Planning initiating and implementing a comprehensive supervision and monitoring program covering all aspects relating to the provision of advice (and other related commercial activity of the Authorised Representative) and notifying ASIC;



Advisory Guidelines The following advisory guidelines must be adhered to by Authorised Representatives who provide advice:

Definitions

Corporate Superannuation funds for the purposes of this Libertas Financial Planning Policy covers:

Public offer funds – funds open to the general public. Professional trustees manage these funds on behalf of the members.

Industry funds – typically large funds operated within specific industries where employers in a given industry contribute for their employees, often as a requirement of an industrial award. Some industry funds may be open to the general public.

Corporate funds - funds established by an employer (or group of employers), usually for employees only

Public sector funds – funds or schemes established under relevant laws, which are only open to government employees.

Corporate Client – representatives of the employer, Trustees or Policy Committees.

Accreditation

1. Authorised Representatives must successfully complete the Corporate Superannuation accreditation before providing Corporate Superannuation advice to a Corporate Client.

Tender Process Corporate Clients

2. Authorised Representatives can include in the tender process:

funds that are on the Licensee’s Approved Investments list;

funds that are in accordance with the Approved Corporate Super Tender Process;

funds requested by the Corporate Client for inclusion in the tender (including their current fund); and

funds that the Licensee General Manager has authorised for use in accordance with Libertas Financial Planning Non Approved Products Policy.

3. The Authorised Representatives must obtain appropriate research on all funds in the tender process as this forms part of having a reasonable basis for any resulting recommendations. Where the fund is not approved Authorised Representatives must conduct research in line with Libertas Financial Planning Non Approved Products Policy.

4. If any fund included in the tender is not on the Licensee’s Approved Product List, the Authorised Representative must clearly document this fact to the Corporate Client in the tender document.

Advice Process Corporate Clients

5. Authorised Representatives must comply with all relevant Authorised Representative to client advice requirements detailed within other Licensee Standards unless the Corporate Client meets the requirement of a wholesale client and the Authorised Representative has Licensee approval to treat the client as a wholesale client in accordance with Libertas Financial Planning Wholesale Clients Policy.

6. Some of the key advice requirements when advising a Corporate client include:

Providing the Corporate client with a Financial Services Guide (FSG) before providing any financial service;



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Using an appropriate Corporate Super Fact Find/Client Profile and complying with all relevant requirements of Libertas Financial Planning Fact Finding and Other Investigations Policy. The Licensee has made available the Corporate Superannuation Client Profile for Authorised Representative use;

Having and demonstrating a reasonable basis for advice;

Preparing and providing the Corporate Client with appropriate advice via a Statement of Advice (SOA) in accordance with Libertas Financial Planning Statement of Advice Policy;

Providing the Corporate Client with a current Product Disclosure Statement (PDS) and any underlying PDSs; and

The Corporate Client should be offered a review annually (unless the client has advised the Authorised Representative in writing they do not wish to be offered a review).

Non Approved Products – Corporate Clients

7. With respect to non approved products, all requirements of Libertas Financial Planning Non Approved Products Policy must be met by Authorised Representatives. Authorised Representatives can only recommend corporate super funds that are on the Licensee’s Approved Investments List, unless any of the stated exceptions within Libertas Financial Planning Non Approved Products Policy apply or the Authorised Representative has gone through the Approved Corporate Super Tender Process.

8. Authorised Representatives can take over the servicing rights for a corporate superannuation fund that is not on the Licensee’s Approved Products List providing the Corporate Client has directed (in writing) that the fund remains with the current product issuer/administrator and prior Licensee General Manager approval is obtained via the Approval to take over Servicing Rights for a Non Approved Corporate Superannuation Fund Form.

Switching Advice- Investigations and Research – Corporate Clients

9. In order to demonstrate a reasonable basis for switching advice Authorised Representatives must obtain information about the Corporate Client’s current fund in line with Libertas Financial Planning Fact Finding and Other Investigations Policy. Some of the key considerations include:

Acquisition and Disposal costs;

Loss of benefits to members;

Fees and premiums;

Insurance (coverage, continuation options and current state of insurability);

Fund Structure - Defined benefits versus accumulation fund;

Fund options on death, retirement or resignation of members;

Nominated beneficiary option;

Underwriting requirements (possible conditions or total decline of insurance cover for members);

Total and Permanent Disability (TPD) versus temporary salary continuance and

Any other significant consequences of switching the fund on members.

Advice Process - Members

10. Authorised Representatives must comply with all relevant advice requirements detailed within other Licensee Standards. Some of the key advice requirements when advising a member include:

Providing the member with a Financial Services Guide (FSG) before providing any financial service;

Using an appropriate Fact Find/Client Profile and complying with all requirements in Libertas Financial Planning Fact Finding and Other Investigations Policy;


Preparing and providing the member with appropriate advice via a Statement of Advice (SOA) or if applicable Record of Advice (ROA) in line with Libertas Financial Planning Statement of Advice Policy and Libertas Financial Planning Record of Advice Policy respectively; and

Providing the member with a current Product Disclosure Statement (PDS) and any underlying PDS’ if they have not received one from their employer.

Switching Advice- Investigations and Research – Members

11. In order to demonstrate a reasonable basis for switching advice Authorised Representatives should use the Licensee approved Employer Sponsored Switching Superannuation Checklist to obtain information about the member’s current fund in line with Libertas Financial Planning Fact Finding and Other Investigations Policy. Some of the key considerations include:



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Acquisition and Disposal costs;

Loss of benefits;

Fees and premiums;

Insurance (coverage, continuation options and current state of insurability);

Fund Structure - Defined benefits versus accumulation fund;

Fund options on death, retirement or resignation;

Nominated beneficiary option;

Underwriting requirements (possible conditions or total decline of insurance cover);

Total and Permanent Disability (TPD) versus temporary salary continuance and

Any other significant consequences of switching funds.

12. Authorised Representatives should source this information firstly from the member and then from any available PDSs, research material, annual reports and insurance policies. If the information cannot be obtained, the Authorised Representative must contact the client’s fund trustee to obtain this information after having the client sign the Information Release Form.

13. Care must be taken to ensure information is obtained on any employer plan, specific benefits or variations to standard benefits relevant to the member.

14. Authorised Representatives must make a file note detailing the enquiries made and keep copies of all information sourced on the client file.

Investment Option and Asset Allocation Advice - Members

15. Where a member is requesting advice solely on the underlying investment options within their fund this is deemed to be limited advice. The SOA/ROA must include a limited advice warning specific to this situation as set out in the licensee approved Scope of Advice template. All other requirements of Libertas Financial Planning Limited Advice Policy, Libertas Financial Planning Statement of Advice Policy and if applicable Libertas Financial Planning Record of Advice Policy apply.

Reviews – Members

16. The Licensee recommends as a matter of best practice that all members who have been provided with an SOA be offered an annual review.

Please note: If the member is paying an annual financial planning advice fee then the Authorised Representative must provide the agreed services documented in the member’s service agreement.

Related Libertas Financial Planning Planners Policies





Libertas Financial Planning Wholesale Clients Policy

Libertas Financial Planning Limited Advice Policy


ASIC RG 175 – Licensing: Financial product advisers – Conduct and Disclosure

ASIC RG146 – Licensing: Training of Financial Product Advisers

ASIC information release IR 04-63 ASIC campaigns against churning and mis-selling.

Corporations Act 2001 – particularly Chapter 7 (sections 761G (6), 1017C, 945A and 947D) and associated Regulations

EXECUTION ONLY Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).



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Libertas Financial Planning Policy Libertas Financial Planning understands that in some situations Authorised Representatives may be requested to provide a financial service by merely carrying out instructions to buy or sell a specific financial product on behalf of a client. Execution only services or no advice transactions or services describe the situation where a Authorised Representative arranges the purchase or sale of a financial product (whether an Approved Product or not) without providing any advice.

Libertas Financial Planning has created comprehensive guidelines in relation to execution only services provided to clients. It is Libertas Financial Planning policy that Authorised Representatives must adhere to the following advisory guidelines in the provision of execution only services.

Examples that are execution only services

Without the Authorised Representative’s prompting, a client says to the Authorised Representative that she wishes to invest a specified sum of money in a particular named investment product identified by her and wants the Authorised Representative to arrange for the placement of that investment. The Authorised Representative provides her with the PDS for that product and requests that she completes the application form. The Authorised Representative does not assist her in determining the client’s investment strategy or the amount to be invested. The Authorised Representative submits the application form on her behalf.

Without the Authorised Representative’s prompting, a client says to the Authorised Representative that he wants to invest a specified sum in a particular named investment product identified by him and he wishes the Authorised Representative to arrange for the placement of that investment, subject to the Authorised Representative confirming the performance figures of that product over the last 3 years. The Authorised Representative provides the person with the PDS for that product and refers him to the relevant page in the PDS with the past-performance information (without further comment) and asks him to complete the application form if he is satisfied with the product and wants to proceed with investing. The Authorised Representative does not assist him in determining his investment strategy or the amount to be invested. The Authorised Representative submits the application form on his behalf.

Without the Authorised Representative’s prompting, a client provides the Authorised Representative with a fully completed insurance proposal form for term life insurance together with payment and requests that the Authorised Representative lodge the proposal on their behalf. The Authorised Representative does not assist the client to determine the amount of cover required or the method of payment (stepped or level premiums). The Authorised Representative submits the application on the person’s behalf.

Examples that are NOT execution only services:

A person says to the Authorised Representative that she wishes to invest a specified sum in a “good” investment product. The Authorised Representative provides the person with the PDS for a particular investment product and requests that she completes the application form if she wants to proceed. In this case, by providing the PDS for a particular product where the client/person has not identified the specific product, it is likely that the Authorised Representative has provided financial product advice by making an implied recommendation for the particular investment product.

Without the Authorised Representative’s prompting, an existing client provides the Authorised Representative with a fully completed insurance proposal form for term life insurance together with payment and requests that the Authorised Representative lodge the proposal on his behalf, but asks the Authorised Representative to confirm that this is a “good policy”. The Authorised Representative tells the client that it is “not a bad policy” and submits the application on the client’s behalf. In this case, the Authorised Representative has provided financial product advice.

Advisory Guidelines

1. A high volume (more than 10% of annual total client transactions) of Execution Only Services should not occur in any practice unless a clear and documented reason exists to substantiate the provision of services on this basis.

2. Gearing cannot be proposed or implemented on an execution only basis under any circumstances.

3. Prior to providing an execution only service the Authorised Representative must provide the client or have provided the client with a current FSG.



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4. Authorised Representatives or their staff must not take any action, or make any comment which could be interpreted as a personal recommendation, advice for a specific purpose, or general advice in respect of execution only services. This includes (among other things) the Authorised Representative not considering the client’s personal circumstances, needs or objectives and not providing a PDS unless the client has (without the Authorised Representative’s prompting) identified the specific product for which the client wants the Authorised Representative to arrange placements/investment.

5. Authorised Representatives must ensure that the client has a copy of the current Product Disclosure Statement/Prospectus (if applicable). If the instruction is to add to an existing investment there is no need to provide a further PDS.

6. Transactions must be implemented within 24 hours unless otherwise agreed by the client and documented via a file note.

Providing product information

7. Authorised Representatives are permitted to provide factual information on a specific financial product or type of financial product such as cost, estimated cost, rate of return or provide research, a quote or PDS at the client’s request, as this would generally not constitute personal advice.

8. An execution only service can be provided where the client subsequently asks the Authorised Representative to arrange for the issue of a financial product as a result of a quote or PDS being provided and no advice is provided.

9. However if the client requests or requires personal advice in relation to the financial product, then the normal financial planning advice process must be followed including the written advice requirements.

Forms & file notes

10. The Authorised Representative must ensure that clients sign an Execution Only Form for all execution only services.

Exception: Where an existing client has only one product and one underlying investment option (and the execution service relates to this product and underlying investment option), the transaction may be recorded using a file note only. For example a file note is all that is required, where the client has an existing superannuation fund that is fully invested in the balanced option and they want to make a SGC contribution or a withdrawal.

11. As a defence for complaints it is recommended (where possible) that Authorised Representatives obtain a signed form prior to implementing a transaction.

12. Where it is not possible to obtain the signed form prior to implementing the transaction, Authorised Representatives must document the client’s instruction via a file note or obtain written instructions from the client via an email or fax and then have procedures in place to ensure that the form is signed and returned by the client. Authorised Representatives are required to follow up unreturned forms at least twice by either phone or in writing and document these attempts on the client file.

13. In special circumstances Libertas Financial Planning may provide written authorisation to a Authorised Representative to provide ongoing execution only services to clients for listed securities using a modified form of the procedures above. If that authorisation is provided, the Authorised Representative must follow the procedures set out in the authorisation. Authorised Representatives must apply for written authorisation by emailing Libertas Financial Planning detailing the client name/s, the number of estimated transactions each year and the reasons why authorisation is required.

Fees

14. Upfront and ongoing commissions or fees must be disclosed to the client in the Execution Only Form.





Regulations


RG 175 Licensing: Financial Product Advisers – Conduct and Disclosure

Corporations Act – Sections 766A, 766B – in particular 766B(1), (6) and (7), 766C and 941

EXTERNAL PORTFOLIO ADMINISTRATION SERVICES



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Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Libertas Financial Planning understands that in some circumstances external portfolio administration services may be appropriate for your clients however due care needs to be taken to ensure that a tax agents service is not inadvertently provided and that client’s understand their obligations before agreeing to use such services.

Definitions

An External Portfolio Administration Service (Service) is any portfolio administration service that is not approved by Libertas Financial Planning and is designed to provide tax and investment reporting on client investments.

A Tax Agent Service is any service that relates to:

ascertaining or advising about the liabilities, obligations or entitlements of an entity under a taxation law; or

representing an entity in their dealings with the Commissioner of Taxation (Commissioner); and

that is provided in circumstances where it is reasonable to expect that the entity will rely on it to satisfy liabilities or obligations under a taxation law or to claim entitlements under a taxation law.

Client Criteria

1. External portfolio administration services can be recommended by Authorised Representatives where the service is provided in accordance with the key principles set out in this Policy.

2. In all likelihood, the service provider will require you to execute an agreement to subscribe to their service. In doing so:

You or your business will be the contracting party but not as a Authorised Representative of Libertas Financial Planning – Libertas Financial Planning name must not appear on the agreement;

You must not in any way bind Libertas Financial Planning to the terms of the agreement;

Before you execute the agreement, carefully consider its terms and if appropriate, seek your own legal advice. Important terms may include the obligation to verify data; confidentiality of data; termination and liability of the service provider; and

You must not agree to have the Service co-branded. Advisory Guidelines

3. External portfolio administration services must not be used for Managed Discretionary Account clients.

4. Clients must have the capacity and experience required to check all transaction entries against the transactions reports received by them where tax reports are to be provided to their accountant.

5. The Service can only be recommended to clients who will be using the services of a tax agent to prepare their tax return unless the Authorised Representative has only subscribed to the external portfolio administration service for the sole purpose of providing portfolio valuation reports that do not contain any tax data.

6. The Service must be recommended by way of a Statement of Advice (SOA) as part of your normal strategic and financial product advice where the Service will be used for tax reporting purposes.

7. The SOA must detail the Service and the client’s obligations particularly in regard to checking the reports for accuracy against their own records.

8. It is the Authorised Representative’s responsibility to pay for the service by collecting the fees from the client in accordance with Libertas Financial Planning Fee For Advice Policy.

Operating the Service

9. Co-branding of the Service with the Authorised Representative’s business and/or Libertas Financial Planning details on reports is not permitted as they may contain tax advice that falls under the definition



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of a tax agent service or may give the client the impression that a report was prepared by you, your business or Libertas Financial Planning . This means that the Authorised Representative’s name, Authorised Representative’s business name and Libertas Financial Planning name must not appear on any webface or publication, including any report.

10. Clients must have Read and View Only access to their account.

11. Where clients have enquiries regarding the Service (other than about functionality) they must be referred to either the service provider or the client’s tax agent.


Libertas Financial Planning Fee for Service Policy


Tax Agents Services Act 2009

FACT FINDING AND OTHER INVESTIGATIONS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of Libertas Financial Planning , and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Authorised Representatives are required to demonstrate a reasonable basis for providing their advice and that they are acting in the best interests of their client under the Corporations Act. To meet this obligation adequately, Authorised Representatives must have sufficient information about the client, or make reasonable inquiries to obtain information from the client.

This Policy sets out Libertas Financial Planning requirements for Authorised Representatives in relation to making reasonable inquiries and determining the client’s relevant personal circumstances prior to providing advice.







Advisory Guidelines

The following advisory guidelines must be adhered to by Representatives who provide advice:

Fact Find/Client Profile

1. Authorised Representatives must use a Libertas Financial Planning approved Fact Find/Client Profile, or similar document approved by Libertas Financial Planning Compliance.

2. The Fact Find/Client Profile and other client information relevant to advice provided by the Authorised Representative (including the client’s tolerance to risk where applicable) must be retained on the client file in accordance with Libertas Financial Planning Client Files Policy.

Information required to be collected



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3. Authorised Representatives are required to consider the following relevant factors when collecting client information.

Relevant factors Fact Finding Requirement

Potential impact of inappropriate advice on the client

More extensive client inquiries are likely to be necessary where the potential negative impact on the client is likely to be relatively serious if the advice is inappropriate (and the client acts on the advice).

Complexity of the advice Less extensive client inquiries are likely to be necessary where the advice is for a relatively simple purpose, rather than where the advice involves complex financial products, classes of financial product or strategies (including tax-related strategies).

Financial literacy of the client The client inquiries requirement will involve attempting to resolve and clarify the client’s objectives where the client:

(a) has limited financial understanding or knowledge;

(b) has conflicting objectives; or

(c) is confused about their objectives or has difficulty articulating them.

4. The level of information required from clients will vary and the Authorised Representative must assess what is adequate information in each case. The following information in relation to the client’s circumstances, needs and objectives would generally be required when advising clients.

Income/Expenses Retirement benefits expected

Retirement Income Cash Flow

Capital growth Investment Preferences

Employment & Security

Expected Retirement Age

Security Tolerance to Risk Family Commitments

Investment time horizon

Personal Details Existing Investments & Insurance

Assets & Liabilities Taxation Position

Social Security Estate Planning Liquidity

5. The client’s financial goals and objectives must be measurable therefore Authorised Representatives are required to document goals and objectives in dollar values together with a corresponding timeframe. Authorised Representatives are encouraged to assign a level of importance to goals and objectives, particularly in cases where it is unlikely that all goals and objectives can be achieved. This may assist with any necessary trade off discussions with the client.

6. If the client is seeking advice for a specific need or objective, then only the relevant information needs to be recorded.

Completing the Fact Find/Client Profile

7. Where the client does not want to give personal information to the Authorised Representative, a verbal warning should be given and the Fact Find/Client Profile noted at the time the client declines to provide all of the personal information considered relevant by the Authorised Representative. Regardless, the warning must be provided at the time advice is provided, for example, included in written advice documents or for time critical advice provided verbally. Please refer to the General Advice Warnings & Core Disclosure document for a suitable verbal warning. Libertas Financial Planning approved Scope of Advice template includes a suitable written warning. The Authorised Representative must consider if they are in a position to provide suitable advice without the relevant information.



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8. Where the client is unable or unwilling to provide information required, the relevant sections in the Fact Find/Client Profile must be clearly crossed out with an appropriate comment written across the section. For example “Client did not wish to disclose this information”.

9. Any section of the Fact Find/Client Profile which is not completed because it is not applicable to the advice required by the client must be crossed through and marked “Not applicable”. No sections should be left blank. If a section is marked “Not applicable”, the Authorised Representative should indicate the reason for this by giving a brief explanation, for example, “Not eligible for Centrelink benefits”.

10. The Fact Find/Client Profile and Privacy Acknowledgement must be signed by both the client and Authorised Representative. Where possible all parties to the fact find/client profile must sign. If one party is not at the appointment at the time the information is collected about them the Authorised Representative must arrange to obtain their signature at the next opportunity.

Risk profiling

11. The risk profile of the client that measures their tolerance to risk, must be assessed in all circumstances where investment advice is being provided, even if the client does not provide all information or requires limited advice. Through appropriate questioning, the Authorised Representative must determine the client’s tolerance to risk having particular regard to issues such as performance, inflation, volatility, taxation and liquidity and the level of involvement the client wants.

12. Libertas Financial Planning does not mandate any particular method or tool for assessing the client’s attitude or tolerance to risk. Libertas Financial Planning approved Fact Find/Client Profile have multiple choice style questionnaires. Regardless of which tool is used the client file must clearly demonstrate how the Authorised Representative has determined the risk profile/tolerance of the client and the subsequent asset allocation.

13. In instances where there are two clients seeking advice (for example husband and wife) the Authorised Representative should offer the clients the opportunity to complete a joint risk profile or separate risk profile assessments.

14. In some instances clients will have a different risk tolerance levels for their superannuation versus non superannuation assets. Authorised Representatives should consider having the client complete two separate risk profile assessments in these instances.

Updating client details

15. Before providing further advice the Authorised Representative must obtain updated information on the client’s personal and financial circumstances and objectives in order to have a reasonable basis for the further advice, or to confirm with the client that there have been no changes since the last advice.

Exception: When providing further advice via a Record of Advice in writing, you may be able to rely on the ‘assumed no significant change to circumstances’ provision where the client’s circumstances were reviewed and updated (where relevant) within the last 15 months. Please refer to Libertas Financial Planning Record of Advice Policy for guidance.

16. The minimum client information to be updated or confirmed:

Personal details (address/dependants/health/employment etc);

All goals and objectives (short/medium/long term);

Income & Expenses;

Assets & Liabilities;

Investments;

Insurances; and,

Risk Profile (Note: this is not applicable for insurance only advice).

17. The Authorised Representative can use one or a combination of the following methods to update or confirm client information:

Where minor changes have occurred the original Fact Find/Client Profile can be used however the changes must be clearly identified (For example, in a different colour pen) and the client and Authorised Representative both sign and date the Fact Find/Client Profile again;

Review Questionnaire;

Reverse Fact Find/Client Profile obtained from Libertas Financial Planning ;

Completing a standard Libertas Financial Planning approved Fact Find/Client Profile again;

Review Checklist;



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Progress Appointment File Note;

Obtaining updates from the client either in full or in part in their own format, for example, handwritten summaries and spread sheets;

File notes;

Updating the original or last comprehensive SOA document and having this initialled by both parties; and/or,

Obtaining information from other sources including reports from product providers and information supplied by the client’s other professional Authorised Representatives such as accountants & lawyers.

Other investigations

18. Having obtained information from the client about their relevant personal circumstances the Authorised Representative must then give consideration to those relevant personal circumstances and conduct an investigation of classes of financial products, financial products and suitable strategies to ensure the advice given is appropriate to the client.

19. All relevant information must be retained on the client file.

20. In the case where the Authorised Representative is:

Considering the replacement of one financial product with another;

Switching investment options (in part or full); or,

Redirecting future contributions from one super fund to another super fund.

the Authorised Representative must make reasonable inquiries about the disposal and acquisition costs, loss of benefits and other significant consequences to the client.

21. Reasonable inquiries include the following:

Requesting information and documents from the client and the product provider;

Accessing information via the product provider’s website such as Product Disclosure Statements;

Obtaining research from Libertas Financial Planning Research; and,

Using Libertas Financial Planning approved software

22. If the Authorised Representative cannot obtain the required information then they must decline to provide replacement product advice.





RG 175: Financial product advisers – Conduct and Disclosure

Corporations Act – Sections 947, 961

Corporations Act – Section 1311(1) - offence

Corporations Act – Generally Chapter 7 Part 7.7 Division 3 and associated Regulations

FEE FOR ADVICE Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy outlines the requirements of Libertas Financial Planning in relation to financial advice fees including Service Agreements, invoicing, disclosure and third party professional fees.



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Definitions

Advice Fee is a fee determined by the relationship between the client and the Authorised Representative. The fee relates to the advice and services provided by the Authorised Representative and is not governed by the relationship the Authorised Representative may have with a product issuer.

An advice fee has the following components/characteristics:

It is explicitly agreed between the client and the Authorised Representative;

It can be varied or terminated by the client in line with their agreement with the Authorised Representative; and

It is separately identified from any product or administration costs.

Commission(s) is any payment made by a product issuer to Libertas Financial Planning / Authorised Representative that cannot be changed by the client.

Investment & Superannuation products – The following product types are included in the definition of Investment and Superannuation Products and are subject to the fee for advice requirements:

Managed Investment & Superannuation Funds

Platform Administration Services

Self Managed Superannuation Funds

Listed Securities

Corporate Superannuation Plans

Annuities

Cash Products (including Cash Management Trusts/Accounts)

Term Deposits

The following product types do not fall into the definition of Investment and Superannuation Products and are deemed to be outside the scope of the fee for advice requirements at this time:

Risk (including when held within or linked to Superannuation)

Debt (including margin lending facilities)

An existing client is a person or persons who at the time of providing advice on a new product, is any client that a Authorised Representative is already receiving commission from an Investment & Superannuation product. (This may include clients acquired as part of a full or partial client book purchase.)

A new client is a person or persons who at the time of providing advice on a new product, is any client that an Authorised Representative is not already receiving commission from an Investment & Superannuation product. (This includes a client that an Authorised Representative is receiving commission only from risk and/or debt products.)

General requirements

1. Authorised Representatives must not charge advice fees from their own or their spouse’s or partner’s superannuation funds. Advice fees charged to the superannuation funds of other family members must not be uncharacteristic of the Authorised Representative’s typical fee charging model in order to avoid issues with the sole purpose test.

Note: Libertas Financial Planning suggests that any other business the Authorised Representative operates also take this approach when providing superannuation services.

2. Authorised Representatives must not accept commissions and/or brokerage for Investment and Superannuation products placed for new clients.

Commissions must be dialled down or, for those products that do not have a dial down facility, all commissions must be rebated to the client even where it requires the Authorised Representative to draw a cheque to do so (i.e. the commission must be shown as an offset against other fees or returned to the client as a cheque).

3. If an existing client requests Fee for Advice on Investment and Superannuation products, the Authorised Representative must offer that facility, after ensuring and demonstrating that it is in the best interests of the client.

4. Where clients incur fees or payments that do not have the characteristics/components of an advice fee, they must be disclosed as commission to the client.



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Service Agreements (or equivalent)

5. Advice fees must be explicitly agreed between the Authorised Representative and the client via a documented Service Agreement prior to providing the relevant advice or service.

6. Authorised Representatives must use a Service Agreement that includes the basis and the terms of any advice fees. There is no prescribed format for a Service Agreement other than ensuring the document is appropriate to the intended relationship between the client and the Authorised Representative, it outlines in sufficient detail the obligations of both parties, explains how the Authorised Representative will charge for the advice and services provided and what the clients will receive for the fee charged. It is also recommended that the Service Agreement outlines what is not provided or that it uses carefully chosen language, especially where a risk exists that a client may form an unrealistic expectation.

The Service Agreement and the client’s acceptance of it can be incorporated into a document that is provided before the relevant advice or service. For instance:

Using a separate Service Agreement for advice or service provided prior to the creation of a Statement of Advice (eg. Strategy Paper or meeting);

Using the Our Acknowledgements section of the Client Profile (or Fact Find) to agree the fee for preparation of a Statement of Advice; ,

Using the Statement of Advice to outline the ongoing Service Agreement and fees and using the Authority to Proceed section of the SOA as the written agreement.

7. Authorised Representatives must retain all Service Agreements (signed by the client) in the client file. The client must also be provided with copies of all Service Agreements.

Agreements.

8. Once signed, Authorised Representatives are legally obliged to deliver what is contained within the Service Agreement for the agreed fee.

9. The Authorised Representative and the client should review the Service Agreement annually to ensure that it remains relevant, the fees payable for the next year are reviewed and that it is consistent with the client’s expectations. If changes are required a new Service Agreement must be prepared and signed by the client before the changes take effect. Where no changes are required a file note to that effect will be sufficient evidence of this discussion.

Fee structure

10. Libertas Financial Planning does not advocate any particular method of calculation of advice fees – this is up to the Authorised Representative’s business model and the relationship between the Authorised Representative and the client. However, the Authorised Representative must make appropriate allowance for GST. Examples of fee calculation methodologies include:

A fee charged by the hour;

A set fee covering certain stages of the advice process (e.g. initial consultation, preparation of advice, implementation of advice and review);

A fee based on a percentage of funds invested or under advice;

A combination of the above.

Authorised Representatives should ensure they provide the clients with either an actual fee or in the case of an hourly fee their best estimate of the total. Where Authorised Representatives reserve the right to increase the fee should the client’s situation be more complex than originally anticipated, this should be clearly stated in the Service Agreement. If this occurs, Authorised Representatives should notify the client and gain acceptance before completing the additional work required.

11. Authorised Representatives must only charge clients via their superannuation fund for advice (product and strategic) and services provided in relation to that particular superannuation fund. Charging the superannuation fund for unrelated advice and services could expose the fund to a breach of the sole purpose test.

Invoicing and payment

12. Authorised Representatives are permitted to collect advice fees via various methods as detailed below:

A fee paid upfront in one lump sum directly by the client or via a product;

A fee paid in instalments directly by the client or via a product;

A fee charged via direct debit invoiced to the client.



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13. Fees (other than fees collected via a product issuer) must be invoiced on Libertas Financial Planning approved Authorised Representative letterhead and must include the words “Tax Invoice” for GST purposes.

14. The invoice must include a clear statement that all payments are to be made in favour of Libertas Financial Planning .

15. Under no circumstances is the payment to be banked into the Authorised Representative’s own bank account, or any portion of the fee withheld by the Authorised Representative.

16. Authorised Representatives are not permitted to accept cash as payment for Advice Fees.

Initial and ongoing advice fees

17. Initial advice fees must be disclosed separately to ongoing advice fees. The client must be able to clearly identify and understand the total cost for the advice and services (both initially and on an ongoing basis) and what they will receive in return for the fee being charged. This distinction between initial and ongoing fees must be made clearly in the Statement of Advice and in any separate Service Agreement.

Corporate Superannuation

In addition to the above principles, Authorised Representatives must also adhere to the following principles when providing corporate super advice.

18. The Service Agreement with the employer or policy committee (Corporate Client) must include an agreed set of services including the provision for an annual report to the Corporate Client.

19. The Corporate Client must have the ability to cease the fee being paid to the Authorised Representative.

20. The Corporate Client may pass on the negotiated service fee to members of the fund on the basis that this fee is explicitly disclosed on the members’ annual statements.

Third party professional fees

21. Third party professional fees (e.g. legal, accounting etc) may not be bundled with advice fees.

22. There are two options for billing and paying for third party professional fees:

Option 1 (preferred): The third party invoice is addressed to the client, and paid by the client to the third party professional directly.

Option 2: The Authorised Representative agrees to be legally liable for payment of third party costs and recovers these costs through separately listed disbursements via a tax invoice with the third party invoices attached.


Libertas Financial Planning Implementing Recommendations Policy



RG 175 Financial product advisers: Conduct and Disclosure

Corporations Act – particularly sections 942 and 947

FINANCIAL SERVICES GUIDE Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).




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Libertas Financial Planning Policy The Financial Services Guide (FSG) covers the requirements under the Australian Financial Services Licensing (AFSL) regime. The FSG is designed to ensure that clients are given sufficient information to enable them to decide whether to obtain financial services from Libertas Financial Planning and the Authorised Representative.

This Policy outlines when and how an FSG must be provided, what needs to be done after providing the FSG as well as record keeping obligations.








Content of an FSG

1. Authorised Representatives must use the FSG format and content approved by Libertas Financial Planning . The FSG must be edited and completed in accordance with instructions issued from Libertas Financial Planning .

Remuneration, commissions and other benefits must be disclosed by the Authorised Representative and/or Corporate Authorised Representative. This information must be detailed in the Commission and Fees section of the FSG.

Providing an FSCG to new/potential clients

2. Authorised Representatives must provide a current version of their FSG to all prospective clients, regardless of whether the client may require a financial service.

Please Note: Authorised Representatives providing general advice are not required to provide their FSG to a group of people who attend an Authorised Representatives workshop, presentation or seminar or to attach their FSG to client newsletters, brochures or general marketing material sent to a group of people.

3. An FSG can be provided via the following methods:

personally delivered face to face;

sent to a nominated address (including nominated email address);

faxed to a nominated fax number; or,

providing written notice of where the FSG can be found eg website address or hyperlink.

4. Authorised Representatives must provide the FSG in paper format unless the client expressly consents to receiving it via another method. This consent could be provided:

in writing (including email or signed acknowledgment); or

verbally and recorded in a file note.

When to provide an FSG

5. An Authorised Representative must provide a prospective client with the current version of their FSG as soon as practicable after it becomes apparent that a financial service is likely to be provided, and in any case, before providing the financial service (except in time critical cases). This will typically occur during the initial discussion as soon as it becomes apparent that the client will need, or may need, a financial service such as financial advice or an execution only service.

6. In time critical cases, the Authorised Representative should try, in the first instance, to provide the current version of their FSG to the client before providing advice (e.g. by fax or email). If this is not possible, the FSG must be provided as soon as practicable after the financial service has been provided and, at the latest, within 5 business days of providing that service.



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7. In time critical cases, disclosure must still occur before the financial service is provided in accordance with Libertas Financial Planning Time Critical Advice Policy. This includes disclosure of information in the FSG that is particularly relevant to the services being provided, the name and contact details of Libertas Financial Planning and Authorised Representative/s as well as details about remuneration and other benefits that may be payable and relationships and/or associations capable of influencing the advice.

8. Authorised Representatives are required to provide an updated version of their FSG to all existing clients when there are Licensee initiated changes to the previous version. The most practical time to provide this to a client may be at their next review, but it must be provided before any further financial services can be provided. Libertas Financial Planning will provide a directive to Authorised Representatives at the time of issuing the new version of the FSG as to when the new version is required to be provided to existing clients. Evidence of reissue must be recorded on the client file.

Authorised Representative-initiated changes to the FSG will also require reissue to all clients. In addition to the Authorised Representatives changes the date must be updated however the version number must remain the same. For example, if changes are made on 1 September 2012 to a previous version of the FSG and this was Version 6: 1 April 2012 then the new version must be updated to Version 6: 1 September 2012. The amended FSG must be reissued to each existing client at the next contact with that client but in any event prior to providing a financial service. Evidence of reissue of the FSG must be recorded on the client file.

After providing the FSG

9. Before providing a financial service or entering into any formal arrangement to provide a financial service, the adviser must:

explain the financial planning process to the client;

give the client sufficient time to read and understand the FSG;

advise the client of the importance of reading and understanding the FSG; and,

offer to explain the information in the FSG, if necessary.

FSG Retention

10. The client’s file must contain evidence that a current copy of the FSG was provided to that client. This must include at least one of the following:

A file note identifying which version and date of the FSG was provided and the date it was provided to the client. Where the FSG was provided electronically, the client’s consent to receive the FSG via this method must be evident;

Please Note: If providing an FSG via reference to a website it must be evident this reference was provided in written format;

A copy of the actual FSG with the notation “Provided to client” and dated; or,

Via Libertas Financial Planning approved Fact Find/Client Profile where the client can acknowledge they have been provided with a current FSG and which version and date.

11. Each version of an Authorised Representative’s FSG (and any supplementary FSGs) must be retained by the Authorised Representative and/or the Corporate Authorised Representative for seven years after the date a copy of that FSG was last provided to a retail client. It is not necessary to keep a separate copy of the FSG on each client file just one copy of each FSG used by the Authorised Representative and/or Corporate Authorised Representative.


Libertas Financial Planning Time Critical Advice Policy



RG 175 Licensing: Financial product advisers – Conduct and Disclosure

Corporations Act – particularly Part 7.7; s941A, s941B and s941D(1),(2), (3) & (4); S940(B); s942B(2)(e) and s942C(2)(f); s941C(4)

GEARING

Regulatory Guidelines



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Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of Libertas Financial Planning , and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy

The purpose of this Policy is to provide an operating framework for the management of this risk.

Note: There are some related specialist areas where Libertas Financial Planning has provided Authorised Representative requirements by way of Libertas Financial Planning Policy. These Policies are listed below:

Libertas Financial Planning Limited Recourse Borrowing by Self Managed Superannuation Funds Policy

Libertas Financial Planning Internally Geared Products Policy

Please note, in these cases Libertas Financial Planning Gearing Policy does not apply.






Libertas Financial Planning permanently terminating the Authorised Representative and notifying ASIC



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Definitions

A Buffer Zone is to allow for small movements in the markets, margin lenders allow the investor to exceed the portfolio’s maximum LVR by a given percentage before making a margin call (typically 5 or 10%). This is known as the ‘buffer zone’.

Capital protected products are products that include a capital protection mechanism, provided by either a non-recourse feature, funds on deposit, put option or other derivative structure. Examples include, but are not limited to, Protected Equity Products, Structured Products and Zero Cost Collars.

Capitalisation of interest is where the loan interest is paid using borrowed funds.

Cash flow is the total net income of the client from all sources, including income from existing investments and investments being recommended, where such income is not reinvested, after allowing for:

annual tax;

franking credits – the level of franking credits used should be determined by the level of Australian equities in the portfolio;

interest costs associated with the servicing of all drawn Debt, including the gearing loan facility;

other costs of living of the client and/or partner; and,

any new expenses and/or deductions arising from the gearing strategy, eg. income protection premiums.

Note: This approach provides for the tax benefit arising from the gearing strategy to be included in the Cash Flow calculation, to the extent that this benefit is able to be used by the client.

Client is all legal entities to whom the Authorised Representative is providing the relevant advice. This might include, for example, a husband and wife, a trading family company, and the corporate trustee of their family trust.

Note that for the purposes of calculating debt to asset ratio, cash flow and surplus cash flow, only assets and income that are under the effective control of the “client” and are accessible can be included. Superannuation assets and income (except for existing fixed pension income) would therefore normally be excluded. Assets and income of a discretionary family trust would be included only where these are under the effective control of the client as trustee.

Debt is all debt for which the client has direct responsibility, including arranged access to borrowed funds (i.e. line of credit, margin loans, credit cards, personal loans, overdrafts etc) whether drawn debt or undrawn debt. Note, credit cards regularly paid in full each month are excluded from this definition.

Debt to asset ratio is the ratio of total Debt divided by Qualifying Assets. Note, when calculating the debt to assets ratio and undrawn debt is included, an equivalent amount can be added to the total qualifying assets. For example, if there is undrawn debt of $50,000, when the calculation is done $50,000 should be added to the qualifying assets.

Drawn debt is the amount of borrowed funds which have been used.

Loan to value (LVR) ratio is the ratio between the loan amount divided by the market value of the secured asset(s). This ratio is set by the margin lender based on their assessment of the underlying asset being used as security.

Margin Loan is a loan secured against a combination of the client’s investment assets (cash, securities, managed funds etc) and the investment assets purchased with the loan funds. Each asset has a maximum loan to value ratio.

Qualifying assets are all income producing assets over which the client has effective control, including investments recommended in the gearing strategy, plus the principal residence, holiday home, vacant land, cheque accounts and whole of life and endowment insurance policies, but excluding superannuation.

Undrawn debt is the amount of borrowed funds which have not been used, but which the client can access.

The following Key Principles apply when advising clients to use borrowed funds to invest into financial products.

Accreditation & vetting requirements

1. Authorised Representatives must successfully complete the Accreditation for Gearing, and have received confirmation of accreditation from Libertas Financial Planning , before making any gearing recommendation.



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2. As a minimum, the first gearing Statement of Advice (SOA) written after accreditation is attained must be submitted and approved by SOA Vetting before presentation to the client. Feedback from SOA Vetting will include whether additional gearing SOAs need to be submitted.

Advisory Guidelines

3. Gearing cannot be proposed or implemented on an execution only basis under any circumstances.

4. The file must contain sufficient client information in order to demonstrate the recommended gearing strategy is appropriate. The Authorised Representative must meet all requirements in accordance with Knowing your Client (section 3 – the Advisory Process).

5. An analysis of the client’s life insurance requirements must be undertaken to assess whether an appropriate strategy is in place in the event of death, disablement, illness or trauma given the increasing levels of debt and if necessary recommend additional cover.

6. When gearing into listed securities, individual stock limits, as per Libertas Financial Planning Listed Securities Policy.

7. Authorised Representatives are able to arrange finance for their clients by direct referral to any financial institution. Where a mortgage or finance broker is used to source the loan facility, the specific loan product must be recommended by the mortgage or finance broker and not by the Authorised Representative.

Client qualifying criteria

8. The client must have a risk profile that can tolerate the volatility associated with having 70% or more of their investments in income producing growth assets.

9. The client must have an investment time frame of 7 years or more.

Debt to asset ratio

10. At the time a recommendation is made to commence or increase gearing, the Debt to Asset Ratio after implementation must not exceed 70%.

Cash flow requirements

11. The client must have sufficient Cash Flow to service all drawn debt (including the proposed gearing) at the existing rates at the time the gearing strategy is implemented.

Note: Where instalment gearing is involved, the interest cost calculation must be based on the amount of the loan scheduled to be drawn by the end of the first twelve months.

Surplus cash flow requirements

12. The client must have surplus Cash Flow to service all drawn debt if the annual interest rate for each debt increases by 3%, or 4% where capitalising interest.

(These percentages will be reviewed by Libertas Financial Planning on a regular basis).

The surplus cash flow requirement can be met by one or more of the following means:

(a) from available income, as for the standard cash flow requirement;

(b) by showing the client can release additional income if required by adjusting the current strategy. For example, by ceasing reinvestment of distributions or reducing salary sacrifice contributions;

(c) by the client holding sufficient surplus cash available in a bank account, cash management trust, offset or redraw facility and/or undrawn debt to meet the ongoing interest costs of servicing drawn debt where these funds are not intended to be drawn upon for any other reason. Where this mechanism is used, the amount must be sufficient to meet the surplus cash flow requirements for all drawn debt for a period of 4 years.

For example, if a 3% interest rate rise for all of the client’s debt would increase total interest costs by $2,000 per annum, the amount set aside or available to meet the surplus cash flow requirement would be $8,000.

Note: If the unexpired term of a fixed rate loan exceeds 4 years, the cost of this debt is excluded from the surplus cash flow requirements.

Important: The level of surplus cash flow remaining after this assessment must be sufficient to allow a reasonable margin for variation in client expenses; a neutral, or close to neutral cash flow position is not an acceptable outcome.



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Double gearing

13. Double gearing (for example, using equity loans in conjunction with margin lending) is allowable where the Debt to Asset ratio, cash flow and surplus cash flow requirements are met.

Capitalisation of interest

14. Interest on a margin loan or line of credit may only be capitalised where

(a) the Debt to Asset ratio is 60% or less; and,

(b) the Authorised Representative can demonstrate that the client could meet cash flow and surplus cash flow requirements as if the interest were not capitalised.

Margin lending

15. Margin call notification: Authorised Representatives are not permitted to be the recipient of margin call notifications for clients under any circumstances. Whilst the legislation provides scope for an ‘agent’ to receive margin calls from lenders on behalf of clients, Libertas Financial Planning does not permit Authorised Representatives to enter into any such arrangements. Authorised Representatives may be copied in on margin call notifications that the lender has sent to clients if this feature is available by lenders.

16. Where margin lending is proposed, at the time of the recommendation the client must have access (in a timely manner) to sufficient funds to meet a margin call if the value of the investments(s) fell by 30% immediately after purchase.

If the percentage fall in the value of the investment would not result in a margin call (due to the Lender’s LVRs) this Key Principle does not apply. The funds available to meet a margin call must be additional to any funds identified as available for the purpose of meeting the cash flow and surplus cash flow requirement.

The following table provides examples of this calculation.

Gearing loan facility $70,000

Client contribution $30,000

Investment value at date of purchase $100,000

Initial LVR 70%

Value of Investment less 30% $70,000

Security value after drop $49,000

Actual LVR after drop in value of investment 100%

Lender’s max LVR 70%

Lender’s margin call LVR 80%

Margin call amount (Loan – Security Value) $21,000

Margin call (to restore Lender’s Max. LVR) Client must have sufficient funds to either:

- Restore the original investment value of $100,000 by increasing the client contribution through cash injection used to invest further (assuming 70% ratio)

Or

- Reduce the loan i.e. client pays lender cash to reduce loan to back to lender’s max. LVR e.g. 70%:

70% X $70,000 = $49,000 (new max loan)

$70,000 (current loan) - $49,000 = $21,000

Or

- Restore the original investment value of

$30,000

$21,000



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$100,000 by increasing the client contribution through provision of additional security [assuming 70% ratio]:

($21,000/70% = $30,000)

Or

- Sell sufficient loan security to restore the balance within the margin facility (assuming 70% ratio on assets sold)

($21,000 / (100% - 70%) = $70,000

$30,000

$70,000 to be sold

Important note: The circumstances in which a margin call will be made will vary between loan providers. Authorised Representatives must ensure that clients will also be able to meet the criteria applied by the selected lender.

17. Where margin lending is implemented, Authorised Representatives must have a process in place to monitor the client’s portfolio in relation to the buffer zone. The process will vary from Authorised Representative to Authorised Representative but must ensure that whatever the process, on entering the buffer zone the client is contacted, informed of their position, and advised to begin to organise their response to a potential margin call.

18. Approved margin lending providers are listed on Libertas Financial Planning Approved Product List. Capital Protected Products

19. Capital Protected Products that offer LVRs of up to 100% may be used provided the cash flow, surplus cash flow and debt to asset ratio requirements are met. In addition, the requirements as outlined by Libertas Financial Planning Research for that product must be met.

Superannuation

20. Authorised Representatives wanting to advise on SMSFs borrowing via an Instalment Warrant structure must follow Libertas Financial Planning Limited Recourse Borrowing by Self Managed Superannuation Funds Policy and therefore the requirements set out in this Policy do not apply.

Written advice

21. A detailed Statement of Advice (SOA) must be prepared and presented to the client. In addition to standard SOA requirements, the SOA must also include:

Libertas Financial Planning approved Gearing SOA template;

Understanding Series Gearing document. Note: This document can be incorporated by reference and provided in either a printed or electronic copy;

In relation to insurance, the SOA must either include a recommendation (eg insurer, amount, waiting period, period of cover etc.) for cover, where required, or a referral to an appropriate Authorised Representative for specific advice and recommendation regarding cover. If the client is ineligible for insurance this should be clearly stated;

A projection of the client’s loan balance and asset value. Note, if the recommended investment fund/s historically pays a low level of franking credits, the lower rate of franking for this investment may be used in the projections. The period covered by the illustration should be consistent with the recommended term for the gearing strategy (minimum 7 years). Note: Not applicable for strategies that involve borrowing money to invest into superannuation;

Cash flow projections for a minimum of 7 years;

The template Gearing Client Acknowledgment must be signed by the client and a signed copy retained on the client file; and,

In addition, in the case of Capital Protected Products the template Client Acknowledgement – Leveraged and Capital Protected Product. This document must also be signed by the client and a signed copy held on the client file.

22. In addition where a margin lending facility (including a proposed increase) is recommended the following information MUST be included and forms part of Libertas Financial Planning approved Gearing SOA template:



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(a) whether the client has used double gearing by taking out a loan to fund the secured investments or transferred investments for establishing the margin lending facility AND if so, whether that loan is secured against the clients primary residential property;

(b) to the extent known at the time of the advice, whether there is a guarantor for the facility, and, if so:

i) a statement as to whether the guarantor has been appropriately informed of, and warned about, the risks and possible consequences of providing the guarantee; or

ii) a statement that the Representative does not have the necessary information to confirm the above.

Reviews

23. Formal review of gearing strategies should occur at least annually.

24. If additional gearing is recommended, then all principles in this Policy must be met.

25. On review, a client’s circumstances may no longer meet the principles set out above. For example, the client’s circumstances may have changed, their investments may have deteriorated or this Policy may have changed since the time of the initial gearing recommendation. In this case, the Representative must document in an SOA:

the way in which the client does not meet the current Libertas Financial Planning Gearing Policy, and the circumstances that have led to this;

the recommended course of action to manage the situation. That is, the Representative must consider all options to bring the client in line with Libertas Financial Planning Gearing Policy. If this cannot be achieved without putting the client in a worse position the Representative must consider the most practical options for the client; and,

the risks of their current position.

26. On review a Representative may discover that the client has initiated a transaction without the Representative’s knowledge and because of this no longer meets this Policy. For example, the client may have borrowed further funds, or drawn on cash holdings that were previously available to fund a margin call and/or surplus cash flow. In this case, the Representative must document in written advice:

this transaction;

recommendation of an appropriate course of action. That is, the Representative must consider all options to bring the client in line with Libertas Financial Planning Gearing Policy. If this cannot be achieved without putting the client in a worse position the Representative must consider the most practical options for the client;

the fact that the Representative and Libertas Financial Planning will not be liable for the client initiated transactions and any negative impact this might have on the gearing strategy; and,

the risks of their current position.



Libertas Financial Planning Client Review Policy




Corporations Act – particularly Chapter 7.7

RG36 Licensing: Financial Product Advice and Dealing

RG146 – Licensing:Training of financial product advisers

RG175 – Licensing: Financial product advisers – Conduct and Disclosure



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GENERAL ADVICE Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Whilst clients will generally require personal advice Libertas Financial Planning understands from time to time Authorised Representatives may provide General Advice by way of marketing material such as newsletters or at the time of delivering a workshop or presentation to clients or prospects. This Policy sets out the requirements when providing General Advice.








Definitions

General Advice is financial product advice and is where:

a statement is made which is intended to influence a person in making a decision about a financial product or class of financial products, or could reasonably be regarded as having been intended to have such an influence; and,

the Authorised Representative has not considered any of the client’s objectives, financial situation or needs and a reasonable person would not expect the adviser to have done so.



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Examples of General Advice

The following are some situations in which General Advice is commonly provided, either intentionally or inadvertently:

Discussions with friends/acquaintances/centres of influence. Informal conversations, often in a social context, may result in gratuitous General Advice being given.

Interviews with prospective clients. A discussion with a prospect about certain investments (or classes of investments) without obtaining their individual circumstances, objectives and existing portfolio.

Provision of research information. For example, product issuer or stockbroker research information which is passed on to a client for

educative purposes. Ordinarily, this would be considered General Advice. However, if this could reasonably be regarded as intended to influence a client’s investment decision having regard to the client’s circumstances, then it could be regarded as personal advice.

Verbal comments during client/public seminars. A verbal General Advice Warning must always be provided at the beginning of presentations of this type. Even if the presentation does not include any General Advice, the presenter may find themselves giving General Advice in answer to a question.

Handout material produced for client/public seminars.

Slides/PowerPoint presentations produced for client/public seminars.

Flyers and other promotional material.

Client newsletters.

Advertisements.

Editorials or newspaper articles.

Emails and websites.

Practical General Advice examples

The following are examples of statements (written or verbal) that will likely constitute General Advice (as opposed to mere statements of fact):

"We believe the Australian sharemarket is under/fairly/overpriced".

"Listed property trusts are returning a good income yield".

"XYZ investment has/has not done well over the last twelve months".

"I believe it is important to maintain a diversified portfolio which contains some exposure to shares, property and international investments".

"Persons with liabilities of over $100,000 need $400,000 life cover".

Factual statements – not General Advice

The following are examples of factual statements that, of themselves, would not constitute advice (General or Personal):

“Your investment/s is/are worth $100,000 as at {date}”.

“The return last year on {name of financial product} was 8%”.

“The cost of {name of insurance product} for the amount of cover you enquired about is approximately $xx”.

Providing research, quotes and PDSs – not General Advice

If responding to a direct request by a client for factual information on a specific financial product or type of financial product such as cost, estimated cost, rate of return or providing research, quotes or a PDS, then this would generally not constitute General or Personal advice.

1. General Advice must not be provided to an existing client where their objectives, financial situation or needs are contained within their file other than by way of generic marketing material (including letters and newsletters) or workshops and presentations.

2. Where promotional material requires approval, this must be obtained prior to use or publication. Refer to Libertas Financial Planning Promotion and Identification of Advisers and their Practices Policy.

3. Authorised Representatives are permitted to provide General Advice to prospects where they have not discussed their objectives, financial situation or needs or even initiated questions with them that could lead to such discussions. If this does occur the Authorised Representative must consider the advice



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personal and all Libertas Financial Planning personal advice requirements apply such as the provision of an advice document.

4. Prior to providing General Advice the Authorised Representative must provide the recipient of that advice with a Financial Services Guide (FSG) if the recipient does not already have a current version.

Exception: An FSG does not need to be provided at a public forum such as a workshop or presentation providing the appropriate General Advice Warning and any conflicts of interests are disclosed that are detailed within the General Advice Warnings and Core Disclosure document.

5. General Advice may be given verbally or in written form including electronic communication. Irrespective of the mode of communication, Libertas Financial Planning approved warning must be provided to the recipient. The approved wording for this warning is provided in the document titled General Advice Warnings and Core Disclosures.

6. The warning must be communicated at the same time, and in the same manner (verbal/written) as the General Advice.

7. General Advice about a specific product will also require the adviser to make relevant disclosures about any relationship or association between the product issuer and the adviser and Licensee. The appropriate wording is provided in the document titled General Advice Warnings and Core Disclosures.


Libertas Financial Planning Promotion and Identification of Advisers and their Practices Policy




Corporations Act – sections 945 and 949

Corporations Act s766B (5), (6) and (7)

Corporations Regulations – Regulation 7.7.02

IMPLEMENTING RECOMMENDATIONS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Poor implementation administration may result in a client complaint. There is also a risk that costly errors or oversights may occur if an efficient implementation process is not in place. Libertas Financial Planning acknowledges that it is often support staff that carry out the day to day function of implementation. However, it is the Authorised Representative (adviser) who is ultimately responsible to ensure the process is conducted honestly, efficiently and effectively.









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Client payment

1. All payments for financial products must be made by way of either:

Personal or business cheque;

Bank cheque;

Post office/money order;

Direct debit/credit where the product has facilities for this type of payment; or,

BPay.

2. Under no circumstances are Authorised Representatives able to accept cash or any other property from a client. In the rare situation where a client has cash to invest, the client must be referred to the nearest bank or post office to obtain a bank cheque or money order.

3. Any payment to acquire a financial product must be made payable to the party specified in the Product Disclosure Statement (PDS) or relevant offer document.

4. Under no circumstances can the Authorised Representative make a payment on a client’s behalf from the Authorised Representative’s own personal or business account or direct debit/credit facility.

Client withdrawals/transfers

5. Authorised Representatives must ensure that any client withdrawal or transfer/rollover cheques are sent directly from the product issuer to the client’s address or ongoing product issuer. Authorised Representatives are strictly prohibited from having withdrawal or transfer/rollover cheques sent directly to their address.

Implementing recommendations procedures

6. Authorised Representatives must have written procedures for the effective implementation of recommendations. Each Authorised Representatives will have a slightly different process depending on resources and their office structure.

7. The following areas must be covered within the written procedures.

Financial product applications, proposals, orders and other documents of that type (“applications”), cheques and any supporting documentation:

must be checked for accuracy and completeness before sending to the product issuer or stock broker;

must have a final copy stored on the client file; and,

must be sent to the product issuer or stockbroker on the same day the application is received by the Authorised Representative (where possible), or in any event within one business day.

A Sample Implementing Recommendations Process is available for Authorised Representatives to use and personalise.

8. There must be a system for recording and regularly monitoring outstanding action. This is particularly important if implementation is to be progressive, for example, a dollar cost averaging process, or life insurance proposal that requires medical examinations. A client should be kept informed of any delays to avoid any misunderstanding.

9. Authorised Representatives must implement either a diary or pending file system to check that financial product applications, proposals and order confirmation/completion documentation is received within a reasonable time period and are checked for accuracy. Authorised Representatives must follow up the product issuer or stock broker if necessary.

10. Listed securities orders that carry a price limit must be closely monitored to ensure that the price limit is amended or removed where necessary.

11. Transaction data and insurance policy details should be recorded promptly in the Authorised Representative’s financial planning software.

Implementing personal/business insurance advice

12. The client must verify their personal and health details contained within the application. This can be achieved by the following methods:

The client completes in their own handwriting;



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The client completes via an online system; or

Within one business day of an application being lodged the adviser asks the client to review and confirm the details. This can be done by:

o The client signing a copy of the completed application form; or

o The adviser sending a copy of the completed application together with a Covering Letter.

A copy of the completed product application together with the relevant client verification and associated file notes must be retained on the client file.

13. In situations where an incomplete application form has been signed or is in progress online because the client does not have the relevant information at hand, the adviser must ensure that they document this fact via a file note. The file note must contain the following information:

Details of what information is missing in the application form; and,

The fact that the client was prepared to sign or submit the application form (with that missing information) on the basis that the client will provide the relevant information at a later date.

14. Where the Authorised Representative has provided guidance to the client on how to complete sections of the application form relating to medical history, net business expenses and/or gross income the Authorised Representative must document the full details of that conversation in a file note.





INTERNALLY GEARED FUNDS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy A breach of this Policy by an Authorised Representative or any associate of the Authorised Representative may lead to the following actions:






Definition

A fund, trust or product that gains leveraged exposure to an underlying asset or investment, either by using debt within the structure or derivatives, such as options or swaps. This includes, but is not limited to, internally geared funds (both listed and unlisted), structured products (that incorporate leverage), and various types of warrants. The leveraging mechanism must be wholly built in and inseparable from the overall product structure.

Competencies and accreditations

1. Authorised Representatives must successfully complete the relevant Product Competencies as directed by Libertas Financial Planning before providing advice on an internally geared product. Authorised



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Representatives must check with Libertas Financial Planning as to the availability of product competencies. Where a product competency is not available, the relevant product issuer competency must be obtained and passed before advice can be provided.

2. Where the underlying investment in the internally geared fund includes listed securities or warrants, Authorised Representatives must also complete the Listed Securities and Derivatives Accreditations. Authorised Representatives must also meet the requirements of Libertas Financial Planning Listed Securities Policy.

Advice requirements

3. The client file must demonstrate the internally geared product(s) is suitable for the client and the client’s risk profile can tolerate the volatility associated with these types of investments.

4. Borrowed monies cannot be used to invest into internally geared products. However, this can be overridden by Libertas Financial Planning Research on a case by case basis as part of their research recommendation. When an internally geared product is added to the approved list, Libertas Financial Planning research communication to Representatives will state whether gearing is appropriate and, if relevant, to what degree. In these cases Authorised Representatives must also comply with all requirements set out in Libertas Financial Planning Group’s Gearing Policy.

5. Authorised Representatives must satisfy any timeframes for investment or restrictions on the exposure levels of internally geared products within a client’s portfolio as communicated by Libertas Financial Planning .

6. Holdings in internally geared funds cannot be used as security for margin lending or counted for the purposes of meeting margin calls.

Related Libertas Financial Planning Group Policies



Libertas Financial Planning Derivatives Policy

INVESTMENT PROTECTION PRODUCTS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Investment Protection can be an effective investment for:

Clients that have little risk capacity – they cannot afford further market losses;

Clients that have little risk tolerance – they can financially afford loss but are uncomfortable with volatility;

Clients that have invested in or switched to defensive assets as a response to volatility and negative returns – they would invest in more growth assets if they had some downside protection;

Clients that are invested in defensive assets that are unlikely to provide sufficient returns over the long term to achieve their goals & objectives –they will only invest in more growth assets if they had some downside protection;

Clients that would contribute more to superannuation but don’t because of general market risk;

Clients that are worried about or cannot afford their retirement income being reduced due to market losses;

Clients that are worried about outliving their retirement savings.

This Policy provides an operating framework for Authorised Representatives to assist in their provision of appropriate advice on Investment Protection features whilst at the same time managing the risks associated with these types of products.



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Definition

Investment Protection is a feature of a member’s account whereby a protection fee is paid in return for the protection benefit, namely capital or income certainty over their retirement savings.

Investment Protection features include:

(a) Protected Capital – Provides a certain level of capital, structured as a minimum capital amount at the end of the selected term, with the minimum increasing based on positive market performance and (optional) contributions.

(b) Protected Income – Provides a certain level of income, structured as minimum withdrawals of capital through the course of the selected term, with the minimum increasing for contributions, and where positive market performance exceeds withdrawals.

Accreditation

1. Authorised Representative must successfully complete the product accreditation for Investment Protection, and have received confirmation of accreditation prior to providing advice in this area.



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The Advice Process

Advisers must comply with all other applicable Libertas Financial Planning Policies. Some of the key requirements include:

2. Providing the client with a Financial Services Guide (FSG) before providing any financial service please refer to Libertas Financial Planning Financial Services Guide Policy;

3. Using an appropriate Fact Find or Client Profile in accordance with Libertas Financial Planning Fact Finding and Other Investigations Policy. The data collected in relation to the client’s risk tolerance must demonstrate that Investment Protection is a suitable feature in order to achieve the client’s goals and objectives in line with their tolerance to risk;

4. Having and demonstrating a reasonable basis for advice. Authorised Representatives should consider the recommendation of a Investment Protection feature on a client by client basis;

5. Documenting within the client file, the conversations held with the client regarding the use of an Investment Protection feature to assist in meeting or maintaining retirement income objectives.

6. Preparing and providing the client/s with appropriate advice via a Statement of Advice as set out in Libertas Financial Planning Statement of Advice Policy.

Note: A Record of Advice cannot be used to recommend that a client take out this feature. A Statement of Advice (Further Advice) is acceptable and can focus specifically on the addition of this feature and can incorporate previous advice by reference.

7. The SOA presented to the client must include the following Licensee approved content within the SOA:

Investment Risk and You – Investment Protection

Explanation of why/how the Investment Protection recommendation relates to the client’s risk profile and target asset allocation.

Investment Protection

The basis for recommending the Investment Protection feature;

An explanation of what Investment Protection is and that the cost of the investment may diminish the upside as well as providing benefits of Investment Protection on the downside;

Protection only applies if the investment is maintained for the chosen term

Why we have recommended these investments – Investment Protection

Investment Protection recommendation points

8. Advisers must use the exact following wording within the SOA strategy template in each instance of providing advice with relation to the Investment Protection feature.

‘Changes that may affect your protection:

Changes may need to be made to the protection features even after you’ve started your protection.

Changes can happen at any time as a result of legislative or regulatory changes. The changes listed below can only happen if certain events happen first, eg material or adverse long term changes on market or demographic conditions.

Changes that may be made include:

the fee you pay for protection, however it won’t exceed 7% pa

switching your protected account balance in to a new investment option

only allowing future contributions to a different investment option to the one you’ve chosen

how often market gains may be ‘locked-in’, but the lock-in will be at least every two years

reducing the withdrawal limit if you choose Protected Capital

stopping or restricting the addition of new investments into your protection

reducing your protected income payments, if you choose an income for life, but by no more than 20%.

If any of these changes occur, Libertas Financial Planning will let you know before the change is made.’

9. The Authorised Representative must actively take the client through the above sections of the SOA when presenting the advice and this must be documented in a file note.

10. The Authorised Representative must provide the client with a copy of the current PDS for the recommended product.



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Corporations Act 2001 - particularly Chapter 7 (sections 946, 947 and 961) and associated Regulations (7.7.11 and 7.7.12)

LIMITED ADVICE Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy deals with two circumstances where client advice and service requirements may be limited.

1. Advice for a specific purpose (Specific Purpose Advice) - where advice is for a limited purpose. This can be either:

(a) Client initiated; or

(b) Non-client initiated.

2. Advice on a restricted range of financial products - where the adviser is only authorised to deal in a restricted range of products.










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Adviser Initiated Limited Advice

1. Authorised Representatives must not limit, the scope of advice provided to the client except in situations where limited advice is required - For example:

A corporate action that requires the Authorised Representative to recommend a course of action to the client;

A product closure that requires the Authorised Representative to recommend what the client should do with their investment;

Legislative changes for example, a change to superannuation rules may create an opportunity for an Authorised Representative to provide a recommendation on a client’s superannuation investment; or

As a result of complying with the non-approved product licensee standard (eg. expressly excluding a non-approved product).

In these cases, limited advice initiated by the Authorised Representative is permitted as long as the Authorised Representative acts in the client’s best interests. Authorised Representative must not otherwise initiate limited advice.

Restricted Product Range

2. Where the Authorised Representative’s certification is restricted to certain financial products (for example, life insurance products only), the Authorised Representative’s ability to provide holistic advice is restricted. In these cases usually be at the time the Financial Services Guide (FSG) is provided to the client or in the initial meeting if the FSG is mailed.

Fact Finding

3. The Authorised Representative must ensure sufficient information is obtained from the client (or updated) in order to demonstrate a reasonable basis when providing limited advice in accordance with Libertas Financial Planning Fact Finding and Other Investigations Policy.

Advice Requirements

4. All advice must be provided to the client in accordance with Libertas Financial Planning Statement of Advice Policy and Libertas Financial Planning Record of Advice Policy.

5. To demonstrate the advice being provided is relevant to the specific circumstances and information provided by the client, Authorised Representatives must ensure the (SOA) explicitly describes how the scope of the advice is limited by using the wording in Libertas Financial Planning approved Scope of Advice template.

6. If providing advice via an ROA the limitations of the advice must be provided verbally and the ROA must detail the limited nature of the advice provided.









Corporations Act – section 961



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LIMITED RECOURSE BORROWING BY SELF MANAGED SUPERANNUATION FUNDS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy The general prohibition on superannuation funds borrowing is modified to allow self-managed superannuation funds (SMSFs) to borrow money to purchase an asset subject to certain strict limited recourse borrowing conditions. Authorised Representatives should refer to Sections 67A and 67B of the Superannuation Industry (Supervision) Act 1993 (SISA) and the ATO web site if they require specific details of the conditions.

This strategy potentially exposes Authorised Representatives and Libertas Financial Planning to considerable risk if, for example, the advice or legal documentation, including the fund deed, are inappropriate and not in the best interest of the client or if the potential impact on the investment strategy of the superannuation fund is not considered.

To reduce the business risks in relation to this area of advice this Policy sets out the specific criteria and documentation required to recommend this strategy.

This Policy is specific to SMSF borrowing via a limited recourse borrowing arrangement and covers all gearing aspects involved in giving advice in this area. As a result, Libertas Financial Planning Gearing Policy does NOT apply when recommending this strategy.







Definitions

A Buffer Zone is to allow for small movements in the markets, margin lenders allow the investor to exceed the portfolio’s maximum LVR by a given percentage before making a margin call (typically 5 or 10%). This is known as the ‘buffer zone’.

Capitalisation of interest is where the loan interest is paid using borrowed funds.

Debt to asset ratio relates to the entire SMSF, the debt to asset ratio is the total of all debts owed by the SMSF divided by the total value of all assets owned by the SMSF.

Limited Recourse Borrowing arrangement is an arrangement involving the SMSF borrowing to purchase an asset. The SMSF will have beneficial ownership of the investment asset(s), while a security trust holds legal ownership, until the loan is paid off.

The loan must be established so that the lender’s recourse against the fund is limited to the asset that was purchased with the borrowings (i.e. remaining superannuation fund assets are protected).

LVR; the loan to value ratio is the loan amount divided by the market value of the secured asset. The value of the asset does not include any upfront fees such as stamp duty.



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A Margin Loan is a loan secured against a combination of the client’s investment assets (cash, securities, managed funds etc) and the investment assets purchased with the loan funds. Each asset has a maximum loan to value ratio.

Advisory Guidelines

1. Representatives must have completed the following accreditation:

accreditation for SMSF;

accreditation for Borrowing by SMSFs; and,

accreditation for Gearing.

Note: Where recommending listed instalment warrants the Listed Securities accreditation is also required.

Product requirements

Property Investments

2. Authorised Representatives must only recommend this strategy to invest into residential and commercial property in accordance with Libertas Financial Planning Direct Property Policy;

3. The loan to valuation ratio of the borrowing must not exceed 65% of the value of the investment. This includes vendor financed arrangements.

Non-property investments (that do not allow margin calls),

4. Authorised Representatives must only recommend:

Listed or self funded instalment warrants where the underlying investment is on the Licensee’s approved list; Libertas Financial Planning Listed Securities Policy apply when recommending these products; or

Structured instalment warrant products that provide a loan directly to SMSFs that are approved by Libertas Financial Planning for this purpose.

5. The loan to valuation ratio of the borrowing arrangement must not exceed 100% and additionally, the overall debt to asset ratio of the SMSF must not exceed 33.33%.

Margin lending facilities

6. Authorised Representatives must only recommend approved margin lending facilities.

7. The loan to valuation ratio must not exceed 60% per arrangement, and additionally, the overall debt to asset ratio of the SMSF must not exceed 33.33%. Note: the fund member may provide third party security in their personal capacity as guarantor.

8. Investments held as security in a margin lending facility for an SMSF must appear on the normal margin lending investment menu and have a security ratio equal or above the following limits at the time the advice is provided:

70% for listed investments

60% for managed funds

Note: These ratios identify which investments can be used a security and does not allow gearing up to a 70% LVR for listed investments.

Suitability criteria

9. When an Authorised Representative is recommending a super fund borrows, they must consider if there are any other potential alternatives that could be more appropriate or that are in the best interest of clients. For example, the fund may be better off investing directly into a geared share fund as this would likely be simpler and cheaper to establish for those with small balances, or the members may be financially better off gearing outside of superannuation if they have sufficient funds and cash flow.

10. Authorised Representatives can only recommend this strategy where it is appropriate and in the best interest of the client and they can demonstrate that a SMSF is (or remains) an appropriate structure based on the client’s circumstances in accordance with Libertas Financial Planning Self Managed Superannuation Funds Policy.

Please note, Representatives are not permitted to implement this strategy on an execution only basis.

11. The borrowing strategy must be consistent with the investment strategy of the SMSF. As a result, some superannuation Trust Deeds and Investment Strategies will require review. A copy of the Investment Strategy must be retained on the client file.



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12. The investment strategy of the fund must have asset allocations that tolerate a gearing strategy and the members must have a risk profile that can tolerate gearing. That is at least a 70 Growth/30 Defensive asset allocation. For advice that relates to segregated accounts within the superannuation fund, the above criteria would only apply to that investment strategy and those segregated members.

13. The relevant members must have an investment timeframe of at least 7 years and Representatives should consider the amount of time the fund will remain in accumulation phase. This strategy may not be beneficial in pension mode.

14. A recommendation to capitalise interest is strictly not permitted. Sufficient funding arrangements must be put in place to meet the loan payments in full and in accordance with the lender’s requirements.

15. At the time of the recommendation, the Authorised Representative must have reasonable grounds to believe the fund will have sufficient surplus income or cash to service a 3% rise in the interest cost of all the drawn debt of the fund. If this requirement is met from cash set aside, there must be sufficient funds to service the prescribed interest rate increase for up to 4 years.

Note: The surplus cash flow requirement does not apply where the term of the fixed rate loan is 4 or more years.

16. An analysis of the relevant member’s life insurance requirements must be undertaken to ensure that an appropriate strategy is in place in the event of death, disablement, illness or trauma. Any insurance recommendation should consider where the funding of loan payments is dependent on contribution to the fund by members in part or whole.

17. Authorised Representatives must be reasonably certain that the structure of the arrangement is in conformity with the requirements of SISA. Where the structure of the arrangement is “pre-packaged” by a reputable supplier Authorised Representatives may rely on the provider. In other cases Authorised Representatives must recommend that the SMSF trustee obtain legal documentation from a suitably qualified legal Representative.

18. Authorised Representatives are able to facilitate the provision of finance for the super fund by direct referral to any financial institution or mortgage broker except in the case of margin lending where only Libertas Financial Planning `’s approved margin lending facilities can be recommended.

Note: Only certain margin lending arrangements meet the requirements for Limited Recourse Borrowing in SMSF. Refer to Libertas Financial Planning Approved Product List.

19. If a decision is made by the trustees and/or client that the lender is to be a superannuation fund member or a related party, the Representative must recommend to the members that independent legal documentation be obtained from an appropriately qualified professional to ensure a commercial rate of interest, terms and conditions apply to the loan in accordance with legislative requirements.

Margin lending

20. Margin call notification: Authorised Representatives are not permitted to be the recipient of margin call notifications for clients under any circumstances. Whilst the legislation provides scope for an ‘agent’ to receive margin calls from lenders on behalf of clients, Libertas Financial Planning does not permit Authorised Representatives to enter into any such arrangements. Representatives may be copied in on margin call notifications that the lender has sent to clients if this feature is available by lenders.

21. The correction responses to a margin call would be to either:

Reduce the loan balance within an agreed timeframe; or

Provide acceptable guarantor security

22. Where margin lending is implemented, Authorised Representatives must have a process in place to monitor the client’s portfolio in relation to the buffer zone. The process will vary from Representative to Representative but must ensure that whatever the process, on entering the buffer zone the client is contacted, informed of their position, and advised to begin to organise their response to a potential margin call.

Statement of Advice (SOA)

23. A recommendation for a borrowing strategy within an SMSF must be documented in a SOA and addressed to the members obtaining the advice for consideration by the fund trustee.

24. The first three SOA’s must to be sent to Libertas Financial Planning for a strategy review and approval prior to presenting these to clients.

25. In addition to the standard SOA construction requirements the SOA must also include:



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The Borrowing by Self Managed Superannuation Fund strategy template and the Costs and Risks Associated with Borrowing by SMSFs template;

Understanding Series - Gearing. Note: This can be incorporated by reference and provided in either printed or electronic copy;

Recommendations in relation to additional insurance requirements as a result of the new borrowing, if applicable;

A detailed strategy for funding the borrowing strategy addressing for example how loan repayments and other charges are going to be paid over the term of the loan;

Where the trustee/members decide to use a related trust structure they must be advised to obtain legal documentation from an appropriately qualified superannuation lawyer to ensure there are no double capital gains tax, stamp duty, in-house asset or associated issues on transfer of the investment;

If the lender is a superannuation fund member or a related party, the SOA must include a recommendation that independent legal documentation be obtained from an appropriately qualified professional;

Where investments are to be sold to finance a deposit or loan repayments the Costs and Risks of Redeeming or Replacing and Investment template is required;

Where the Representative is recommending a future sale of the investment purchased via the limited recourse borrowing arrangement explicit consideration must be given to issues that may affect the sale or redemption of the investment, including liquidity and potential market outcomes, capital gains tax, stamp duty and related issues.

Financial Projections

26. Financial projections must be prepared.

For non structured products the illustration must show the net present value of the investment using the following variables:

i) The maximum period covered by the illustration must be the lesser of the member’s retirement date or 30 years with the minimum period being the longer of 7 years or the term of the loan;

ii) Annual interest rate based on the standard variable rate plus a margin of 1.5% (or the actual interest rate if this is known) including provision for Representative commission;

iii) Default annual trust fees for maintaining and operating the trust of between 1 – 1.5% or an estimate of the actual fees, if known. Also, any applicable accounting, auditing and trustee fees;

iv) Property management fees, if applicable;

v) Default projection rates for property (Income 3%/Growth 5.5%). If actual income amounts have been provided by the client during the fact finding process then the actual income rate must be used. For example, in the case of residential and commercial property actual rental income as per the current lease agreement, including any CPI adjustments must be used;

vi) For investments other than property Authorised Representatives must use Libertas Financial Planning Compliance approved income and growth return projection rates.

vii) Default set up costs of $3,000 or the actual set up costs if known;

viii) Default loan Establishment fees of $2,000 or the actual fees if known;

ix) Initial Statement of Advice/Service Fee;

x) Actual agreed ongoing advice fees. The maximum asset based fee applied to the borrowed asset must not exceed 0.55% per annum including GST; and

xi) If the property is to be sold at the end of the term of the instalment arrangement any applicable Capital Gains Tax (CGT) implications.

xii) Where a property is to be purchased and the member/s are in a position to purchase the property outside of their SMSF, a second illustration must be attached to the SOA. This must show the net present value of purchasing the same property over the same period outside of superannuation using:

the actual or expected marginal tax rates of the relevant members over the period of the instalment warrant,

the same projection rates,

relevant ongoing fees, and



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CGT implications (if applicable) as above.

Please note: In many cases this strategy will not be viable and as such it is unlikely that the members will gain a financial benefit using the borrowing strategy within superannuation. In this case, the Authorised Representative must not recommend the borrowing strategy. As an alternative (and only if the second illustration demonstrates the client will be better off financially), the Authorised Representative may wish to recommend gearing outside of superannuation for the client in accordance with Libertas Financial Planning ’sGearing Policy.

27. Alternatively, where the members have available cash within their SMSF and are considering using that cash as a deposit for a property within the SMSF then the Authorised Representative is required to attach the first illustration using the projection variables in the principle above and a second illustration must show the net present value of investing the cash within the SMSF (without gearing) into growth assets (including internally geared funds) in accordance with the asset allocation of the fund and their risk profile. All establishment costs, initial and ongoing fees must be factored into the illustration and Libertas Financial Planning Research Solutions Income and Growth Return Projections for the approved products used. Where the second illustration is more beneficial to the client the Authorised Representative must recommend this strategy above the borrowing strategy.

28. Where a structured product is recommended the illustration must detail the net present value of the product taking into consideration all establishment costs, upfront and ongoing fees associated with the product as detailed in the Product Disclosure Statement over the term of the loan (maximum 20 years). The projection rates for income and growth of the product must be in line with Libertas Financial Planning Research Solutions projection rates.

Ongoing advice

29. A formal review of the funding strategy for loan repayments must be reconfirmed or recommendations made to assist the client meet the lenders requirements. Details of the review must be clearly documented in a Statement of Advice (SOA) or Record of Advice (ROA) whichever is applicable.

30. The ongoing fees charged for the above review must be consistent with the service provided after consideration of the anticipated amount of time and resources required for the formal review service. For example, if a commercial property is valued at $1,000,000 then an ongoing fee of 0.55% ($5,500) may not be appropriate.

Contrary advice provided by third party

31. Where the Authorised Representative has determined it is not financially beneficial for client/s to implement a borrowing strategy within their SMSF via the provision of a SOA and this is contrary to third party advice the client/s have received (in most cases this will be via their Accountant). The Authorised Representative must NOT endorse the third party advice or change their recommendations to be consistent with the third party advice under any circumstances. The Borrowing by Self Managed Superannuation Fund strategy template has appropriate wording for these scenarios.

32. The Authorised Representative can continue to provide ongoing advice post implementation of the borrowing strategy to advise on contribution strategies and funding arrangements for the purposes of making the required loan repayments.

Breach of key principles

Where the adviser has not followed the standard and a client complaint arises the Professional Indemnity Insurance may not provide cover.







Libertas Financial Planning Self Managed Superannuation Funds Policy



Tax Laws Amendment 2007 (Measures No.4) Act 2007



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Section 67A and 67B of SIS Act 1993

LISTED SECURITIES Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Listed securities can be an effective investment for clients with the appropriate risk profile and investment time horizon.

For example:

To gain appropriate exposure to speciality market sectors (For example, infrastructure and healthcare);

To achieve potentially a more reliable income stream with higher income yields and more tax efficient income than can be obtained from managed funds;

To achieve more control over the timing of realisation of capital gains than can be achieved via managed funds;

The client may not be comfortable with managed funds and has a preference for Listed Securities.

The purpose of this Policy is to provide an operating framework for Authorised Representatives to assist in their provision of appropriate advice on Listed Securities whilst at the same time managing the risks associated with this type of advice for both Authorised Representatives and Libertas Financial Planning .








Definitions

Listed Securities include:

(a) Ordinary and Preference Shares;

(b) Perpetual income notes and capital notes;

(c) Hybrid securities (eg convertible notes, converting Preference shares);

(d) Listed Managed Investments (LMIs) including listed investment companies or trusts;

(e) Listed structured products;

(f) Listed Property Trusts (A-REITS);

(g) Exchange Traded Fund’s (ETF’s) & Exchange Traded Commodity Fund’s (ETC’s)

(h) Listed Corporate Bonds

(i) Warrants and other derivatives.

(j)



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APL:

Libertas Financial Planning Approved Product List (APL) being:

a) the Stocks on the Approved Product List; or

b) Derivatives on the Approved Product List

c) Broker Panel

Recommendation: Is based on the estimate of a company’s fair value on a per share basis. Recommendation ratings consist of Buy, Accumulate, Hold, Reduce, Sell and Avoid. At certain times a stock may also have a rating of Under Review.

Investment Guidelines: Exposure limits set by Libertas Financial Planning for particular asset classes.

Total Client Portfolio: The total of all asset classes within a client’s investment portfolio that an Authorised Representative is aware of. A client’s investment portfolio includes all managed investments and listed securities (superannuation and non-superannuation assets) excluding investment properties.

Model Portfolio: A portfolio of Listed Securities that is either constructed by Libertas Financial Planning or managed by an external party (such as within a Protected Equity Product) that has been approved for use by Libertas Financial Planning .

Advisory Guidelines Representatives must comply with all other applicable advice guidelines. Some of the key requirements include:

1. Representatives must successfully complete the accreditation for Listed Securities (if applicable), and have received confirmation of accreditation from Libertas Financial Planning , before providing any Listed Securities advice.

2. Providing the client with a Financial Services Guide (FSG) before providing any financial service;

3. Using an appropriate Fact Find or Client Profile in accordance with Libertas Financial Planning requirements. The data collected in relation to the client’s risk tolerance must demonstrate that Listed Securities are a suitable financial product in order to achieve the client’s goals and objectives in line with their tolerance to risk. Generally, Listed Securities are regarded as long-term investments (typically 5 years plus) and this must be considered by Representatives when constructing client portfolios;

4. Having and demonstrating the advice is aligned with the clients gaols and objectives and is also in the best interests of the client. Representatives should consider the recommendation of a Listed Security on a client by client basis. The fact that a particular Listed Security is approved does not mean that it is appropriate for all clients;

5. Authorised Representative must comply with Libertas Financial Planning Investment Guidelines and Asset Allocation Guidelines;

6. Authorised Representatives preparing and providing the client/s with appropriate advice via a Statement of Advice (SOA) or Record of Advice (ROA).

7. Representatives providing the client/s with a current Offer Document (if applicable); and

8. Representatives offering the client/s a review annually (unless the client has advised the Authorised Representative in writing they do not wish to be offered a review).

9. Authorised Representatives must only provide advice on Listed Securities that are on the Approved Products List and comply with all the requirements as per dealings with non approved products.

10. Authorised Representatives can only use the Listed Securities Service (either the Standard Model Portfolio, IPO or Direct Equities Research Service) that they have gained Libertas Financial Planning approval to use.

11. Authorised Representatives must have processes in place to ensure they are up to date with a listed security’s status on Libertas Financial Planning APL. This is particularly important with listed securities given their inherent volatility.

12. Where the Authorised Representative arranges implementation of a Listed Securities recommendation, the trade can be placed through:

(a) a Libertas Financial Planners approved broker;

(b) an Online Broker if there is an agreement between Libertas Financial Planning and the online broker; or

(c) any broker authorised by the client in writing either as a one off or as a standing authorisation



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13. If a borrowing strategy is recommended in relation to Listed Securities Authorised Representatives must also comply with Libertas Financial Planning Gearing Policy.

14. Execution only transactions are permitted when carried out in accordance with Libertas Financial Planning Execution Only Services Policy. Execution only transactions involving non-approved Listed Securities must be executed in accordance with Libertas Financial Planning Non Approved Products Policy.

15. Authorised Representatives are permitted to advise a client to purchase Listed Securities when there is a “Buy”, “Accumulate” or “Hold” Recommendation.

16. Listed Managed Investment (LMI) products are subject to a different recommendation criteria and may be recommended for purchase if they are rated “Highly Recommended”, “Recommended” or “Investment Grade”. For Investment Grade recommendations, Authorised Representatives must explain to clients’ that these investments are inherently more risky than “Recommended” Listed Managed Investments on the basis of factors such as LMIs investing overseas where there are added risks such as country risk or there is not a long running track record for the management of the LMI Company. Representatives cannot recommend on “Inferior” or “Avoid” ratings.

17. Where a company undertakes a capital raising, specific corporate advice will be issued by the Licensee. The exception is where Share Purchase Plans do NOT form part of a larger company capital raising. In such cases, the Authorised Representative should refer to the recommendation in force when advising whether or not the client should participate in the Share Purchase Plan.

18. When a Listed Security is rated “Reduce”, “Sell” “Avoid” or “Under Review”, it may not be recommended for purchase and Authorised Representatives must consider whether clients with holdings should be advised to sell or reduce their portfolio weighting in the security. Authorised Representatives should refer to Libertas Financial Planning research report to fully understand the “Reduce”, “Sell”, “Avoid” or “Under Review” recommendation Authorised Representatives need to consider whether selling the listed security is in the best interest for the client and, if so, the timing of this. Authorised Representatives are permitted to advise that clients take the opportunity to sell or reduce their portfolio weighting in Listed Securities that have a “Sell” recommendation on the APL at then current price, after considering the client’s individual situation, for example, CGT implications.

19. Listed Managed Investment products are subject to a different recommendation criteria and may not be recommended for purchase if they are rated “Inferior” or “Avoid”.

20. Authorised Representatives are permitted to advise a client to sell a security which has a “Buy”, “Accumulate” or “Hold” recommendation. There could be a number of reasons why an Authorised Representative feels it is in the best interest for a client to sell their listed investments. There does not need to be an official Licensee “Reduce” or “Sell” definition in order for a Authorised Representative to recommend a client sells listed investments if this is appropriate for the client.

21. In rare cases, some securities included on the APL will have a valuation published, however will not have a published recommendation. In such cases, Authorised Representatives are permitted to recommend a security for purchase, providing the current market price of the security is trading at a discount to the published valuation. A copy of a valuation must be retained on the client file.

22. If, contrary to the advice to sell, the client wants to continue holding the Listed Security the client must acknowledge the following on the Authority to Proceed (ATP). The Authorised Representative must add the following wording to the ATP ;

”You understand that by not accepting our advice that you will bear full responsibility for any deterioration of the value of the Listed Security and understand that this Listed Security will not be supported by the Licensee’s research function.”

23. If the advice to sell was given to the client via an ROA and the client wants to continue holding the Listed Security, the above information must be provided verbally and the ROA must show that the client was informed of the above. Additionally, the Authorised Representative must send the ROA to the client for their records.

24. Authorised Representatives can implement Model Portfolios (including Separately Managed Accounts – SMA’s) even if individual securities within these Model Portfolios have a hold, reduce or sell rating. While a security may have a hold, reduce or sell recommendation when viewed on a stand alone basis, there may be valid reasons for including it within a portfolio of securities given diversification benefits and the application of portfolio theory.



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25. If a Model Portfolio has been implemented for a client, the above principle also applies to changes made to the Model Portfolios that may occur from time to time. These may include additions and deletions of securities, changes in weightings or re-balancing of the portfolios.

26. Regardless of implementation of a Model Portfolio, individual stock limits (as set out in the Licensee’s Listed Securities Exposure Guidelines) within the context of the total client portfolio still apply.

27. The Model Portfolio Advice Key Principles within this standard are conditional upon Authorised Representatives implementing the Model Portfolios in their entirety and as per the weightings given within 2 weeks of making a recommendation to clients. If Authorised Representatives add or omit securities, change weightings or subsequently make variations away from the recommended Model Portfolios, the above principles no longer apply and Authorised Representatives must abide by the stand alone security recommendations.

28. As evidence of implementation of the Model Portfolio, the Authorised Representative must keep on the client file a copy of the Model Portfolio as at the date the recommendation is made. Authorised Representatives must also keep on file a copy of any amendments made (by Libertas Financial Planning Research or an approved external party) to the Model Portfolio.

29. Listed Securities transactions must be conducted in accordance with the terms and conditions agreed between Libertas Financial Planning and approved stockbrokers.

30. Authorised Representatives must provide the stockbroker with the client’s mailing address for mailing contract notes and transaction advice.

31. Authorised Representatives must ensure, each time an order is placed with an approved stockbroker, that the client has sufficient funds to be able to settle any transaction upon the settlement date. Many brokers will hold Libertas Financial Planning liable for any loss if the Authorised Representative fails to do this.

32. Authorised Representatives are not permitted to publish material or place any advertisements that refer to approved stockbrokers and their relationship with Libertas Financial Planning without the stockbroker’s prior written consent.









Libertas Financial Planning Client Review Policy




RG36 – Licensing: Financial Product Advice and Dealing

RG175 – Licensing: Financial product advisers – Conduct and Disclosure

Corporations Act 2001 - particularly Chapter 7 (sections 946, 947 and 961) and associated Regulations (7.7.11 and 7.7.12)

MARKETING VIA TELEPHONE AND EMAIL Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).



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Libertas Financial Planning Policy This Policy provides guidance to advisers when marketing to clients and prospects via telephone and emails and in particular sets out the requirements of the Do Not Call Register Act 2006 and the Spam Act 2003.

Compliance with this standard is mandatory.








Definitions

A Financial product is any facility through which a person:

makes a financial investment (e.g. contributions to generate a financial return);

manages financial risk (e.g. effects insurance to minimise particular consequences); or,

makes non-cash payments (e.g. direct debit).

An unsolicited telephone call is generally regarded as a telephone call initiated by someone other than the prospective purchaser of the financial product.

Commercial Electronic Messages (CEMs) for the purposes of this Policy are defined as a message that:

a) is electronic (defined as emails); Plus

b) is sent for marketing purposes (defined as promotion/advertising of goods, services, organisation, land, business opportunities, and investments. Note: some of these examples are activities that are not approved by Libertas Financial Planning ); Plus

c) has an Australian link (i.e. sent from Australia, received in Australia, sent by an organisation controlled in Australia, sent to an organisation with a business or operations in Australia)

Hawking involves offering to issue or sell financial products in the course of, or because of, an unsolicited meeting, unsolicited telephone call, including a ‘Telemarketing Call’, or some other contact as defined in the Regulations with another person.

Telemarketing Call is a direct telephone call for the purposes of offering or promoting a product or service, including ‘Hawking’. For example, a follow up phone call to a prospective client who has been sent promotional material such as a marketing letter is a telemarketing call.

Do Not Call Register is a national register of private or domestic purpose phone numbers kept by the Australian Communications and Media Authority (ACMA) for the purposes of the Privacy Act 1988. The primary purpose of the Do Not Call Register is to facilitate the prohibition of unsolicited telemarketing calls to those numbers on the register.

1. Authorised Representatives are not permitted to use text messages, multimedia services or instant messages for marketing purposes.

2. Authorised Representatives are expressly prohibited under the Spam Act from using address harvesting software and/or lists created by the software (software that is specifically designed or marketed for use in searching the Internet for electronic addresses and collecting, compiling, capturing or otherwise harvesting those electronic addresses).



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3. Authorised Representatives must check any address mailing lists to ensure that the lists have not been compiled using address harvesting software, and must ensure that any client list purchased complies with this requirement.

4. Specific requirements apply to email CEMs and telemarketing calls as set out in the attached Marketing via Telephone and Email Appendix to this Policy. Authorised Representatives must comply with all the requirements set out in the Marketing via Telephone and Email Appendix.

5. Authorised Representatives must set up a No Contact/Unsubscribe Register that details the name and address of the client, whether they want to unsubscribe from emails or not be contacted by phone for marketing purposes and the date that the client requested this in accordance with the requirements set out in the Marketing via Telephone and Email Appendix.

Appendix

For more information relating to the requirements for Marketing Email Commercial Electronic Messages and Telemarketing Calls refer to the Marketing via Telephone and Email Appendix.

Breach of the Policy

In addition to other penalties for breaches of section 992A of the Corporations Act, a failure to comply with section 992A (Hawking Prohibition) gives the other person a right of return and refund in respect of certain financial products, exercisable within 1 month after the expiry date of the relevant cooling off period for the relevant financial product, or 1 month and 14 days in the event that no cooling off period applies to the relevant financial product. The financial products covered in section 992A include superannuation (i.e. non Managed Investments), life and general insurance, derivatives and deposit products).

The following penalties apply for breaches of the Do Not Call Register Act 2006.

1. A corporation without a prior breach may be liable to pay up to $11,000 for a single offence and up to $220,000 for multiple offences on one day. For a corporation with a prior record, the maximum penalty for multiple offences on one day is $1.1 million.

2. The court also has the power to order compensation to the victim and to recover any financial benefit made as a result of the breach. Restraining and performance orders and interim injunctions can also be granted.

3. The ACMA can issue infringement notices with fines or a formal warning for minor breaches as an alternative to court proceedings.


Corporations Act – Sections 736, 992A and 992AA

Do Not Call Register Act 2006

Spam Act 2003 (refer www.aca.gov.au)

Telecommunications (Do Not Call Register) (Telemarketing and Research Calls) Industry Standard 2007

ASIC Guides: Hawking Prohibitions – October 2002

ASIC Act – particularly Section 12 – misleading and deceptive conduct

MANAGED DISCRETIONARY ACCOUNTS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy We are aware that allowing Representatives to provide Managed Discretionary Account services to clients poses a significant risk to our reputation. There have been several cases in recent years where ASIC has taken strong and highly publicised action against Authorised Representatives who have either negligently or dishonestly misused discretionary authorities. Consequently, Libertas Financial Planning Policy is designed to achieve a reasonable compromise between:



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meeting retail client service expectations, and

managing the risk to Libertas Financial Planning and its Representatives.







Definitions

A Managed Discretionary Account (MDA) service means a service with the following features:

(a) A client gives the Representative access to their portfolio of assets held via a Regulated Platform.

(b) The Representative has the discretion to buy and sell investments within a Regulated Platform without prior reference to the client for each transaction.

(c) An MDA service does not extend to the following situations

Contributions;

Withdrawals;

Transfers from one platform to another. (E.g. AMP to Navigator Wrap)

(d) The client’s portfolio and any assets derived directly or indirectly from the portfolio must be managed as a discrete portfolio belonging to the client.

The following are examples of an MDA service:

A client who frequently travels overseas does not want to miss investment opportunities that might become available while he/she is travelling. The client gives their Authorised Representative written authority to buy any opportune investments the Authorised Representative considers appropriate. The Authorised Representative exercises this authority the next time a suitable investment becomes available and the client could not be contacted by telephone.

An Authorised Representative provides a client with generic listed securities recommendations in a SOA (eg, invest $50,000 in bank stocks, $20,000 in listed property trusts). The Authorised Representative obtains an “Authority to Proceed” from the client. During the implementation process, the Authorised Representative decides which specific securities should be bought to “fit” the generic recommendation(s) made to the client without prior reference to the client.

The Authorised Representative reviews the listed investments held in a client’s portfolio and decides it would be in the client’s best interests to sell stock X quickly. The Authorised Representative is unable to contact the client who is travelling overseas. The Authorised Representative sells the client’s holding in stock X without prior reference to the client.

An Authorised Representative recommends that a client invests in a range of wholesale managed funds within a Regulated Platform. When completing the platform application form, the client indicates approval for the platform provider to accept investment instructions from the Authorised Representative. The Authorised Representative subsequently instructs the platform provider to switch an investment in the client’s portfolio without prior reference to the client.

Some examples of similar situations that DO NOT constitute the provision of an MDA service:

A client in a Regulated Platforms has provided the platform provider with authority to accept investment instructions from their Authorised Representative. In exercising this authority, the Authorised Representative would not be engaging in discretionary trading if he/she obtains the client’s oral or written consent before each transaction. Although the authority given by the client makes it technically possible to conduct discretionary trading, the Authorised Representative is not using the authority in a discretionary manner as the client’s prior consent to each transaction is obtained.

It is not uncommon for an Authorised Representative to recommend in a review report that the client buy a specific stock when the price falls to a particular level or when cash becomes available to fund the purchase. If the client accepts this recommendation, the fact that the transaction may occur many months later, and without any client contact in the intervening period, does not constitute discretionary trading.



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Accepting a limited general power of attorney in conjunction with a third party from a client that authorises purchase or sale of a specific investment/s is not discretionary trading.

An MDA Contract is the agreement under which we provide MDA services to a retail client.

An Investment Program means that part of the MDA Contract including personal advice on the suitability of the MDA Contract to the client’s personal circumstances.

Management MDA Service; This type of authority is intended to enable the Authorised Representative to routinely make and action all investment decisions within a Regulated Platform relating to the client’s portfolio between scheduled reviews. The Authorised Representative is not required to contact, or attempt to contact, the client before actioning changes to the client’s investment portfolio. This type of service is usually unrestricted, but may contain some asset allocation limitations.

Opportunity/Limited MDA Service; Encompasses all types of MDA services that do not fall into the Management MDA Service such MDA services may be limited as to:

time (eg, limited to the period a client is overseas);

client availability for prior consultation (For example, comes into effect if the client cannot be contacted by telephone);

dollar value of transactions;

a pre-determined asset allocation; and/or

type of transactions (For example, limited to time sensitive transactions such as floats and opportunities, or excluded offers).

Approved Product Lists (APLs) are the following documents issued by Libertas Financial Planning Research Committee:

Listed Securities Approved Investment Lists;

Managed Funds Approved Product List*;

Derivatives Approved Products and Issuers List;

Broker Panel;

Risk Providers Approved Product List;

Any other Approved Product List issued by Libertas Financial Planning Research Committee.

*The Managed Funds Approved Product List includes approved managed funds, platforms, Corporate Superannuation, Margin Lending providers and Self Managed Superannuation Fund Administrators.

Regulated Platform; For the purposes of this Policy a Regulated Platform is a Master Trust, Wrap Account, Investor Directed Portfolio Service, Superannuation or other custodial facility.

Note: Some Separately Managed Accounts (SMAs) may not fall under this definition. Please contact Libertas Financial Planning Research Committee for guidance.

Regulated Platform; For the purposes of this Standard a Regulated Platform is a Master Trust, Wrap Account, Investor Directed Portfolio Service, Superannuation or other custodial facility.

Note: Some Separately Managed Accounts (SMAs) may not fall under this definition. Please contact Libertas Financial Planning Research for guidance.

Accreditations

1. Authorised Representatives must complete the Listed Securities, Derivatives and Self Managed Superannuation Fund accreditations prior to providing an MDA service in these areas and must comply with all relevant sections of corresponding Libertas Financial Planning Policies.

Approval Process

2. Approval to provide MDA services will not be provided unless:

The Authorised Representative has demonstrated competence in the type/s of advice encompassed by the MDA Contract

The Representative has the time and resources necessary to deliver a high-quality MDA service

3. Application for approval to provide MDA services must be submitted to the Licensee on the Approval to Provide MDA Services form. Applications will be assessed on their merits by us taking into account:

The type of MDA service involved;

The Representative’s accreditation program results (if applicable);

The nature of the Representative’s business and client base; and



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The Representative’s compliance record.

4. An Authorised Representative can apply for general approval to provide MDA services of a particular type such as Opportunity or Management. If this request is not approved, future requests for approval will need to be client-specific.

5. Authorised Representatives must sign an MDA Representative Acknowledgement.

Pre Conditions for Providing MDA Services

6. All of the following conditions must be met before providing an MDA service:

The client has been provided with a current version of a Financial Services Guide (FSG) that contains the required Managed Discretionary Account Services wording within the FSG;

The client’s portfolio is held in an approved Regulated Platform;

The Authorised Representative has a clear understanding of the client’s circumstances and needs and any investment preferences or aversions the client may have documented on a Client Profile/Fact Find or somewhere else within the client file;

The nature of the MDA service has been explained to the client by talking the client through an example MDA Contract;

The client has requested an MDA service;

The Authorised Representative has prepared a Statement of Advice (SOA) that includes the MDA SOA Rider (as part of the Investment Program within the MDA Contract) recommending the MDA service and the reasons why the MDA Contract is suitable to the client, taking into account factors such as:

o the client’s reason/s for wanting the Authorised Representative to provide MDA services;

o the structure of the client’s investment portfolio;

o the client’s investment knowledge and experience; and

o the client’s past responses to short-term losses and recommendations provided by the Representative.

The client has signed a fee-based ongoing service agreement that provides for a formal review of the client’s financial plan at least annually and rebate of all initial commissions where the product allows for this and all brokerage.

MDA Contracts

7. An Authorised Representative must not pressure or persuade a client to enter into an MDA Contract. The MDA Contract must be signed and executed freely by all clients who enter into it.

8. An Authorised Representative must not make potentially deceptive or misleading claims or promises about the consequences of the client/s entering into an MDA Contract. For example, suggesting that portfolio performance will improve.

9. The client must only sign an MDA Contract approved by Libertas Financial Planning after having had sufficient time to read and understand the terms and conditions.

10. The client is to be provided with a copy of the executed MDA Contract.

11. The applicable current MDA Contract (including the Investment Program and SOA) as executed by each client must be held in the client’s current file and must not be archived.

12. An MDA Contract does not provide an Authorised Representative with authority to sign an investment application on behalf of a client. If there is a need to execute transactions that require the client’s signature, for example, participation in floats and purchase of retail managed investments, the Authorised Representative will need to hold a general power of attorney jointly with another third party that is limited to the signing of investment applications, in addition to the MDA Contract in line with Libertas Financial Planning Conflicts of Interest Policy.

13. An MDA Contract continues to remain in force until the earlier of:

(a) express notification of termination of the MDA Contract in writing by the client to the Authorised Representative or us;

(b) the client notifying the Authorised Representative or Libertas Financial Planning in writing that he/she does not wish the Authorised Representative to continue to provide him/her with any ongoing services; or

(c) the Representative or us notifying the client in writing that they wish to terminate this MDA Contract.



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Exercising a MDA Contract

14. An Authorised Representative will only “properly exercise” an MDA Contract where all of the following conditions are satisfied:

(a) The MDA Contract is active; (has not been terminated)

(b) The transaction is within the scope of the authority granted to the Authorised Representative under the MDA Contract;

(c) The Authorised Representative has a reasonable basis for the transaction and the reason/s for the transaction is/are clearly documented in the client file; and

(d) The Authorised Representative has complied with this Policy and has acted efficiently, honestly and fairly in executing the transaction.

Please Note: An Authorised Representative who misuses an MDA Contract will be in breach of the Corporations Act requirement to act “efficiently, honestly and fairly”. We may have an obligation to report this activity to ASIC.

MDA Register

15. Authorised Representatives must maintain a current register of both active and (separately) terminated MDA Contracts. The register must contain the following information:

Client name;

Type of MDA service (Management or Opportunity);

Date of commencement of any current MDA Contract;

Termination date of any previous MDA Contract; and

The name of the custodial/administration facility being used.

A sample MDA Register has been provided by Libertas Financial Planning . This register must also include a copy of the approval to provide MDA services, including copies of any client-specific Libertas Financial Planning approvals.

16. The information contained in this register is to be supplied to Libertas Financial Planning on request

MDA Investment Transaction & Limitations

17. All investment transactions executed by an Authorised Representative under an MDA Contract must satisfy Libertas Financial Planning Investment Exposure Guidelines and Asset Allocation Guidelines, Directives and Libertas Financial Planning Policies relating to investment recommendations.

18. Where any client’s portfolio falls outside the Investment and Asset Allocation Guidelines the following steps must be taken by the Authorised Representative:

If any additional purchases are being made to an investment that at the time of the proposed purchase exceeds the Licensee’s Investment and Asset Allocation Guidelines, then the client must agree in writing to such a purchase; and

If, at the time of a client’s review, an investment in the client’s portfolio exceeds Libertas Financial Planning Guidelines due to an increase in its market value, then the client must be informed of this fact in writing via a letter or email. The client must advise in writing as to whether he/she wants to continue to hold the investment or move back to Libertas Financial Planning Investment Guideline limit.

Exercising Rights

19. Where the Authorised Representative receives communications that are relevant to the exercise of a right that relates to a client’s portfolio, the Authorised Representative may exercise the particular right on the client’s behalf.

Excluded Offers

20. Authorised Representatives on our Excluded Offers Register may apply to take up “excluded offers” on behalf of:

(a) any client who has executed a Management MDA Contract; or

(b) any client who has executed a Limited/Opportunity MDA Contract where the option “(b) in circumstances where you can apply on my/our behalf for securities that are not available to the general public” has not been deleted.



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Please note: We presently give notice of “excluded offers” only to those Authorised Representatives who are listed on our Excluded Offers Register. These are Representatives who have notified us that they have clients who satisfy MDA Contract requirements above.

Advice – Non MDA Services

21. In the case of where a client makes a contribution to or withdrawal from a Regulated Platform or transfers from one Regulated Platform to another the Authorised Representative must provide the client with a Statement of Advice (SOA) or a Record of Advice (ROA) as required in line with Libertas Financial Planning Statement of Advice Policy or Libertas Financial Planning Record of Advice Policy respectively.

22. The Authorised Representative must determine the client’s preferred mode of communication. This is important if the client will be absent from their home for an extended period. Communication by mail, telephone, facsimile or e-mail is acceptable to us. In the absence of any client direction on this issue, our “best practice” is for the Authorised Representative to post the communication to the client’s usual or last known postal address.

23. A quarterly report MUST be provided to clients for each quarter ending December 31, March 31, June 30 and September 30, within 10 (ten) working days of the end of the relevant quarter containing the following information:

(i) Details of all transactions executed by the Authorised Representative on behalf of the client during the quarter;

(ii) Opening and closing balances for the quarter;

(iii) Any commission or brokerage (where this cannot be rebated) or fee (including transaction fees) charged by the Authorised Representative for providing the MDA Services; and

(iv) Any material conflict of interest.

Sample MDA Quarterly Report templates have been made available by Libertas Financial Planning .

24. The Authorised Representative MUST send the quarterly report within 10 (ten) working days, and maintain a file record of the report being sent. It is not a requirement that the client receives the information within 10 (ten) working days.

25. Where a discretionary transaction involves a listed security, and the client has indicated on the MDA Contract that they wish to receive copies of contract notes. The Authorised Representative must provide a copy of the contract note to the client within 10 (ten) working days of receiving this from the broker.

26. At least once every thirteen (13) months, Authorised Representatives must consider whether the MDA Contract is still appropriate for each of their clients. As part of this process, each client must be provided with personal advice via a Statement of Advice (SOA) documenting the Authorised Representative’s recommendation as to whether the MDA Contract continues to be suitable to the client’s personal objectives and needs and if applicable reminding the client of the risks associated with continuing with an MDA Contract. The MDA SOA Rider must be used to detail this.

Representative Remuneration

27. An Authorised Representative must not receive any direct benefit from ongoing discretionary transactions. In particular:

(a) An Authorised Representative must not retain any remuneration from investment transactions executed under an MDA Contract, other than the annual service fee paid by the client. Any upfront commission, brokerage or similar type of remuneration stemming from a discretionary on-market transaction is to be rebated or refunded to the client. Where product providers do not allow for rebating of upfront fees, Authorised Representatives are required to notify the client that an upfront fee will apply and the amount in percentage and dollar terms that the client will be charged and the Authorised Representative will receive. If this information is provided verbally, then a file note of the discussion must be made and retained on the client file.

(b) Any commissions, brokerage, handling or transaction fees earned by Authorised Representatives through ‘one-off’ transactions such as IPOs, underwritings, sub-underwritings, rights issues or other corporate actions may be retained by the Authorised Representative subject to the client service agreement allowing this and both the investment being approved by us and such remuneration earned by the Authorised Representative being disclosed to the client in percentage and dollar terms. If this information is provided verbally, then a file note of the discussion must be made and retained on the client file.



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Refusing to Provide MDA Services

28. An Authorised Representative is under no obligation to provide MDA services to a particular client even though that client may request an MDA service. It would be prudent not to provide MDA services where there are “danger signs” such as:

There has been friction in the Representative-client relationship;

The client does not demonstrate the capacity to appreciate the contract or service;

The client lacks investment experience and/or has responded inappropriately to past market downturns or investment losses/under-performance;

The client has not accepted some of the Representative’s past investment recommendations; or

The MDA Contract will need to be signed by two or more individuals (For example, a married couple) and one of the individuals appears to be uncomfortable with the proposed arrangement.

Please Note: There is an increased risk of client complaint if an MDA service is provided to a client who displays the above characteristics.

Office Procedures

29. Authorised Representatives who provide MDA services must ensure that:

MDA Contracts for persons who are no longer clients of the Authorised Representative are cancelled;

The MDA register is kept up-to-date;

The portfolios of clients receiving an MDA service are appropriately reviewed;

Quarterly reports are sent within the legislated 10 (ten) working days;

An SOA is prepared every 13 (thirteen) months providing advice as to the continued suitability of the MDA Contract;

Implementation of the discretionary transaction is completed in a timely manner in accordance with Libertas Financial Planning Implementing Recommendations Policy; and

Copies of the MDA Contract, MDA FSG, and all SOAs must be maintained for a period of 7 years from the end of the business relationship.



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Compliance

30. An Authorised Representative who provides MDA services to clients must recognise this type of service changes the “usual” Authorised Representative-client relationship. The “usual” relationship involves the Authorised Representative providing recommendations to the client supported by reasons for the recommendations and investment research. Under this scenario the client is the decision-maker and the Authorised Representative is insulated from the effect of any inappropriate investment decisions made by the client provided the advice given to the client was appropriate to that client’s financial circumstances, needs and objectives.

31. An Authorised Representative who acts under an MDA Contract does not have the benefit of any client input. The Authorised Representative acts alone and must be aware of the possible legal consequences. An Authorised Representative who makes investment decisions on behalf of a client has a fiduciary duty to ensure the action taken is appropriate to the circumstances, needs and objectives of the client. A client can take action against the Authorised Representative and Libertas Financial Planning if the MDA service is exercised in an illegal or negligent manner. Negligence might involve making an inappropriate investment decision, or even, depending on the scope of the discretion held, FAILING to act when it was appropriate to act. (For example, failure to take up an appropriate opportunity or failure to dispose of an investment that had ceased to be appropriate to the client’s circumstances).

32. Authorised Representatives providing MDA services will be reviewed by Business Review Group staff more frequently than annually.

33. An Authorised Representative will be deemed not to have complied with this Policy if the client file does not contain documentary evidence of compliance. ASIC imposes specific requirements in relation to MDAs in our AFSL. These requirements are subject to change and will be communicated to you separately.








Libertas Financial Planning Conflicts of Interest Policy


ASIC RG 179 – Managed Discretionary Account Services

ASIC Class Order (CO 04/194)

NON APPROVED PRODUCTS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy assists Authorised Representatives in addressing situations where:

Clients have existing non approved products within their current portfolio, where

A client approaches an adviser for advice on a non approved product or

A unique need is identified which cannot be facilitated by a product on the Approved Product List (APL).



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Execution only requests should be dealt with in accordance with Libertas Financial Planning Execution Only Services Policy.

Libertas Financial Planning Professional Indemnity insurance policy excludes cover for claims relating to Non Approved Products, unless the Authorised Representative has strictly followed this Policy. If an Authorised Representative fails to strictly follow this Policy, and there is subsequently a claim in relation to the Non Approved Product there will generally be no insurance cover, and Libertas Financial Planning will look to the Authorised Representative to meet the costs of the claim.








Definitions

Approved Product – is a financial product, facility or platform either specifically listed or approved by reference to an approved provider in an Approved Investment List (APL). This includes products on the APL that have a buy, sell, hold or any other recommendation status defined by Libertas Financial Planning Research.

Please note in relation to the Investment Facilities and Platforms, the underlying financial products recommended must also be Approved Products. An exception applies to members of Corporate Superannuation Funds (please refer to Principle 23 below).

Approved Product Lists (APLs) are the following documents issued by Libertas Financial Planning Research:

Listed Securities Approved Product Lists;

Managed Funds Approved Product List*;

Derivatives Approved Products List;

Broker Panel;

Risk Providers Approved List; and,

Any other Approved Product List issued by Libertas Financial Planning Research.

*The Managed Funds Approved Product List includes approved managed funds, platforms, Corporate Superannuation, Margin Lending providers and Self Managed Superannuation Fund IDPS/Custodial service providers.

Non Approved Product is:

A financial product, facility or platform NOT listed or approved by reference to an approved provider in an Approved Product List (APL);

A product, platform or facility that has been removed from an APL;

A Non Approved Product authorised for use by Libertas Financial Planning Research or authorised delegate.

Approved Asset Classes are those asset classes listed on the APLs.

Default superannuation fund is the fund employee sponsored superannuation payments are made into where the client has not exercised choice of fund.

A. Non Approved Products already held by clients

This situation may result from an Authorised Representative taking on a new client, an Authorised Representative acquiring new clients or an Authorised Representative transferring to Libertas Financial Planning .

1. Authorised Representatives must



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(a) Identify all clients holding Non Approved Products; and

(b) Provide the clients with a review;

(i) at the time of their next scheduled review;

(ii) on the next occasion the client seeks advice; or,

(iii) in the case of a new Authorised Representative, the review must be:

in accordance with any existing service agreement requirements (but no later than 12 months); or,

if there is no service agreement as soon as practicable, but no later than 12 months from the date of joining Libertas Financial Planning .

2. At the time of the review the Authorised Representative must expressly include Non Approved Products within the scope of their advice or expressly exclude them.

Examples of when Non Approved Products could be excluded from the scope of advice include:

Where the client instructs the Authorised Representative that advice is not required on this product. This can be done in writing on Libertas Financial Planning Approved Fact Find/Client Profile or a separate document or in a File Note; or

Where the Authorised Representative has made reasonable enquiries and is unable to obtain sufficient information in order to demonstrate a reasonable basis to provide a recommendation.

Excluding the Non Approved Products from the Scope of Advice

3. Where the adviser excludes the Non Approved Products from the scope of their advice a Non Approved Products Exclusion Warning must be provided to the client:

Via a Statement of Advice (SOA); or,

Verbally, and then documented in a Record of Advice (ROA).

Please refer to Libertas Financial Planning approved Investment Recommendations and/or Insurance Recommendations templates for the mandatory wording for the warning. Each time further advice is provided the Authorised Representative must restate this warning.

Where the Non Approved Product is excluded from the scope of advice, Authorised Representatives must still consider the Non Approved Product in relation to overall asset allocation, life insurance and strategic advice where applicable.

Providing Advice on an Existing Non Approved Product

4. Unless the Authorised Representative has excluded the Non Approved Products from the scope of their advice, the Authorised Representative must make reasonable enquiries and obtain sufficient information in order to demonstrate a reasonable basis for initial and ongoing advice, by considering the following factors where applicable:

Whether an Approved Product is more appropriate to the client's circumstances, needs and objectives;

Quality of asset management of the existing Non Approved Product;

Quality, features and claims history of the Non Approved life insurance products and providers;

Underwriting requirements involved for a new approved life insurance product;

The performance history (minimum 5 years history if available) of the existing Non Approved Product relative to the performance of any proposed alternative Approved Product over the same period;

Quality of existing administration and the existing cost structure;

Any disposal costs such as exit penalties, transaction costs such as buy/sell spreads and brokerage associated with cancellation, redemption or reinvestment;

Any acquisition costs such as entry fees and transaction costs associated with an Approved Product;

Capital Gains Tax (CGT) consequences;

Any benefits the client may lose either temporarily or permanently if they move to an Approved Product;

Social Security consequences of redeeming and reinvesting;

Tax consequences of recalculation of the deductible amount on rollover of a pension; and,

Any other significant consequences to the client if they move to an Approved Product.



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Please Note: The fact that a Non Approved Product is not on the Approved List is not by itself a reasonable basis to recommend redemption or cancellation.

5. Where Libertas Financial Planning Compliance authorisation is required, product competencies must be completed if the nearest equivalent product on the APL would require accreditation and an accreditation is available.

6. All research documentation, file notes and other documents recording calculations and analysis must be retained on the client file.

7. Where the Authorised Representative can establish a reasonable basis for a recommendation the following principles apply and must be complied with at each subsequent review and on any occasion where it is necessary to provide advice on Non Approved Products between scheduled reviews.

(a) Full or partial sale, redemption or cancellation:

The reasons for the sale must be clearly explained to the client via a SOA or verbally and included in a ROA in accordance with Libertas Financial Planning Statement of Advice Policy or Libertas Financial Planning Record of Advice Policy.

If the advice involves replacement of the Non Approved Product with an Approved Product then all requirements of documenting replacement product advice must be complied with.

(b) Hold recommendation:

Must only be recommended where a full sale, redemption or cancellation at that point in time is not clearly in the client’s best interest or where it would be disadvantageous;

The reasons for the hold must be clearly explained to the client via a SOA or verbally and included in an ROA in accordance with Libertas Financial Planning Statement of Advice Policy or Libertas Financial Planning Record of Advice Policy that includes:

o Libertas Financial Planning approved Non Approved Products Warning contained in the Investment Recommendations and Insurance Recommendations templates;

(c) Increase recommendation:

An increase to an existing Non Approved Product can only be recommended where this is clearly in the client’s best interest and it would be disadvantageous for the client to purchase an Approved Product. In this case, Libertas Financial Planning Compliance or delegate authorisation is required. Please refer to Libertas Financial Planning Compliance Authorisation Process below.

The reasons for the increase must be clearly explained to the client via a SOA or verbally and included in an in accordance with Libertas Financial Planning Statement of Advice Policy or Libertas Financial Planning Record of Advice Policy that includes:

o Libertas Financial Planning approved Non Approved Products Warning contained in the Investment Recommendations and Insurance Recommendations templates.

Non Approved Product Advice not Accepted

8. If the client does not accept the recommendation in relation to the Non Approved Product:

they must acknowledge this on the Authority to Proceed (ATP) in the SOA.

If the advice is provided verbally to the client, this must be documented in a ROA. Additionally, the Authorised Representative must send a copy of the ROA to the client for their records.

Annual Requirement to Obtain Information/Research

9. Where an Authorised Representative has included a Non Approved Product within the scope of advice, they must annually make reasonable enquiries and obtain sufficient information/research in order to ensure that the product is still appropriate. The Authorised Representative must then either:

If sufficient information/research can no longer be obtained, the Authorised Representative can exclude the Non Approved Product from the scope of advice (and follow the requirements of the principles 3 & 4 above);

If the information/research obtained indicates the product may no longer be appropriate then the Authorised Representative must conduct a review;

If the information/research obtained indicates the product is still appropriate then this should be documented on file and no further action is required.

Note: The annual research requirement is not required where there is no ongoing service to be provided to the client and this is made clear within the Statement of Advice.



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Servicing Rights for Existing Non Approved Products

10. Authorised Representatives may take over the servicing rights for a Non Approved Product. If they do then all of the conditions of this Policy must be met. Whether the Non Approved Product is included or excluded in the scope of advice, the Authorised Representative must disclose all ongoing commission and fees relating to the product in relevant advice documents.

11. For Employer Sponsored Superannuation Authorised Representatives are required to complete the Approval to take over Servicing Rights for a Non Approved Corporate Superannuation Fund form. Please refer to Libertas Financial Planning Employer Sponsored Superannuation Policy.

B. Non Approved Products not currently held by clients

This situation may result from either:

an Authorised Representative being approached by a client for advice on whether they should purchase a Non Approved Product; or

where an Authorised Representative identifies a unique set of client needs or circumstances which can not be addressed by a product on the APL.

In either situation, when providing advice on Non Approved Products not currently held by clients:

12. Where Libertas Financial Planning Compliance authorisation is required, product competencies must be completed if the nearest equivalent product on the APL would require accreditation and an accreditation is available.

13. All fact find, research documentation, file notes and other documents recording calculations and analysis must be retained on the client file.

14. Any recommendation either to purchase or not to purchase a Non Approved Product must be documented via a SOA or ROA in accordance with Libertas Financial Planning Statement of Advice Policy or Libertas Financial Planning Record of Advice Policy.

15. Authorised Representatives must not recommend the acquisition of a new Non Approved Product unless Libertas Financial Planning Compliance Authorisation Process (subject to exceptions listed) detailed within this Policy is followed.

Providing Advice on a Non Approved Product requested by a client

16. Where a client requests advice on whether they should purchase a Non Approved Product the adviser can:

Decline to provide advice on the basis that the product is not approved;

Provide advice if a reasonable basis for that advice can be established.

Providing Advice on a Non Approved Product to address a unique set of client needs or circumstancecs

17. Where an Authorised Representative identifies a unique set of client needs or circumstances, they can provide advice on the purchase of a Non Approved Product if a reasonable basis for that advice can be established.

C. Libertas Financial Planning Compliance Authorisation Process

Subject to the exceptions outlined below:

18. This process applies where an Authorised Representative is seeking approval to recommend the acquisition of a new Non Approved Product or an increase to an existing Non Approved Product.

19. The Authorised Representative must complete a Request to Libertas Financial Planning Compliance to use Non Approved Products Form. Authorisation is not guaranteed and will be reviewed on a case by case basis.

20. Authorisation must be obtained before making any recommendation.

21. A copy of Libertas Financial Planning Compliance or delegate authorisation must be retained on the client file. Requests for authorisations are held on a register maintained by Libertas Financial Planning .

Exceptions

22. Libertas Financial Planning Authorisation is NOT required under the following circumstances if all other conditions of this Policy are met:

Advice to increase the cover of an existing Non Approved personal or business insurance policy;



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Advice to continue or increase existing regular contributions to a Non Approved Product that is in an Approved Asset Class or has underlying investment options that are in Approved Asset Classes;

Advice to fund insurance premiums with an approved insurer, via a platform that has not been approved. If the underlying fund selection is not on the Approved Product List, the funds must:

o be held in Cash; and

o not be greater than three years annual premium above the minimum fund balance.

Further requests for approval to "top-up" the cash holding via lump sum or regular contributions are not required if the total value invested will not exceed the estimated 3 year premium above the minimum fund balance.

For Non Approved employer default superannuation funds including Corporate Superannuation Funds that have been selected through the tender process outlined in Libertas Financial Planning Employer Sponsored Superannuation Policy where advice is being given to employees (or eligible members):

o to join, contribute or increase regular superannuation contributions, make additional lump sum investments, select or switch between investment options, rollover funds (where the recommended underlying investment options are in Approved Asset Classes) or to add new or increase insurance cover;

o who have transferred to the personal division as a result of leaving employment and the adviser recommends underlying investment options that are in Approved Asset Classes;

o who are eligible to transfer to the income stream division as a result of leaving employment or retirement and the adviser recommends underlying investment options that are in Approved Asset Classes;

An Authorised Representative has gained Libertas Financial Planning Compliance or delegate authorisation to provide advice on a Non Approved investment facility/platform and they recommend an increase to this platform/facility by recommending underlying Approved Products. For example, if a client has funds already in ABC Master Fund (Libertas Financial Planning Compliance Authorisation has been obtained to advise on this platform), the Authorised Representative can recommend additional investments into that Non Approved platform/facility however such investments must only be made into underlying Approved Products;

23. When Authorised Representatives have a large number of the same Non Approved Products (Platforms and underlying Non Approved Products) Authorised Representatives should apply for a ‘multiple client’ Authorisation from Libertas Financial Planning Compliance using that option on the Request to Libertas Financial Planning Compliance to use Non Approved Products Form.

Requests for inclusion of Products on the Approved Products List

24. An Authorised Representative who wishes to have a Non Approved Product considered for inclusion on the Approved Product List must send a request to Libertas Financial Planning Compliance. The request must include:

The name of the Non Approved Product;

Reasons why it should be considered for inclusion on the Approved Investment List;

What features and benefits the Non Approved Product offers relative to Approved Products;

How the Non Approved Product would be used in clients’ portfolios if it became an Approved Product; and,

Relevant information, for example the Product Disclosure Statement and research material.






Libertas Financial Planning Employer Sponsored Superannuation Policy




Corporations Act 2011 – Section 961



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OTHER BUSINESS ACTIVITIES Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy addresses the implications, and potential conflicts of interest that can arise, when the Authorised Representative conducts or is associated with other business activities in conjunction with their financial services business. The main risks that can arise from other business activities are:

The client is unable to clearly distinguish between the Authorised Representative’s activities as a representative of Libertas Financial Planning , and their external unrelated activity;

Conflict of Interest: Advisers using their role as an Authorised Representative of Libertas Financial Planning to induce clients to invest in an associated business venture, although this is not an investment approved by Libertas Financial Planning ; and,

Privacy issues if there are common databases and staff within the other business.

The purpose of this Policy is to provide an operating framework for the management of these risks.







Definitions Property Refers to direct property (residential, commercial or industrial).

Authorised Representative/Advice Business Authorised Representative throughout this Policy refers to Authorised Representatives (including Corporate Authorised Representatives) of Libertas Financial Planning . Where the Authorised Representative is a partnership, these principles apply to the partnership as a whole and each partner individually.

Any association that an Authorised Representative or advice business has with a family member or close friend should be deemed as being an extension of the Authorised Representative’s own involvement.

Buyers Agent (or Advocate) (eg. Property) Acts in the interests of the buyer. Only receives remuneration from the buyer, usually in the form of a fee. If remuneration is received from both the buyer as well as the seller, or just from the seller, this is not a buyers agent.

Sellers Agent (eg. Real Estate) Acts in the interests of the seller. Only receives remuneration from the seller, usually in the form of a sales commission. This commission may be governed by state industry guidelines but can be negotiated with each vendor. Real estate agents may sell established property, recently developed property or property that will be, or is in the process of being, (re)developed (“off the plan”).

Property Developer Acts for themselves or their shareholders. Takes on all costs and risks associated with property (re)development and attempts to sell for a profit. Property developers may sell the development directly or by



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engaging the services of one or more real estate agents to which they pay a sales commission. Typically this would be higher than the commission the vendor of an established property would pay to a real estate agent.

Approved external business activity

1. Provided all conditions outlined in this Policy are met, Authorised Representatives may engage in the following non-financial planning business activities:

General insurance, as an Authorised Representative of another Licensee (if prior cross endorsement is obtained from all Licensees);

Accountancy;

Registered tax agent;

Business planning;

Legal services;

Mortgage broking;

Buyers Agent (or Advocate) – provided financial planning clients are only referred to buy property through the Buyers Agent;

Real Estate Agent – provided financial planning clients are only referred to sell property through the Real Estate Agent.

2. The financial planning and non-financial planning activities must be conducted as separate businesses, so clients will understand clearly which activities the Authorised Representative and their business and/or Libertas Financial Planning is responsible for, and which it is not. In practical terms, this must include the following:

a) Separate corporate entities where practical – Libertas Financial Planning prefers that where practicable, the two businesses are conducted through separate corporate entities. However Libertas Financial Planning recognises that in some circumstances this may be commercially impractical, and does not insist on separate corporate entities provided the requirements within this Policy are met.

b) Distinct company or trading names

Where the same trading name is to be used by multiple corporate entities (i.e. same trading name used for multiple business activities), the following conditions must be met:

The Financial Planning business and the other business must maintain separate corporate entities

The same individual must not act in the capacity of both financial adviser and as a representative of the other business. (E.g. financial adviser and accountant)

The trading name must be generic so as not to give the impression that the Authorised Representative could be doing work relating to the other business and vice versa (e.g. ABC Financial Solution, ABC Financial Group, ABC Wealth Advisers).

If the non financial planning business and the financial planning practice are conducted by the same individual or company, then the non financial planning business must operate under a different registered business name to that used by the financial planning business. The two business names and structures must either be completely different, or distinguish their respective activities, for example:

Financial Planning Business ABC Pty Ltd t/a ABC Financial Planning

Other Business ABC Pty Ltd t/a ABC Accountancy Services

c) Separate professional indemnity cover – Professional indemnity insurance cover must be maintained for all business activities external to the financial planning business. The professional indemnity cover provided by Libertas Financial Planning does not cover activities other than those that fall within Libertas Financial Planning financial planning business.

d) Stationery and signage – The non-financial planning business must have separate stationery and signage, however Authorised Representatives are permitted to have double sided Business Cards with their financial planning business on one side and their non-financial planning business on the other side provided all requirements outlined in Libertas Financial Planning Promotion and Identification of Authorised Representatives and their Practices Policy are met.



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e) Promotional material - Promotional material may include references to both the financial planning and non-financial planning businesses, provided all requirements outlined in Libertas Financial Planning Promotion and Identification of Authorised Representatives and their Practices Policy are met.

f) Explain distinction to clients – Authorised Representatives must ensure clients are informed of, and clearly understand, the delineation between the advice and services provided as an Authorised Representatives of Libertas Financial Planning , and those provided in any other capacity. The distinction must be explained in discussion with the client, and accurately reflected in all promotional material (e.g. brochures).

g) Separate client files – Separate client files and databases must be maintained for each business. Where records are held electronically, the records relating to the two businesses must be stored separately with access restricted appropriately.

h) Confidentiality of client information – Client confidentiality must be observed (see Libertas Financial Planning Collection, Use, Disclosure and Security of Client Information Policy). Client information obtained by one corporate entity cannot be disclosed to another without written authority from the client.

i) Separate invoices – All fees and charges associated with the conduct of the non-financial planning business must be separately invoiced on the appropriate stationery. A single invoice/payment combining fees for financial planning and non-financial planning services is not permitted.

j) Income directed appropriately – The non-financial planning business must not be used as a vehicle for the redirection of income away from Libertas Financial Planning . All income relating to the provision of financial planning advice within the scope of the Authorised Representative’s agreement with Libertas Financial Planning must be paid to Libertas Financial Planning .

External business activities that are not permitted

3. Authorised Representatives / Advice businesses are not permitted to operate in the following areas:

As an Australian Financial Services Licensee;

Authorised Representative /or Corporate Authorised Representative of another Australian Financial Services Licensee – other than for General Insurance (provided the licensee’s cross-endorsement procedures below are followed);

Property development (except where the Authorised Representatives is investing their own funds). Under no circumstances may an Authorised Representatives invite any third party (client or otherwise) to participate in activity of this nature conducted by them;

Real Estate Agent – except where financial planning clients are referred to sell properties through the Real Estate Agent;

Finance/lease origination;

Promoter of an investment scheme;

Issuer of a financial product; and

Any other business activity, which has the potential to compromise the reputation of Libertas Financial Planning and/or create an unacceptable conflict of interest with regard to the Authorised Representative’s relationship with client(s).

Referrals to other businesses 4. Where the Authorised Representatives refers clients from their financial planning business to their other

business they must comply with all the relevant requirements set out in Libertas Financial Planning Referral Arrangements Policy.

Cross endorsement – general insurance

5. If arranging cross endorsement for General Insurance the Authorised Representatives must:

Apply to Libertas Financial Planning for consent for cross endorsement. Refer to the Cross Endorsement Process. Libertas Financial Planning will notify the Authorised Representatives in writing of the decision;

Have a separate FSG for each General Insurance Australian Financial Services Licensee;

State in the existing Libertas Financial Planning FSG the following:

<Adviser’s Name> is not authorised by <Licensee Name> to provide financial product advice in the following financial products:

General Insurance Products



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Provide the approved Libertas Financial Planning FSG to clients at the same time the FSG for the external General Insurance Licensee is provided;

Provide a separate advice document for any recommendation relating to General Insurance Products;

Include the following wording in the Acknowledgments section of the Fact Find/Client Profile:

Where my adviser provides general insurance related financial services, I acknowledge that:

o My adviser provides me with general insurance advice as a representative of [name of GI Licensee]. My adviser has given me a separate FSG concerning those services.

o My adviser is not authorised to provide general insurance related financial services by the Australian Financial Services Licensee identified on the front page of this document. Libertas Financial Planning is not liable to me or any other person for any conduct whatsoever of my adviser or any other representative of the General Insurance Licensee concerning the provision of general insurance related financial services.

The approval process

6. Authorised Representatives who conduct a business, or otherwise operate in an area which falls within the scope of Principles 1 or 3 (above), will be required to notify Libertas Financial Planning , in writing via the Other Business Activities Notification Form, of their involvement in the conduct of an external business. Authorised Representatives wanting Libertas Financial Planning approval for permitted business activities must confirm on this form that they meet all requirements of Principle 2 of this Policy.

7. Authorised Representatives must have written approval from Libertas Financial Planning to continue to operate the business in conjunction with their role as an Authorised Representatives of Libertas Financial Planning .

8. If Libertas Financial Planning does not provide written approval, the Authorised Representative must:

Organise the termination of the non-financial planning business as soon as practicable, or as instructed by Libertas Financial Planning ; and,

Inform Libertas Financial Planning in writing, when the business activity has been terminated.

Alternatively, the Authorised Representative may elect to cease their relationship with Libertas Financial Planning .


Libertas Financial Planning Collection, Use, Disclosure and Security of Client Information Policy

Libertas Financial Planning Promotion and Identification of Advisers and their Practices Policy

Libertas Financial Planning Referral Arrangements Policy

PERSONAL AND BUSINESS INSURANCE ADVICE Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy outlines the advice process and documentation required when providing Personal and Business Insurance advice.






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Definitions

Business Insurance Advice

Financial planning services to clients requesting advice relating to:-

Ownership protection – insurance that provides the continuing owners of a business (or their nominees) with sufficient cash for the transfer of an outgoing owner’s equity to the continuing owners, should a business owner die, become disabled or suffer a critical illness;

Revenue protection – insurance that provides a business with enough money to compensate for the loss of revenue and costs of replacing a key employee or business owner should they die, become disabled or suffer a critical illness;

Asset protection – insurance that can provide a business with funds to preserve its asset base so it can repay/ reduce debts, free up cash flow and maintain its credit standing if a business owner or loan guarantor dies, becomes disabled or suffers a critical illness. It can also release personal guarantees, thereby protecting an owner’s personal assets such as the family home; or

Business Expenses insurance – provides those who are self-employed or in a small partnership/company with cover that will help pay the ongoing expenses of the business in the event of disablement.

Personal Insurance Advice

Personal insurance advice is provided to an individual or both spouses or partners who have a personal need for wealth and asset protection. Premiums can be paid for by a business they own, their employer, their superannuation fund or directly by themselves. The individual or their partner/spouse is usually the policy owner.

Competencies and Accreditation

1. Authorised Representatives must complete the relevant insurance product competencies prior to providing both personal and business insurance advice.

2. Authorised Representatives must complete the Business Insurance accreditation to advise and deal in Business Insurance.

Advice Process

3. Authorised Representatives must comply with all other applicable Libertas Financial Planning Policies. Some of the key requirements when advising on personal and business insurance include:

Providing the client with a Financial Services Guide (FSG) prior to providing any financial service please refer to Libertas Financial Planning Financial Services Guide Policy;

Using an appropriate Fact Find or Client Profile in accordance with Libertas Financial Planning Fact Finding and Other Investigations Policy. For example, either the Wealth and Asset Protection Client Profile for personal insurance or the Business Protection Needs Analysis Form for business insurance.

Having and demonstrating a reasonable basis for advice. Where this involves recommending top up income protection, consideration must be given to whether an offset clause applies. Authorised Representatives should also note when using research tools that their product ratings are based on a general set of factors and it is the Authorised Representative’s responsibility to consider these in context of their client’s circumstances. For example, many research tools do not factor in the financial strength and sustainability of the insurer, consistency of premiums over time and claims history. Where these issues are important to a client the Authorised Representative must consider supplementing research from other sources (additional to the research software) in order to demonstrate a reasonable basis for the advice;

Preparing and providing the client/s with appropriate advice via a Statement of Advice (SOA) in accordance with Libertas Financial Planning Statement of Advice Policy;

Providing the client/s with a current Product Disclosure Statement(PDS); and

Offering the client/s a review annually (unless the client has advised the Authorised Representative in writing they do not wish to be offered a review).



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Non Approved Products

4. Authorised Representatives can only recommend insurance products that are on Libertas Financial Planning Approved Product List. Authorised Representatives should refer to Libertas Financial Planning Non Approved Products Policy in relation to servicing rights for non approved products, where the client holds existing non approved products or where there is a requirement for a non approved product to meet the needs of the client.

Business Insurance Fact Finding

5. In addition to the information provided through the usual data collection process, consideration must be given to the following further issues for business insurance advice:

The Authorised Representative must retain file notes and communications pertaining to referral of clients to – and subsequent dealings with – other professional service providers, such as solicitors, accountants and business valuation firms;

The Authorised Representative must retain evidence of business insurance decisions via documents such as file notes, minutes of meetings, buy sell agreements, and business valuations. These documents provide evidence of the insurance requirements, goals and objectives of all stakeholders;

The Authorised Representative must determine if the individual(s) seeking the advice is (are) authorised to do so by the business by sighting documentary evidence.

6. The Business Protection Needs Analysis Form or other relevant fact find/client profile must be signed by an individual who is authorised by the business to obtain the advice. Depending on the structure of the business, this may include a company director or secretary, a trustee or a partner. An individual who is otherwise duly authorised by the business to obtain the advice may also be the signatory. An Authorised Representative will need to retain written evidence of this authorisation. Best practice dictates that data collection would involve all business owners/directors/trustees.

7. Details of the business’ financial statements will need to be obtained in all cases to evidence the basis for any needs analysis and to demonstrate the affordability of the recommended policies. Where such financial statements do not exist or are unable to be obtained, the adviser must obtain from the clients a “Statement of Affordability” confirming that the business can “afford” a certain level of premium.

Special Statement of Advice Requirements

8. The SOA must be addressed to the individuals seeking the advice for personal insurance advice and in the case of business insurance and any advice must be provided to either the person/s authorised by the business to obtain advice or jointly to all business owners/directors/trustees.

9. Unless the client instructs otherwise, the Authorised Representative must identify the amount of cover the client needs and base their recommendations on this amount of cover. If the client can't afford the recommended cover then the Authorised Representative needs to make a statement to that affect in the SOA and then could state the amount of cover the client can afford after restructuring cash flow if required. That is, the Authorised Representative should not recommend a lower level of cover than that identified by the needs analysis.

10. As a matter of best practice Authorised Representatives should provide information to the client about their premium options, and the long term cost comparison.

11. Policy Ownership & Taxation issues must be addressed for both personal and business insurance advice as there can be significant taxation consequences surrounding the ownership of the recommended insurance policies.

Where relevant, consideration should be given to grossing up the sum insured to take account of capital gains tax on insurance proceeds, superannuation and employment benefits. Advice in relation to Asset Protection should have regard to the commercial debt forgiveness laws.

When considering policy ownership, the advice must take into consideration whether the proceeds in the event of claim will flow to the appropriate person or entity in a timely manner, as well as the client’s estate planning requirements. Advice in relation to Asset Protection should also take into consideration other intended outcomes such as release of personal guarantees.

12. In the case of business insurance the SOA must address business succession issues and consider key person versus business succession agreements.

13. Estate Planning issues must be addressed in the SOA for both personal and business insurance advice.



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14. In the case of business insurance advice it is common for business partners to have legal documents (Buy/Sell Agreements) as part of their business insurance strategy. Each SOA must contain a recommendation advising the client to seek legal advice and have such documents/agreements relevant to the recommended cover reviewed or put in place. In addition, the SOA must also include a comment stating that without the relevant documents/agreements in place the recommended cover may not assist in achieving the client objectives.

Replacing Insurance Policies

15. The Authorised Representative must make reasonable inquiries in accordance with Libertas Financial Planning Fact Finding and Other Investigations Policy about the disposal and acquisition costs, loss of benefits and other significant consequences to the client if providing replacement product advice.

16. When considering whether to replace an existing insurance product for another, there are many considerations Authorised Representatives need to take into account. Some of these include premiums, fees, insurance coverage, continuation options, insured’s current state of insurability. The Business Insurance Replacement Product Checklist or Personal Insurance Replacement Product Checklist can be used whenever an Authorised Representative considers the appropriateness of the current policy and whether to replace it. If used then this checklist must be retained on the client file to demonstrate the research conducted.










ASIC information release IR 04-63: ASIC Campaigns against Churning and Misselling.

Corporations Act 2001 – particularly Chapter 7 (sections 761G (6), 1017C, 947 and 961) and associated Regulations

PROMOTION AND IDENTIFICATION OF ADVISERS AND THEIR PRACTICES POLICY Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).




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Libertas Financial Planning Policy This Policy outlines the regulatory and Licensee requirements that apply to the promotion and identification of Authorised Representatives and their practices in business documents, websites, signage, advertising and other promotional material.

Libertas Financial Planning is aware that many Authorised Representatives and their brands are recognised in their community and acknowledges the importance of this to Authorised Representatives. Accordingly this standard has been designed to ensure Authorised Representatives meet the regulatory requirements regarding disclosure while maintaining some flexibility to meet their business needs.

Please note: The FPA Principal Member category no longer exists for Libertas Financial Planning . Accordingly, any stationery or promotional materials that include reference to this will need to be updated.







Definitions

Authorised representatives An individual acting as an Authorised Representative of the Licensee.

Corporate Authorised Representative (CAR) An Authorised Representative that is a corporate entity. Where the Business Agreement with Libertas Financial Planning is held by a corporate entity, that corporate entity will be issued an Authorised Representative Certificate and will be a Corporate Authorised Representative.

Licensee Libertas Financial Planning (holder of an Australian Financial Services License (AFSL)).

Key business documents Letterheads (paper and electronic - includes emails), business cards.

Other business documents With compliments slips, fax cover-sheets, envelopes and routine administration forms.

Promotional materials Include written materials, such as brochures, newsletters, circulars, flyers, PowerPoint presentations, advertisements, telephone directory listings and counter displays; material on any electronic medium, such as email, websites, social media, television, radio, audio or videotape; invitations to seminars; and signage.

Registered business name (RBN) A trading name registered to one or more Authorised Representatives, or a partnership, trust or other entity using that name.

Registered trading name (RTN) A trading name registered by one or more corporate entities, including the CAR and the Licensee.

Advice documents Statement of Advice and Record of Advice.

Core requirements

There are three core requirements that apply to all materials used by Authorised Representatives in the identification or promotion to the public of their business relationship with Libertas Financial Planning .

1. Licensee disclosure

All Key Business Documents and promotional materials used by one or more associated Authorised Representative (and their CAR if applicable) must disclose:

the identity of the Authorised Representative/s and, where appropriate, their CAR;



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that the Authorised Representative/s are Authorised Representatives of Libertas Financial Planning ; and,

the company name of Libertas Financial Planning and the fact Libertas Financial Planning is an Australian Financial Services Licensee.

This disclosure must be made in a clear, concise and effective manner and in easily understood terms that do not:

confuse or mislead, or have the potential to confuse or mislead, consumers; or,

create the impression that the Authorised Representative or their business is an Australian Financial Services Licensee or conducting a financial services business in their own right.

The standard wording for this disclosure will depend on the nature of the Authorised Representative’s legal relationship with Libertas Financial Planning as documented in their business agreement:

(a) where the individual Authorised Representative holds the Business Agreement:

John Smith Authorised Representative Licensee Name Pty Ltd

Trading as XXX (Applicable if Authorised Representatives want to use Libertas Financial Planning brand name)

Australian Financial Services Licensee

(b) where a CAR holds the Business Agreement:

John Smith ABC Pty Ltd Authorised Representatives Licensee Name Pty Ltd Trading as XXX (Applicable if Authorised Representatives want to use Libertas Financial

Planning brand name) Australian Financial Services Licensee

Please note:

Authorised Representatives must ensure that only trading/business names that are appropriately registered via the relevant State or Territory Authority in the State or Territory they trade in are used by the CAR and/or Authorised Representative;

Where there are a number of Authorised Representatives who work for the CAR or individual who holds the Business Agreement, their names can be listed above the name of that CAR/individual as in the following example:

John Smith Bill Brown ABC Pty Ltd Authorised Representatives Licensee Name Pty Ltd Trading as XXX (Applicable if Authorised Representatives want to use Libertas Financial Planning brand name) Australian Financial Services Licensee

2. Clear, concise and effective requirements

In order to satisfy the disclosure requirements, the name of Libertas Financial Planning must be reasonably prominent so that Libertas Financial Planning identity and relationship with the Authorised Representative (s)/CAR is clear to the consumer. This required clarity is not simply a question of size; it is also a matter of positioning and visual impact (For example, colour, style, etc.). Ultimately Authorised Representatives must ensure it is clear who the Authorised Representative is and who they represent.

3. Advice Compliance sign off

The following promotional materials require sign off from Libertas Financial Planning Compliance:

Websites;

TV/Radio/Newspaper advertisements

Yellow pages advertisements

External signage

Social media wall pages



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FSG and Stationery for new advisers

Other promotional materials do not require approval but must be completed in accordance with this Licensee Standard. Checklists have been developed to assist advisers in meeting these requirements.

Please note that any documents and/or external signage that have been printed without prior approval from Libertas Financial Planning Compliance (unless exempted) must be reprinted at the Authorised Representative’s expense.

Specific requirements

The preceding section outlines the core requirements that apply in every situation. These should be read in conjunction with the following specific principles that relate to different types of promotional material. Advice Strategy has developed guides and checklists that will assist advisers meet these requirements.

4. Key business documents

These requirements apply to letterheads (paper and electronic), emails, and business cards.

(a) Each Authorised Representative must have his or her own individual documents. The only exception is where more than one Authorised Representative is associated with the same Corporate Authorised Representative, in which case a single letterhead can be used. When using the corporate letterhead there is no need for all Authorised Representatives to be listed provided that the Authorised Representatives sign-off using “Authorised Representative” directly under their name.

(b) Letterheads constitute ‘Public Documents’ under the law and therefore where a company name appears on it the document must also include the company’s full name and Australian Company Number (ACN) or Australian Business Number (ABN) (if the last 9 digits of the ABN are the same as the ACN).

(c) The footer of letterhead must contain the following disclosure in a minimum font of 8 point Times New Roman or better:

Corporate Example CAR name ACN XXX XXX XXX Authorised Representative of Libertas Financial Planning ABN 27 160 419 134 Trading as XXX (Applicable if Authorised Representatives want to use Libertas Financial Planning brand name) Australian Financial Services Licensee Level 6, 111 Elizabeth Street Sydney NSW

Individual Adviser Example Adviser Name, ABN XX XXX XXX XXX, Authorised Representative of Libertas Financial Planning ABN 270160 419 134 Trading as XXX (Applicable if Authorised Representatives want to use brand name) Australian Financial Services Licensee Level 6, 111 Elizabeth Street Sydney NSW

(d) Standard Licensee templates have been provided by Libertas Financial Planning which meet all regulatory and Licensee requirements. Where these are used without any alteration, no further sign off is required from Libertas Financial Planning Compliance.

(e) Non standard formats may be used for letterheads and business cards. These formats should be developed with reference to the standard Libertas Financial Planning Group templates and:

Must comply with the Licensee disclosure and clear, concise and effective requirements above;

The Licensee’s registered address is not required to be shown on business cards;

The identity of the Licensee and Authorised Representative/CAR must be on the same side of business cards. However, the Authorised Representative/CAR’s financial services can be listed on the reverse side of the business card, if appropriate and if desired;

May incorporate the words “a member of Libertas Financial Planning of companies” in conjunction with the name of Libertas Financial Planning ;

May include the Authorised Representative’s corporate logo;

May include your professional designation with the FPA subject to compliance with FPA Logo and Brand guidelines. Refer to the FPA website for further information.

Authorised Representatives who operate other businesses must comply with Libertas Financial Planning Other Business Activities Policy in relation to key business documents.



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Other business documents

5. With compliments slips, fax cover sheets, envelopes and routine administration forms (e.g. change of address forms) are not subject to the core disclosure and prominence requirements, on the basis that adequate disclosure of Licensee identity and Representative’s capacity is made in the Financial Services Guide, Advice Documents and Key Business Documents. Advisers should note, however, that the underlying principles still apply, for example, the material must be clear, concise and effective, must not be misleading or confusing, and must not imply that the adviser/CAR holds an AFSL in their own right.

Promotional materials (excluding websites & signage)

6. Promotional materials covered by these principles include:

Written materials, such as brochures, newsletters, circulars, flyers, PowerPoint presentations, advertisements, invitations and telephone directory listings; and,

Material on any electronic medium, such as email, television, radio, audio, videotape. For the specific requirements relating to Social Media refer to the Adviser Guidelines for the Use of Social Media.

7. With the exception of telephone listings, all promotional material must include a disclaimer and the Licensee approved general advice warning where a financial product or class of financial product has been mentioned in the material.

8. Advisers developing their own promotional material:

(a) Must comply with the Licensee disclosure and clear, concise and effective requirements above;

(b) In brochures, circulars, flyers and the like, disclosure should occur at the earliest reasonable opportunity in the document (e.g. not page 20 of 20). It is acceptable, however, for television, radio, audio or videotape, CD/DVD material to include the disclosure as the last frame (television/ videotape) or verbal comment (radio/audio);

(c) Must include the full name of the Licensee, registered address and type of licence held, for example:

Libertas Financial Planning Trading as XXX (Applicable if advisers want to use Libertas Financial Planning brand name) Australian Financial Services Licensee Registered Office at Level 1, 90 Vulture Street, West End Qld 4101

Exception telephone listings & Radio Advertising:

“One line” telephone directory listings are not required to mention the name of the Licensee, provided the wording is not misleading and does not imply that the Authorised Representative/s is/are acting as a Licensee.

The Licensee registered business address is not required to be included in Yellow Pages or Radio advertisements.

(d) May incorporate the words “a member of the National Australia Group of companies” in conjunction with the name of the Licensee;

(e) May include the adviser’s corporate logo;

(f) May include the FPA or other approved association name, logo or your designation, subject to compliance with FPA or other approved association Logo & Brand guidelines;

(g) May include an RBN or RTN; and,

(h) Must not imply that the adviser is the sole adviser of the Licensee in any area or has exclusive geographic rights.

(i) Printed advertisements relating to the provision of credit must disclose the Australian Credit Licence (ACL) number

(j) The Promotional Material/Signage Checklist has been developed to assist Authorised Representatives meet these requirements.

Signage

9. External signage, signage on office doors and in reception areas is not compulsory.



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10. Signage need not mention the Licensee provided the wording is not misleading and does not imply the Authorised Representative or CAR (if applicable) is acting as an Australian Financial Services Licensee. This is particularly important where an RBN or RTN is shown on the sign.

11. Where signage does contain the name of the Licensee and/or the wording “Authorised Representative” or “Corporate Authorised Representative” then the Licensee disclosure and clear, concise and effective requirements above must be met.

12. If signage mentions or lists services or areas of advice, core disclosure requirements need to be met.

13. The Promotional Material/Signage Checklist has been developed to assist advisers meet these requirements.

Promotional material – websites

14. These principles apply to all websites, irrespective of the format used. Advisers:

a) Must comply with the Licensee Disclosure and clear, concise and effective requirements above. Disclosure must occur at the earliest reasonable opportunity, for example, on the home page;

b) Must include the full name of the Licensee, type of licence held and registered address, for example:

Libertas Financial Planning Trading as XXX (Applicable if advisers want to use Libertas Financial Planning brand name) Australian Financial Services Licensee Registered Office at Level 1, 90 Vulture Street, West End Qld 4101

This information must appear on the home page;

c) May incorporate the words “a member of the National Australia Group of companies” in conjunction with the name of the Licensee;

d) May include the adviser’s corporate logo. The use of the adviser’s logo must not be misleading or confusing nor create the impression that the Authorised Representative(s) or CAR is an Australian Financial Services Licensee. The home page may include both the adviser(s)/CAR and the Licensee logo. Either or both logos may be used on its own on subsequent pages;

e) May include your professional designation with the FPA subject to compliance with FPA Logo and Brand guidelines. Refer to the FPA website for further information.

f) May include an RBN or RTN;

g) Adviser-developed formats are not subject to any colour restrictions (other than in reproduction of the Licensee and FPA logos);

h) Must include the Terms and Conditions no more than one link from the home page. Please refer to General Advice Warnings and Core Disclosure document. It is recommended that a “Legal and Advice Warning” button is created on the home page;

i) May include links to the sites of financial services companies on the Licensee’s Approved List and regulator sites, for example, ASIC, ATO etc;

j) Must not include any links to calculators, sites of financial services companies not on the Licensee’s Approved List or any other financial/non financial sites without specific Advice Compliance approval;

k) Must not include any reference or link to other business activities undertaken by the adviser which are outside the scope of the Business Agreement without specific Advice Compliance approval;

l) Must ensure that information on the site remains current at all times through regular updating;

m) Can provide general advice via the site, and if so, must include an appropriate warning. Please refer to General Advice Warnings and Core Disclosure document;

n) May use the site to collect personal client information, subject to the Licensee Standard – Collection, Use, Disclosure and Security of Client Information;

o) Must obtain sign off from Advice Compliance in your state prior to the site going live; and

p) Must obtain sign-off from Compliance for all subsequent proposed changes to the site, except for minor changes, namely:

changes to photos; and,



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address/email/phone/fax changes.

q) The Website Checklist has been developed to assist advisers meet these requirements.

Breach of key principles

Advisers using identification and/or promotional material which does not comply with the key principles will be required to withdraw such material/signage immediately and modify it, at their expense, in accordance with the requirements set out in this Licensee Standard.



Libertas Financial Planning Other Business Activities Policy


ASIC FAQ103

ASIC Practice Note 47, in particular 47.71

ASIC RG 161 Share and interest sale facilities

Corporations Act 2001 – Chapter 7 (e.g. S911C, S942C(6A), S947C(6), S952, S953 and 1041H)

ASIC Act 2001 – S12DA

RECORD OF ADVICE Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy and the Record of Advice (ROA) Guide provides guidance to Authorised Representatives as to when an ROA can be used to document further advice to existing clients and what must be included in an ROA.







Definitions

Classes of Financial Products

Securities

Derivatives

Debentures

Foreign exchange contracts (other than those that are defined to be derivatives)

Deposit Products

Managed investment products (including platforms such as Master Trusts and Wrap Accounts)



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Superannuation products (including Retirement Savings Accounts and Self Managed Superannuation Funds);

Investment life insurance products; and

Life risk insurance products;

Margin Lending.

When to use an ROA

11. Separate rules apply to the use of ROAs for wholesale clients. Please refer to Libertas Financial Planning Wholesale Clients Policy.

12. For retail clients an ROA can be used to provide further advice to an existing client if all of the following criteria are met:

The Authorised Representative has personally provided that client with a Statement of Advice (SOA), Financial Plan or Customer Advice Record (collectively referred as an Advice Document) that contains the client’s objectives and financial situation and needs;

Exception: Where the client has received an Advice Document from an Authorised Representative who is an employee of a Corporate Authorised Representative (CAR) and the client is still a client of the CAR then all Authorised Representatives who are employed by the CAR can potentially use an ROA - not just the Authorised Representative who provided the previous Advice Document.

The client’s objectives and their financial situation and needs that are relevant to the further advice are not significantly different from those in the previous Advice Document;

The basis on which the further advice is given is not significantly different from the basis on which the previous advice was given: and

The further advice relates to a Class of Financial Products and/or strategy that was either recommended or discussed as an alternative in the previous Advice Document.

The Licensee recommends as a matter of best practice, that an ROA is not used beyond 5 years from the date of the earlier SOA. Instead advisers should provide a new SOA in which to continue to provide further advice.

13. As the legislation is not prescriptive in relation to the definition of “significant”, and there are so many different circumstances that can apply, Libertas Financial Planning has provided Authorised Representatives with an ROA Guide in order to help Authorised Representatives to determine whether an ROA or an SOA is required.

14. Authorised Representatives must read and understand the ROA Guide before documenting any further advice via an ROA.

Methods of advice communication

15. Advice appropriate to an ROA, must be communicated to the client by the Authorised Representative via one of the following methods:

Verbally and then recorded in the ROA – verbal advice template immediately after where practicable, but in any event within one business day of the further advice being provided

OR;

In writing, via the ROA – advice in writing template, which can be emailed, letter posted or faxed to the client.

ROA Process

16. If the client does not have a current version of the Authorised Representative’s Financial Services Guide (FSG), they must make a current version available to them within 24 hours of providing the further advice in accordance with Libertas Financial Planning Financial Services Guide Policy.

17. The Authorised Representative must ascertain if the client’s objectives and their financial situation and needs relevant to the advice have changed and then using the ROA Guide, determine whether the changes (if any) are insignificant.

Note: Advice via a written ROA, the advice can rely on an ‘assumed no significant change to circumstances’ provision, provided the client’s circumstances have been updated within the last 15 months. Refer to ROA - advice in writing template and ROA guide.

18. Authorised Representatives must comply with Libertas Financial Planning approved Investment Guidelines and Asset Allocation Guidelines where the advice involves investment linked financial products in accordance with Libertas Financial Planning Statement of Advice Policy.



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19. Where the client requests a copy of the ROA this must be provided to them within 5 business days.

20. The client must accept the advice and consent to proceed before the adviser arranges implementation. For example, return email, written consent on the ROA or a phone call which is then file noted.

21. The ROA together with any supporting research and attachments must be kept on the client file for 7 years from the date of the ROA and in accordance with Libertas Financial Planning Client Files Policy.

Client Reviews

22. Where the client is paying a fee for service/advice and the further advice provided verbally relates to the client’s annual review the client must be sent either a:

Copy of the ROA; or

The Licensee approved ROA Annual Review Letter edited and personalised for the client.

23. If sending an ROA Annual Review Letter this can state the outcomes of the further advice already provided but must not contain the reasons for that advice.

Content

24. If Authorised Representatives want to use a different format to Libertas Financial Planning approved templates, the content of the ROA must still contain all the information required in the approved template.

25. The ROA must demonstrate a reasonable basis for the advice and record any verbal discussion held with the client by including the following information:

The client/s name;

The title and date of the previous Advice Document referred to;

Changes to the client’s objectives and their financial situation and needs relevant to the further advice and the reasons why these are not considered significant;

The basis for the further advice and the reasons why this is not considered significant;

The advice and the reasons for all recommendations including the benefits for the client;

The costs and risks associated with the advice;

The name and preparation date of the Product Disclosure Statement (PDS) already provided to the client or that will be provided to the client before implementation of any advice (if applicable);

Any required warnings as set out in the ROA Guide;

Disclosure of commission and fees and any conflicts of interest associated with the advice;

Where the advice involves replacement in whole or part of a financial product the requirements set out below;

The fact that the adviser has offered the client a copy of the ROA at no cost;

The date the advice was provided;

The fact that the client consents to implementation of the advice. Where the client does not accept the advice or where they want to make a variation this must also be noted; and

The name of the adviser who provided the advice and their signature.

26. Any supporting research or documents relevant to the advice must be attached to the ROA.

The Licensee has provided ROA Examples for adviser to use as a reference tool.

Replacement Product Advice

27. Authorised Representatives are only permitted to recommend a replacement of a financial product to a client using an ROA where all the conditions set out in this Policy are met and the advice involves:

Switching between similar investment options or product issuers within the same platform;

Selling listed securities and replacing them with other listed securities; or

Switching between margin lending providers

Please note: Further guidance on switching, rebalancing and asset allocation advice is provided in the ROA Guide.

28. Where the Authorised Representative recommends the full or partial replacement of a financial product the ROA must demonstrate a reasonable basis for that advice and comply with the requirements set out in Libertas Financial Planning Fact Finding and Other Investigations Policy



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29. The documented ROA and any advice provided verbally must also include the following information:

a) The costs and charges the client will or may incur concerning the disposal or reduction;

b) The costs and charges the client will or may incur concerning the acquisition or increase;

c) Any pecuniary or other benefits that the client will lose either (temporarily or permanently) as a result of the replacement advice; and

d) Any significant consequences for the client that are likely to occur if they proceed with the advice that the adviser is aware of or should reasonably know.

Information provided to the client relating to paragraphs (a), (b) or (c) must to be stated in dollars, where the costs, charges and loss of benefits have a monetary value.

If the Authorised Representative doesn’t know (and cannot reasonably find out) the information above, they must decline to provide advice.








RG 36 Licensing - Financial Product Advice and Dealing


Corporations Act 2001 – particularly Chapter 7 (sections 946, 947, 948 and 961) and

Associated Regulations (7.7.05, 7.7.08, 7.7.09, 7.7.10, 7.7.11, 7.7.12 and 7.7.13)

ASIC Class Order 04/1556

REFERRAL ARRANGEMENTS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy This Policy deals with the requirements for Authorised Representatives who receive client referrals from third parties and Authorised Representatives who refer clients to third parties, where a fee or other pecuniary benefit is paid to the referrer. This Policy does not apply where no such fee or other benefit is paid.

Where the referral arrangement has a different structure to any of the situations contemplated in this Policy, Authorised Representatives must promptly discuss the particular circumstances with Libertas Financial Planning Compliance.








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Definitions

To “refer” is to direct a client to a third party (including a related third party) for help or information. For example, an Authorised Representative may refer a client to a lawyer for legal advice, or an accountant may refer a client to an Authorised Representative for financial planning services.

A “referral arrangement” is an ongoing arrangement between an Authorised Representative and a third party (including a related third party) under which one party refers clients to the other in exchange for a referral fee.

A “referral fee” is a fee or other pecuniary benefit paid by the referee to the referrer.

A “referred client” means a client who has been referred to an Authorised Representative by a third party (including a related third party).Property Refers to direct property (residential, commercial or industrial).

Authorised Representative/Advice Business Authorised Representative throughout this Policy refers to Authorised Representatives (including Corporate Authorised Representatives) of Libertas Financial Planning . Where the Authorised Representative is a partnership, these principles apply to the partnership as a whole and each partner individually.

Any association that an Authorised Representative or advice business has with a family member or close friend should be deemed as being an extension of the Authorised Representative’s own involvement.

Buyers Agent (or Advocate) (eg. Property) Acts in the interests of the buyer. Only receives remuneration from the buyer, usually in the form of a fee. If remuneration is received from both the buyer as well as the seller, or just from the seller, this is not a buyers agent.

Sellers Agent (eg. Real Estate) Acts in the interests of the seller. Only receives remuneration from the seller, usually in the form of a sales commission. This commission may be governed by state industry guidelines but can be negotiated with each vendor. Real estate agents may sell established property, recently developed property or property that will be, or is in the process of being, (re)developed (“off the plan”).

1. Arrangements to be documented: All referral arrangements involving a referral fee must be documented in a written agreement. Libertas Financial Planning has prepared a Referral Letter Template as a guide for instances where a third party is referring to Authorised Representatives. Authorised Representatives will need to insert the relevant commercial details (such as fees and pecuniary benefits) into the letter. Authorised Representatives can adapt this letter, or use another form of agreement, but any referral agreement must include the terms that are marked “mandatory”.

Please note: Whilst it is Libertas Financial Planning position that all referral agreements should be signed by both parties in order to expressly acknowledge the terms of the arrangement, in circumstances where the Authorised Representative pays the referral fee directly to the referrer (and the Authorised Representative does not receive any payment) the minimum requirement is that the agreement be documented and a copy provided to the other party.

2. Referral Register: Referral agreements involving payment of a fee or other benefit must be documented in a referral register. It is considered best practice to record all other referral agreements in the register. The Sample Referral Register has created as a guide for recording the relevant details of these agreements.

3. Licensee pays referral fee: Requests for Libertas Financial Planning to pay the referrer out of the Authorised Representative’s commission entitlements must be made on a case by case basis. Libertas Financial Planning will consider each request at its discretion, and if it approves the request, must be a party to the written agreement.

4. Participation in sale proceeds of the business: If a referral arrangement contemplates participation in sale proceeds, then, in addition to a referral agreement, the Authorised Representative and referrer will also need to consider and negotiate the terms on which a lump-sum may be paid out. The Authorised Representative and the referrer should obtain independent valuation, taxation and legal advice on the consequences of a proposed “sale proceeds” arrangement before entering into an agreement.

5. Licensee notification of referral arrangements: Authorised Representatives are required to notify Libertas Financial Planning of any referral arrangements they have in place by completing the Licensee Notification of Referral Arrangements Form prior to any referral fees being paid.



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Referral Arrangements that are permitted

6. Provided all conditions outlined in this Policy are met, Authorised Representatives may enter into referral arrangements (as either referee or referrer and pay or receive referral fees) with the following non-financial planning businesses:

General insurance, as an Authorised Representative of another Licensee (if prior cross endorsement is obtained from all Licensees);

Accountancy;

Registered tax agent;

Business planning;

Legal services;

Mortgage broking;

Buyers Agent (or Advocate) – provided financial planning clients only buy property through the Buyers Agent;

Real Estate Agent – provided financial planning clients only sell property through the Real Estate Agent.

Referral Arrangements that are not permitted

7. Authorised Representatives are not permitted to enter into referral arrangements whereby they act as referrer and receive referral fees from the referee in the following non-financial businesses:

Property development;

Real Estate Agent – except where financial planning clients are referred to sell properties through the Real Estate Agent;

Finance/lease origination;

Promoter of an investment scheme;

Issuer of a financial product; and,

Any other business activity, which has the potential to compromise the reputation of Libertas Financial Planning and/or create an unacceptable conflict of interest with regard to the Authorised Representative’s relationship with client(s).

The following Principles set out the key regulatory matters that must be considered when entering into and administering a referral arrangement.

Privacy

8. If a referred client decides to engage an Authorised Representative to provide financial planning services, and this will involve the Authorised Representative disclosing personal client information to the referrer in the future then the Authorised Representative must obtain the client's consent to that disclosure in accordance with Libertas Financial Planning Collection, Use, Disclosure and Security of Client Information Policy. The Referral Privacy Consent Form must be used to obtain consent.

Disclosure

9. Authorised Representatives receiving referrals from third parties (including related third parties): The Authorised Representative must disclose the referral fee to the referred client in the relevant written advice document (and verbally if advice is provided via a verbal Record of Advice). The dollar amount must be disclosed or where a dollar amount cannot be provided then worked dollar examples must be provided.

Please refer to the General Advice Warnings and Core Disclosure document for appropriate verbal and written wording for the above situation.

10. Authorised Representatives referring clients to Third Parties (including related third parties): If the Authorised Representative refers clients to a third party, then the Authorised Representative must disclose that they will receive a referral fee and/or disclose any conflicts of interest and associations at the time of the referral. Initially, there is no requirement to disclose the actual dollar amount or a percentage simply the fact that a referral fee will or may be payable must be disclosed if this will later be disclosed in a written advice document. Where the Authorised Representative has an association with the third party such as being a director or owner of the third party business this must also be disclosed at the time of the referral. Please refer to the General Advice Warnings and Core Disclosure document for appropriate verbal and written wording for the above situations.

Please Note: Failure to make this disclosure may constitute a criminal offence.



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In addition to the upfront disclosure above, the relevant written advice document and Record of Advice must contain:

(a) the name and contact details of the referral source;

(b) details of the referral arrangement the Authorised Representative has in place (including fees and associations); and,

(c) the following statement: “Please note, neither I nor Libertas Financial Planning shall be liable for the provision of services by a third party.

Please Note: If no written advice document will be provided the above details must be communicated to the client verbally.

Advertising

11. Any introductory and promotional material about the Authorised Representative and/or Libertas Financial Planning , whether released by the referrer or jointly with the Authorised Representative, must be approved by Libertas Financial Planning Compliance.

Other Authorised Representative Responsibilities

12. If the Authorised Representative has concerns regarding the referrer’s behaviour (such as breach of privacy obligations, failure to disclose fees or the performance of activities that may constitute the provision of financial a financial service), the Authorised Representative must advise Libertas Financial Planning of those concerns. In such circumstances, Libertas Financial Planning may at its discretion require the Authorised Representative to terminate the referral arrangement.

13. The Authorised Representative must make it clear to the referrer that the referrer is not acting as agent or representative of the Authorised Representative or Libertas Financial Planning , and the referrer must not hold themselves out as such in any dealings with clients.

Third party obligations

14. Certain laws regulate the manner in which referrals may be made. As Authorised Representatives are aware of these laws, it would be prudent for them to bring the following matters to the referrer’s attention:

(a) Financial Services: A third party referrer may give the client information about the services offered by the Authorised Representative and their relevant contact details, but unless the referrer is authorised to provide financial services, they are not able to participate in providing financial product advice to the client. To do so constitutes a breach of the licensing rules in the Corporations Act;

(b) Privacy: If the referrer intends to provide personal information about the client to the Authorised Representative, the referrer is required by privacy laws to have the client's consent. Where practicable this should be written; if not, the referrer should make a file note of the verbal consent, and inform the Authorised Representative, who should also make a file note confirming consent has been provided; and,

(c) Secret Commissions: Each State requires the referrer to disclose the referral fee to the client at the time of making a referral. In most states, failure to disclose a referral fee makes the payment a “secret commission” and constitutes a criminal offence on the part of the referrer. Furthermore, in some states, failure by the Authorised Representative to take precautions to ensure that the fee is disclosed (for instance, by making this requirement part of the referral agreement) is considered to be “bribery” and may be punishable as a criminal offence. In other words, the Authorised Representative has a legal obligation to take steps to ensure the referrer makes the necessary disclosure. For this reason, the template referral letter includes a requirement that the referrer disclose the fee when a referral is made.




Corporations Act 2001 - Section 911 and 1311

Regulation 7.6.01

Privacy Act

Crimes Act (All States)



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REVERSE MORTGAGES Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Reverse mortgages (also known as Equity Release Products) are debt products regulated under the Uniform Consumer Credit Code (UCCC). While they are not ‘financial products’ under Chapter 7 of the Corporations Act 2001 (the Act), Authorised Representatives have the same legal obligation as any professional to take reasonable care and act in the best interests of the client when providing advice.

Libertas Financial Planning recognises the role reverse mortgage products can play in meeting a need for clients who are asset rich and cash poor. This area of advice also represents a significant risk for both the client and Libertas Financial Planning when used without taking into account all the relevant facts and circumstances. The purpose of this Policy is to provide an operating framework for the management of this risk.








Definition

Loan to Value Ratio is calculated by dividing the loan amount by the value of the property used as security.

Accreditation

Authorised Representatives must successfully complete the Reverse Mortgage Accreditation, and have received confirmation of accreditation from Libertas Financial Planning Compliance, before providing any reverse mortgage advice.

Advice Process

2. Authorised Representatives are permitted to provide strategic advice to their clients on the suitability of a reverse mortgage strategy. Some of the key advice requirements are included below:

Providing the client with a Financial Services Guide (FSG) before providing any financial service, please refer to Libertas Financial Planning Financial Services Guide Policy;

A comprehensive Fact Find/Client Profile must be completed by the client. Data collection must include details of the client’s goals and objectives, particulars of their need for a reverse mortgage product, health status, income, expenses, assets, liabilities, estate planning and Centrelink entitlements. All requirements of Libertas Financial Planning Fact Finding and Other Investigations Policy must be met;


Authorised Representatives must always act in the best interest of the client;

Preparing and providing the client/s with appropriate advice via a Statement of Advice (SOA) in accordance with Libertas Financial Planning Statement of Advice Policy; and



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Offering the client/s a review annually (unless the client has told the Authorised Representative in writing they do not wish to be offered a review). Ongoing advice can be provided via a Record of Advice (ROA) if all the key principles in Libertas Financial Planning Record of Advice Policy are met.

3. Special care needs to be taken where the client is elderly and is less familiar with borrowing and investment. In this case, all requirements of Libertas Financial Planning Clients with Special Circumstances and Needs Policy must be met.

4. Generally, a reverse mortgage strategy is only recommended on a needs basis for such expenses as house renovations and to paying off debts. As the payment can be taken as a lump sum or regular payment, reverse mortgages can form part of the broader environment for retirement planning.

5. If the strategy involves an investment purchase, consideration needs to be given to the return on the investment relative to the interest rate on the loan and Centrelink implications. In this case all the requirements of Libertas Financial Planning Gearing Policy must be met however Authorised Representatives are not permitted to use the funds obtained from the reverse mortgage to use as security for other borrowing strategies. That is, double gearing is strictly prohibited.

6. Authorised Representatives are not permitted to implement this strategy on behalf of their clients and are required to refer clients to an accredited mortgage broker or other qualified person who can deal in consumer credit to implement the reverse mortgage product and facilitate the lending arrangements.

7. The SOA must be prepared in accordance with Libertas Financial Planning Statement of Advice Policy and must also contain the following templates and projections:

Reverse Mortgage template;

ASIC Reverse Mortgage Calculator projections;

Costs and Risks of Reverse Mortgages template

Maximum Loan Amount

8. The maximum Loan to Value Ratio for all reverse mortgages is the lower of Lender’s Limits or 40%.

Complaints

9. Authorised Representatives should note; clients can seek to have complaints determined by the Financial Ombudsman Service (FOS) where they provide a combination of financial product advice and strategic advice about reverse mortgages in the one SOA. For this reason, and where practical, Libertas Financial Planning recommends strategic advice on reverse mortgages be prepared as a standalone separate SOA.


Libertas Financial Planning Clients with Special Circumstances and Needs Policy








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Corporations Act 2001 – Section 912 and 961

Uniform Consumer Credit Code (UCCC)

STATEMENT OF ADVICE Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy While the structure and layout of an SOA will differ from one Authorised Representative to another, the law imposes certain key format and content requirements.

This Policy sets out the requirements for a Statement of Advice (SOA). For Records of Advice (ROA), refer to Libertas Financial Planning Record of Advice Policy.








1. An SOA must be provided when:

providing initial advice to a client; and

providing further advice to an existing client where circumstances do not permit an ROA (refer to Libertas Financial Planning Record of Advice Policy).

Exemptions:

Certain exemptions apply when providing further advice to a Wholesale Clients. Refer to Libertas Financial Planning Wholesale Clients Policy; and

Some exemptions apply to advice on Basic Deposit Products and Cash Management Trusts. Refer to Libertas Financial Planning Basic Deposit Product Advice Policy.

Incorporation by Reference

2. Authorised Representatives can refer to another document (hard copy or electronic) to provide client’s with additional information subject to the requirements of this Policy. Libertas Financial Planning will permit Authorised Representatives to refer to the following types of documents for this purpose:

Financial Services Guide

previous advice documents provided to the client (Customer Advice Records, financial plans, previous SOAs or SOAAs but NOT ROAs) subject to the exceptions noted within this Policy;

Understanding Series documents approved by Libertas Financial Planning ;



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current version of the relevant Product Disclosure Statements (PDS) (including Supplementary PDSs) issued by the product provider; and

Adviser Service Agreement.

3. Legally most information can be incorporated by reference within an SOA.

Exception: Replacement Product Advice information and the ASIC mandatory Limited Information Warning (if applicable) cannot be incorporated by reference.

4. The information that can be referenced within advice documents previously provided to clients include:

the client’s current situation;

their goals and objectives;

their asset allocation if re-weighting back to the original asset allocation or the variance is less than 10% as a result of the further advice. (Please refer to Asset Allocation section below for an explanation of the 10% variance);

the principles of asset allocation;

an explanation of the various asset classes;

an explanation of various types of insurance;

other Benefits and Interests.

Practically this means reference should be made to either the most current advice document/s:

that specifically contains the relevant information above; or

that includes a reference to another advice document that specifically includes this information.

5. An Authorised Representative can only refer to previous advice documents provided to the client by another authorised representative if that authorised representative was also a representative of the same licensee. Additionally, the information in those documents being referred to must still be relevant, meet the requirement of being clear concise and effective and meet all the current Libertas Financial Planning ’s Policies.

6. If an Authorised Representative was a representative of another licensee when they provided a client with a previous advice document, only factual information about the client that is still current can be incorporated by reference. Any strategic information, warnings and disclosures must be restated in line with current Libertas Financial Planning ’s Policies.

Consent to Receive Documents Electronically

7. Authorised Representatives must provide disclosure documents (eg SOA, PDS and Understanding Series) in paper format unless the client expressly consents to receiving these via another method. The consent could be provided:

verbally and recorded in a file note; or

in writing e.g. via email, Libertas Financial Planning approved Client Profiles/Fact Finds or standalone Statement of Advice Related Documents Consent.

8. Regardless of the method used to obtain consent, it must be clear which documents are involved eg all documents, PDS only.

Single Interview Advice and Incorporation by Reference

9. Where the reference to information is via website link or website address the client must be given a description and location of the information and sufficient time to read and understand the content before deciding to proceed with the advice. In practical terms this means that if the Authorised Representative is presenting the SOA that incorporates advice by reference to a website, and the client wants to proceed at the same meeting the Authorised Representative must:

request the client take the SOA away so they have the ability to access the information online and then make an informed decision; or

take the client through the referenced information online at the SOA appointment before the client makes a decision to proceed. A file note outlining this must be held on the client file; or

take the client through a printed version of the referenced information before the client makes a decision to proceed. A file note outlining this must be maintained on the client file.



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Content

10. The following key principles outline the content requirements of an SOA. This content can either be specifically included in the SOA or incorporated by reference to other documents subject to exceptions within this Policy.

Covering Letter

11. Libertas Financial Planning recommends as a matter of best practice that Authorised Representatives include a covering letter on the SOA for initial advice. This letter could confirm the contributors to the SOA, and their relationships, and explain the purpose of the attached SOA.

12. For further advice SOAs Authorised Representatives must use Libertas Financial Planning approved further advice Covering Letter if they do not include the Cover Page.

Cover Page

13. The SOA must clearly disclose the identity and contact details of the Authorised Representative, the capacity in which they act on behalf of Libertas Financial Planning and the identity of Libertas Financial Planning and type of licence held.

This disclosure must be made on the Cover Page or on the covering letter (in the case of further advice). The information required is:

the title “Statement of Advice”. For example “Statement of Advice (incorporating a Financial Plan)”;

<full Licensee Name> ABN <Licensee ’s ABN> trading as <Licensee’s trading name, if any> Australian Financial Services Licensee <AFSL Number> Registered Office at <Licensee’s registered office address>;

the name of the Authorised Representative followed by “Authorised Representative” and “Corporate Authorised Representative” (if applicable);

the name of the client/s;

the contact details of the Authorised Representative; and

the date the SOA was prepared.

Please note: In the case of further advice most of this information is contained on the Authorised Representative’s letterhead.

Table of Contents

14. Libertas Financial Planning recommends as a matter of best practice that Authorised Representatives include a table of contents page and where possible, pages should be numbered (x of y) and dated. This ensures no part of the document can be removed at a later stage should a dispute arise.

Executive Summary

15. Authorised Representatives can include an executive summary at the beginning of the SOA although this is not compulsory. As a guide, this should be no longer than two pages in length and should briefly review the following areas:

key personal information;

client’s goals and objectives;

recommended strategies; and

the strategy outcomes, (for example, whether or not, or how closely, the client can meet their goals and objectives.

Current Situation

16. The SOA must contain the client’s current personal and financial details obtained during data collection or where relevant the changes since previous advice has been provided. Information which must be highlighted in this section includes (to the extent that it is relevant):

personal details;

assets and liabilities;

income and expenditure;

investments;

taxation position;

cash-flow;



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insurance; and

issues and problems (that may impact the desired outcome).

Limited Information Warning

This warning cannot be incorporated by reference.

17. If the client has chosen to provide incomplete information, a warning must be included in the SOA. Libertas Financial Planning approved warning is contained within the ”Current Situation” template.

Goals and Objectives

18. The SOA must include a description of the client’s, goals and objectives from the Fact Find/Client Profile or where relevant the changes since the previous advice was provided. The purpose of the SOA is to document the client’s goals and objectives, and any information relevant to the advice. The identification of the client’s goals and objectives is critical to the effectiveness of the advice and forms the basis for the advice.

If the client’s goals and objectives are not clearly documented it will be difficult for the Authorised Representative to defend the advice if there is a subsequent client complaint.

19. All financial goals and objectives must be specific, and quantified both in terms of the amount required and timeframe. Where relevant, goals and objectives should also be ranked in order of priority. Personal (non-financial) goals and objectives must also be detailed, particularly where their achievement may impact on the client’s financial position.

Client Attitude to Risk

20. If relevant to the advice, the client’s attitude to risk must be detailed together with an explanation of the client’s risk profile. Please Note: Authorised Representatives should detail all risk profiles if these are different – for example between husband and wife or between superannuation versus non superannuation. Please also refer to Libertas Financial Planning Self Managed Superannuation Funds Policy.

Use of Flow Charts

21. Authorised Representatives are encouraged to make use of flow charts to graphically outline an overview of the strategies being recommended in the SOA however this is not compulsory.

Scope of Advice

22. The Authorised Representative must detail the scope of the advice being provided by using the wording in Libertas Financial Planning approved Scope of Advice template. Please also refer to Libertas Financial Planning Limited Advice Policy.

Strategy & Recommendations

23. The Authorised Representative must develop an appropriate strategy or strategies for the client based on the analysis of relevant information obtained through data collection.

24. The strategy or strategies must address all of the client’s goals and objectives that they require advice on. The link between strategy(s) and goals and objectives must be clearly outlined in the Statement of Advice. Most clients will have a number of goals and objectives, some of which may be in conflict, and it may not be possible to satisfy them all. In such cases the Authorised Representative must state which goal(s) or objective(s) cannot be satisfied, or can only be partly satisfied, by the recommended strategy/ies, and provide an explanation of the rationale.

25. In this section the Authorised Representative should not be focusing on individual products but rather product “types” that will most effectively contribute towards meeting the client’s goals and objectives.

26. The Authorised Representative must provide sufficient explanation(s), along with appropriate supporting analysis, of the strategy(s) to enable the client to make an informed decision. This must include the benefits of the recommended strategy(s), impact on any other strategy(s), and any actual or potential disadvantages/risks associated with the strategy(s).

27. If any goal and/or objective is outside the competency of the Authorised Representative, it is the Authorised Representative’s responsibility then to refer the client to a specialist or another appropriate professional which must be documented in the SOA. You may wish to include the professional’s name and/or the timeframe within which that review will be completed.

28. Any investment risk and specific risks relevant to the strategy/ies and recommendations must be disclosed to the client and where appropriate, strategies for their mitigation. Generic information about



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the risks and benefits of particular strategies can be incorporated by reference to the relevant Understanding Series documents.

29. The client’s current cash flow position and the proposed cash flow must be detailed as a result of the recommended strategy/ies where applicable.

Achieving Goals

30. The template “Achieving Your Goals” must be used in all SOA’s except for Listed Securities Corporate Action SOAs. This provides the client with a snapshot of whether their goals are going to be achieved and when.

Investment Recommendations

31. Recommendations for self employed (or substantially unsupported) clients to make personal superannuation contributions of $20,000 and above (concessional) or $125,000 and above (non-concessional) requires a comprehensive calculation and a copy of the calculation is to be kept on the client file.

32. Where the recommended strategy or strategies involve(s) the purchase/ redemption of financial products and/or administration platforms, these recommendations must be detailed in the SOA, together with the rationale for the recommendations and a brief overview of the products/platform/s.

33. Libertas Financial Planning approved “Investment Recommendations” template must be used when non-approved products are included and/or excluded from the scope of the advice. This template contains important disclosures and warnings required by Libertas Financial Planning in relation to non-approved products.

34. A generic description of the product class and descriptions of individual product/s/platform/s and the reasons why these products/platforms have been selected must be detailed. Product summaries/research comments can be included as an appendix to the SOA or reference made to the relevant PDS(s) to support this requirement.

35. Where a client’s existing financial product or asset will not form part of the advice service, this must be made clear in the SOA. Please refer to Libertas Financial Planning Limited Advice Policy and Libertas Financial Planning Non Approved Products Policy.

Investment Guidelines

36. Authorised Representatives must comply with the Investment Guidelines set by Libertas Financial Planning when providing initial advice.

37. If the exposure levels exceed the limits set by Libertas Financial Planning after the initial advice due to market conditions or other factors the following principles apply.

A variance of 10% is permitted. For example, if the limit for an agribusiness investment is 5% of the client’s total portfolio then the exposure could be up to 5.5% without any explanation or action required by the Authorised Representative.

If the client’s exposure exceeds the limit by 10% Authorised Representatives must:

o detail in the SOA that the limits are not within Libertas Financial Planning Investment Guidelines and the specific risks associated with this; and

o provide a recommendation to reduce the exposure limit to be within the approved limits where this would not disadvantage the client; or

o provide a recommendation to hold where a reasonable basis for reducing the exposure cannot be demonstrated and advise the client that their exposure limits will be reviewed annually with the view to moving this within the approved Investment Guideline limits.

Asset Allocation

38. If relevant to the advice, the SOA must detail the concept of risk, return and diversification, the principles of asset allocation and include an explanation of the various asset classes. Libertas Financial Planning approved Understanding Investment Concepts document contains sufficient information to meet this requirement.

39. Authorised Representatives must use Libertas Financial Planning approved Asset Allocation Guidelines.

40. The specific asset allocation that is considered most likely to achieve the client’s goals and objectives must be included. A client’s understanding and preferences based on the risk profiling discussion as outlined in the client profile must be reflected in the SOA.



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41. Where there has been no change to the target asset allocation or a variance of less than 10 percentage points this can be referenced back to a previous relevant advice document in the event of a further advice SOA.

42. If there is a difference between the client’s attitude to risk and the asset allocation necessary to achieve the client’s goals and objectives, this difference must be explained in the SOA. In that case, the Authorised Representative must assist the client to reach a compromise between the risk profile, the goals and objectives to be achieved and the asset allocation that the client is comfortable with. It is essential that any compromise is clearly set out, and that subsequent investment recommendations can be linked back to this analysis.

43. In relation to the client’s underlying asset classes a difference of 10 percentage points between the proposed asset allocation (PAA) and the target asset allocation (TAA) is permitted. For example, if the TAA for international shares is 35% then the PAA could range from 25% to 45% without any explanation or action required by the Authorised Representative. If the difference is more than 10 percentage points Authorised Representatives must have and demonstrate a reasonable basis to retain the existing investments and explain those reasons clearly in the SOA. Where no reasonable basis exists for the variance the Authorised Representative must move the client back to their TAA or within 10 percentage points.

Wealth and Asset Protection Recommendations

44. Where it is within the scope of advice, the SOA must list, and provide an analysis of, the client’s current policies for life, TPD, trauma, critical illness, income protection and business cover in light of their needs, goals and objectives. Where this analysis highlights the need for additional or changed cover, recommendations regarding these insurances must be outlined in the SOA.

45. A generic description of the individual product/s and the reasons why this/these product/s have been selected must be detailed. These reasons must be linked to client goals and objectives.

46. Libertas Financial Planning approved “Insurance Recommendations” template must be used when non-approved products are included and/or excluded from the scope of the advice. This template contains important disclosures and warnings required by Libertas Financial Planning in relation to non-approved products.

47. The Authorised Representative must advise the client to review their health and general insurance cover to ensure they have adequate protection except where the client has specifically requested that this be excluded from the scope of the advice.

For further information and other SOA specific requirements for life insurance please refer to Libertas Financial Planning Personal and Business Insurance Policy.



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Assumptions

48. Where assumptions have been made in relation to the client’s personal or financial circumstances or in the preparation of figures or projections, those assumptions must be disclosed. Similarly, any qualifications that apply to the recommendations must be disclosed. For example, if the strategy is dependent on the client selling a property to free up cash for investment then the SOA must state that the strategy recommended is subject to the sale of a property. Libertas Financial Planning approved assumptions template can be used to detail any assumptions.

Replacing Financial Products

This information cannot be incorporated by reference.

49. Where the Authorised Representative recommends the full or partial replacement of a financial product the SOA must demonstrate a reasonable basis for that advice and Authorised Representatives must comply with the requirements set out in Libertas Financial Planning Fact Finding and Other Investigations Policy.

50. The SOA must include the following information:

e) the costs and charges the client will or may incur concerning the disposal or reduction;

f) the costs and charges the client will or may incur concerning the acquisition or increase;

g) any pecuniary or other benefits that the client will lose either (temporarily or permanently) as a result of the replacement advice;

h) any significant consequences for the client that are likely to occur if they proceed with the advice that the Authorised Representative is aware of or should reasonably know; and

i) the compulsory ‘on balance’ statement in Libertas Financial Planning approved “Why We Recommend Insurances” template when replacing an insurance policy.

Information provided to the client relating to paragraphs (a), (b) or (c) must to be stated in dollars, where the costs, charges and loss of benefits have a monetary value.

If the Authorised Representative doesn’t know (and cannot reasonably find out) the information above, they must decline to provide advice.

51. Libertas Financial Planning approved templates “Costs and Risks of Redeeming and Replacing Investments” and/or the “Costs and Risks of Cancelling and Replacing Insurance” must be used.

Disclaimers & Warnings

52. The Authorised Representative must include in the SOA the current Libertas Financial Planning approved Important Information page.

Ongoing Service

53. Authorised Representatives must outline their ongoing service offering and its benefits by using Libertas Financial Planning approved “Our Ongoing Services” template. This would include the timeframe for periodic reviews and updates of the client’s plan and strategy/ies and the cost. This information can be referenced to a Service Agreement instead of being stated within the SOA. Care needs to be taken to ensure the wording used does not impose a liability or obligation on the Authorised Representative to provide services that they cannot provide or do not intend to provide.

54. Where no formal review service is being offered or where the client has not agreed to a review service this must be detailed within the SOA. In addition the Authorised Representative must not make references to providing reviews in the future in the covering letter or within the body of the SOA.

Disclosures

55. All financial product advice provided to clients must include full disclosure of all initial and ongoing product commissions, implementation, plan preparation and/or service/advice fees that will specifically apply to that advice together with any other benefits reasonably capable of influencing the making of a recommendation.

56. Authorised Representatives must use Libertas Financial Planning approved disclosure templates detailed below without any variation unless instructed on the template to edit or delete if not applicable:

Disclosure – Commission

Disclosure – Fee for Advice

Disclosure – Further Advice

Disclosure – Risk Only



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Please note where receiving commission in any form the Disclosure – Commission template must be used for initial advice.

57. Where the Authorised Representative provides several options for payment leaving the ultimate choice to the client, the client must be given full disclosure about the remuneration and other benefits for each option.

Regular Contributions

58. Where the advice includes regular contributions, the amount of commission and/or fees (dollar and percentage terms) to be received for each contribution over the next 12 months must be disclosed at the time the original advice is provided. Because of this, disclosure is not required each time the regular contribution is made.

Referrals

59. Referral fees paid or received by the Authorised Representative must be disclosed within the appropriate section of the relevant disclosure template.

Other Benefits and Interests

60. Any benefit/advantage, interest or association not already disclosed in the Authorised Representative’s FSG and capable of influencing the Authorised Representative in making the financial product or strategic recommendation must be disclosed.

Implementation

61. Authorised Representatives must include a list of actions required to implement the recommendations, indicating responsible parties, action required and timing. A summary of these matters will be particularly useful to the client if the strategy is complicated or implementation is likely to take some time. Libertas Financial Planning approved ”What you need to do” template can be used to do this.

Authority to Proceed

62. The SOA must contain Libertas Financial Planning approved “Authority to Proceed” (ATP) template.

63. The Authorised Representative must have the client sign this before implementing any recommendations and a copy must be kept on file except in the case of Time Critical Advice.

64. In the case of Time Critical Advice the Authorised Representative must follow the client up a minimum of two times via email or telephone to obtain a signed copy of the ATP. A file note of the attempts to contact the client must be kept on the client file.

65. Where the client wants to proceed with client directed changes to the advice provided within the SOA the ATP must detail what the changes are and that they agree to implement the recommendations with their changes. If further advice is required an additional advice document is required e.g. a Record of Advice or Statement of Advice: Further Advice.

66. Where the Authorised Representative has recommended that the client seek external tax advice this fact must be acknowledged by the client on the relevant section of the ATP.

Related Documents you should Read

67. Where Authorised Representatives incorporate information by reference they must list all incorporated documents in the Related Documents You should Read template approved by Libertas Financial Planning . In the case of further advice to an existing client, this list may include a previous advice document given to the client.

68. Hard copy or electronic documents incorporated by reference must have a unique identifier such as a version number and date. The unique identifier must be included in the SOA.

69. In referring to a document, the Authorised Representative must describe the content sufficiently that the client can make an informed decision as to whether they should read the information and the Authorised Representative must offer the client a copy of the document at no cost.

Authorised Representatives can refer to information:

previously provided to the client such as a Customer Advice Record, financial plan or SOA;

that is physically attached to the SOA (for example, in an appendix); and

by including a link to a website or providing the website address within the SOA.



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Financial Projections

70. Authorised Representatives must use Libertas Financial Planning Research Income and Growth Return Projection rates in all of their financial modelling calculations and reports. Where rates are not available they should consult with Libertas Financial Planning Compliance to obtain guidance.

Attachments & Appendices

71. All appendices and attachments to the SOA must be detailed on Libertas Financial Planning approved Related Documents You Should Read template or referenced within the body of the SOA.

Product Disclosure Statements & Investor Directed Portfolio Services (IDPS) Financial Services Guides

72. Any relevant Product Disclosure Statement(s) (PDSs) and Financial Services Guides (FSGs) (including any Supplementary or Additional documents) and all underlying PDSs must be provided at the same time the SOA is provided.

Please note that for IDPS products (e.g. Wealthtrac Investment Service) this means that the IDPS FSG and the underlying investment product PDS/s must be provided to the client. For example if a recommendation has been made to invest into a unit trust via the Wealthtrac Investment Service then the Wealthtrac Investment Service FSG and any supplementary FSG’s and the Wealthtrac Investment Service Unit Trust PDS’ must be provided to the client. For further information please refer to FAQ – Product Disclosure Statements.

73. Authorised Representatives can provide PDSs via any method agreed to by the client. Care must be taken to ensure any hyperlinks or documents provided are current. Where the PDS is to be obtained from a website, the specific web address where the PDS can be found or clear instructions on where to locate the PDS within the website must be provided for example a generic reference to www.amp.com.au would not be sufficient.

Please note that the PDS cannot be provided to clients electronically (including electronic disk) for single interview advice unless the Authorised Representative takes the client through the PDS/s online or through hard copies before the client makes a decision to proceed. A file note outlining this must be maintained on the client file.

SOA Retention

74. The SOA, together with any associated attachments and appendices, must be kept on the client’s file for 7 years from the time the SOA is provided to the client.

75. SOAs must be retained in softcopy (electronically) as a minimum regardless if the client proceeds with the advice.

Please Note that any of Libertas Financial Planning approved attachments such as the Understanding Series documents will be maintained by Libertas Financial Planning and will not be required to be maintained on the individual client file. Appendices that relate specifically to the client circumstances will however be required to be maintained on the client file.


Libertas Financial Planning Personal and Business Insurance Policy



Libertas Financial Planning Self Managed Superannuation Fund Policy




Libertas Financial Planning Basic Deposit Product Advice Policy


RG36 Licensing – Financial Product Advice and Dealing

RG 175 Licensing - Financial Product Advisers- Conduct and Disclosure

Corporations Act 2001 – Particularly Chapter 7 (Sections 946,947,961) and associated Regulations (7.7.11 and 7.7.12)



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STRATEGY PAPERS AND PRESENTATIONS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy The Policy understands that Authorised Representatives will from time to time need to ascertain the client‘s comfort level with various strategies as part of the fact finding process in order to gain additional or sufficient information from the client before providing advice that meets the client’s personal circumstances, needs and objectives.

This Policy outlines Libertas Financial Planning requirements and is intended to help Authorised Representatives conduct Strategy Discussions only in the context of a genuine fact finding process and ensure their clients are appropriately informed that these are not to be relied on as personal advice.







Definitions

Strategy Discussions involve preliminary discussions and communications both verbal or written (that does NOT contain personal advice) with clients about possible financial strategies for the purposes of a genuine fact finding process in order to gain additional or sufficient information from the client before providing written advice via a Statement of Advice (SOA) that meets the client’s personal circumstances, needs and objectives.

Strategy discussions are typically in the form of one or more of the following:

visually-aided verbal presentations/discussions for example Powerpoint presentations. That is, “strategy presentations”

written communication following verbal presentation/discussions other than in the form of an SOA. That is, “strategy papers”.



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1. The Strategy Discussion must only be used as part of a genuine fact- finding process to find out further information about the client’s personal circumstances, needs or objectives (including an assessment of the clients comfort level with certain strategies) so that personal advice can be later provided to them in an SOA.

2. The client file must demonstrate the Strategy Discussion has occurred as part of the fact- finding process and why it was necessary to have the Strategy Discussion before providing an SOA. This information can be detailed in the Client Fact Find/Client Profile or via a separate file note.

3. It is impractical (if not impossible) for Libertas Financial Planning to prescribe appropriate wording or templates for the many and varied circumstances in which Strategy Discussions are likely to be used. Accordingly, it is up to the Authorised Representative who conducts Strategy Discussions to, in addition to complying with the specific requirements in this standard, ensure that only General Advice as detailed Libertas Financial Planning General Advice Policy is provided in their Strategy Discussions and that these do not give the client the impression that they are receiving personal advice.

Specific Requirements

4. In order to maintain consistency with its use as part of a genuine fact finding process;

(a) Authorised Representatives must, in any dealings with the client, make it clear to the client that:

- the purpose of the Strategy Discussions (whether the strategy presentation, strategy paper or any surrounding discussions), is to obtain further information about the client’s personal circumstances, needs or objectives (including an assessment of the clients comfort level with certain strategies) so that personal advice can be provided in an SOA; and

- on this basis, the client should not act on any representations made as part of this process.

(b) Strategy Discussions must not include any:

- recommendation or statement of opinion as to a preferable strategy; or

- recommendation or statement of opinion as to any specific products; or

- information about or in relation to any specific products or platforms (for example the name of a platform provider such as Netwealth Super Wrap or underlying products such as BT Wholesale Property Securities Fund), cannot be included.

- Include language that gives the impression the Authorised Representative has considered the clients financial situation or goals.

(c) Authorised Representatives must not (during the fact-finding process) provide the client with or attach to the Strategy Discussion document, a copy of any Product Disclosure Statement (PDS);

(d) Strategy Discussions may include information on a strategy that incorporates a class of asset and/or a class of financial product. For example, a strategy involving Australian versus global shares, retirement income streams or a wealth creation strategy.

(e) Although the client’s personal information can be used to explain the strategies and applicable financial projections can form part of Strategy Discussions, the overall description of each strategy must be kept at a high level so as to be preliminary in nature. The more detailed the description and the more personal information is used, the more likely the Strategy Discussion will be construed as personal advice – in which event it must be presented in the form of a complying SOA.

5. A copy of all Strategy Discussion documentation and any attachments must be retained on the client file.

Strategy Presentations

6. Any visual aids shown or provided to the client as part of Strategy Presentation must contain a Strategy Presentation Notice contained in the General Advice and Core Disclosures document. The notice must be prominently placed – usually, in the case of a slide presentation, this will be at the beginning of the presentation.

Strategy Papers

7. Libertas Financial Planning has made available a Strategy Paper Template. Authorised Representatives wishing to use a Strategy Paper must adopt the wording in the Introductory Paragraph and paragraphs in the template indicated as “mandatory”.


Libertas Financial Planning General Advice Policy



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Part 7.7 of the Corporations Act 2001

Regulatory Guide 175

ASIC QFS 154

TIME CRITICAL ADVICE POLICY Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Time critical advice situations may arise for example where a client needs to make Superannuation Guarantee contributions before 30 June, roll over superannuation within the required timeframe or obtain risk insurance cover immediately.

The key point for Representatives to be aware of is that even if the financial service is time critical, it is still financial product advice and most of the usual requirements for providing advice (including disclosure and record keeping) still apply, but with some modifications as outlined in this Policy because of the time constraint.








Definitions

Time Critical Advice

The provision of a financial service (advice and/or dealing) is regarded as time critical if the client accepts the verbal advice provided by the Authorised Representative and then instructs the Authorised Representative to implement that advice immediately, or by a specified time, and it is not reasonably practicable to provide a Statement of Advice (SOA) before the service can be implemented. Advice that can be documented via a Record of Advice (ROA) is excluded from Time Critical Advice as the Authorised Representative must document that advice at the time the verbal advice is provided using a ROA.

1. Prior to the client’s implicit instructions to arrange a financial product and where it is not practical to provide an SOA before implementing the recommendation, the Authorised Representative must provide the client with verbal details of the following at the same time the advice is provided:

full remuneration, other benefits and conflicts of interests; and

the information required when recommending replacement of a financial product such as acquisition and disposal costs in both percentage and dollar terms, loss of benefits ( in dollar and percentage terms if these are quantifiable) and any other significant consequences of replacing the product.

2. A file note of the verbal advice must be made immediately after giving the time critical advice. In addition to the verbal advice, the file note must also include the following:



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the reason why the situation was time critical;

the reason why an SOA could not be provided prior to arranging the implementation of the advice;

a statement referring to the client's implicit instructions to proceed with implementing the advice before receiving an SOA;

the basis for the recommendation and the client’s relevant or updated personal information;

details of the disclosure required to be provided verbally to the client at the time the advice was provided as set out above; and

Details of the Financial Services Guide (FSG) and Product Disclosure Statement (PDS) provided to the client where applicable.

3. Provide an SOA (and FSG if not previously provided) to the client within the 5 business days or sooner if practicable. All time critical advice to clients must be documented in accordance with Libertas Financial Planning Statement of Advice Policy.

4. A copy of the time critical advice file note and the SOA including all attachments and appendices must be held on the client file.






Corporations Act 2001 - particularly Chapter 7

Part 7.1 Division 4 – (When does a person provide a financial service?) – see Section 766A(1)

Part 7.7 Division 2 and 3 - (Financial Services Disclosure) – see Sections 941D and 946C

Part 7.9 Division 2 – (Product Disclosure Statements) – see Section 1012G and Regulation 7.9.02A

WHOLESEALE CLIENTS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Libertas Financial Planning recognises that continuing to provide a Statement of Advice (SOA) to clients is neither practical nor wanted by some clients, given their investment experience, portfolio size and level of investment activity. Where a client can properly be classified as a Wholesale Investor, there is scope to follow less onerous advice document requirements.

For the purposes of this Policy Wholesale Investor includes Wholesale Clients. Some safeguards are still required, to ensure the statutory conditions are met, to provide adequate documentation to clients, and to protect Representatives and Libertas Financial Planning from client complaints.

This document sets out:

how wholesale clients are identified;

the advice procedure for these clients; and

the approval required from the Licensee.





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Definitions

The Corporations Act 2001 (Act) legislation and regulations distinguishing Wholesale Clients from Retail Clients and classifying Sophisticated Investors can be complex to apply. A brief summary is detailed below however Authorised Representatives should refer to the Identifying and Documenting Status as Wholesale Clients document for further explanation.

Wholesale Clients: The following clients may be treated as Wholesale Investors in accordance with the principles set out in this Policy.

(a) Professional investors – $10million control test A person who has or controls gross assets of at least $10 million (including any amount held by an associate or under a trust that the person manages).

(b) Sophisticated Investors – Certificate by a qualified accountant The financial product being acquired is not for use in connection with a business, and the person

acquiring it has obtained a Certificate by a Qualified Accountant within the preceding 24 months stating that the person has a gross income for each of the last 2 financial years of at least $250,000, or net assets of at least $2.5 million. (Note that the Certificate is the specific form of proof required under the Act). A company or trust controlled by a person that is a sophisticated investor is also taken to be a sophisticated investor.

(c) Businesses that are not small businesses A business, whether incorporated or not, that employs at least 20 people as Full Time

Equivalents(FTEs), or in the case of a business engaged in manufacturing, at least 100 people as FTEs. Depending on the structure of the business, your advice will be provided to a company director, secretary, a trustee, partner or individual who is authorised by the business to obtain the advice or a combination of the above.

Important Exception: Advice on Superannuation Where the Authorised Representative is advising a person on superannuation investments, that advice must be treated as advice given to a retail client, even if the person would otherwise qualify as a wholesale investor under one of the tests above. The only exception to this is that advice given to the trustee of a superannuation fund with net assets of at least $10 million can be treated as a Wholesale Investor.

Examples:

A client is the trustee of a self-managed superannuation fund with net assets exceeding $10 million. The client wants advice about his/her own personal interests as a member of the fund. This advice must be treated as retail, because the client is seeking advice as a member, not about investment decisions and his/her obligations as trustee.

An employer seeks advice about the “default” (or “employer”) fund for a large business. As the employer is not the trustee, this advice must be treated as retail. This is a requirement of the Corporations Act. It may mean that for some clients, advice on the non-superannuation part of their portfolio can be provided in accordance with the Wholesale Investor principles set out below, however advice on the superannuation component will have to comply with normal retail advice rules.

Group Insurance Advice

1. The client file must demonstrate that the client meets the wholesale client definition by having the client sign the Application to be treated as a Wholesale Client for Group Insurance form.



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2. A current FSG and any advice must only be provided to a company director, secretary, a trustee, partner or individual who is authorised by the business to obtain the advice or a combination of the above. The authorised signatory (as above) must make it clear to the Authorised representative that the advice is directed at the business NOT the individual.

3. In order to determine an appropriate design for a group insurance policy the following information will generally need to be collected from the client:

Employee Identification (Name of Employee or Employee Number)

Employment Status

Age or DOB of Employee

Gender

Residence

Salary

Occupation

If existing group insurance in place copy of existing policy and claims history

4. Authorised Representatives must obtain a minimum of two quotes unless quoting against a current policy, in which case only one further quote is required. All copies of quotes must be maintained on the client file.

5. Where Authorised Representatives make a recommendation for a preferred policy they must document an analysis of the policies in order to demonstrate they acting in the best interests of the client for any subsequent advice. The analysis, Policy Document and recommendations must be presented to the client using the Group Insurance Proposal document template.

6. In the case where the Authorised Representative is simply providing the client with an analysis of various policies, the Group Insurance Proposal document template must still be used however the recommendations section can be deleted.

7. The client must be offered a review at the end of the guarantee period (not exceeding three (3) years) and provided with a letter outlining any changes to the policy (if applicable). Where there are changes to a policy the letter must also alert the client to advise affected employees so that they are in a position to review the impact on any standalone insurances that they have in place.

THE REMAINDER OF THIS POLICY DOES NOT APPLY TO GROUP INSURANCE ADVICE.

Investment Advice - Application and Approval

8. The Application to be treated as a Wholesale Investor form must be provided to Libertas Financial Planning Compliance for approval. Only after receiving approval can the Authorised Representative begin to treat the client as a Wholesale Investor. A copy of the approval must be kept on the client file.

9. A review of the client’s qualification to remain a Wholesale Investor must be diarised and conducted at least once every 24 months. In the case of Sophisticated Investors, the Authorised Representative is entitled to rely on a Certificate by a qualified accountant for 24 months, after which time it must be renewed. In the case of Professional Investors or businesses that are not small businesses, the Authorised Representative must review the client’s circumstances at least every 24 months or sooner. If the Authorised Representative becomes aware any of any changes in the clients circumstance which means they no longer qualify as a Wholesale Investor. The clients file must be updated with evidence of the review of the client’s status on the file.

Advice Process

10. The Authorised Representative must maintain a register (electronic or manual) of clients who are treated as Wholesale Investors.

11. The Authorised Representative must collect sufficient information from the client before providing advice in order to demonstrate a reasonable basis in accordance with Libertas Financial Planning Fact Finding and Other Investigations Policy.

12. A new or existing client must receive a Statement of Advice (SOA) that in addition to any strategic advice includes a statement that the client has been identified as a Wholesale Investor, explains the different procedure that may be followed for Wholesale Investors, and invites the client to apply to be treated as a Wholesale Investor by completing and returning to the Representative the Application to be treated as a Wholesale Investor form.

13. All further advice can be provided to the client verbally and then documented via a Record of Advice (ROA) prior to implementing any recommendations and in accordance with Libertas Financial Planning



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Record of Advice Policy. As a matter of best practice Libertas Financial Planning would recommend that Representatives send a copy of the ROA to clients.

14. A current Product Disclosure Statement (PDS) for the investment platform and any underlying PDSs must be provided to the client where applicable for each product prior to implementing any recommendations.

15. Under the Act the Authorised Representative must be able to prove that the client meets the relevant Wholesale Investor criteria at the time advice is given. If the Authorised Representative cannot prove this via documented evidence on the client file, the Act treats the client as retail, and a Representative who has not provided a Financial Services Guide (FSG) and an SOA where required for a retail client will be in breach of the Act.

Clients with MDA’s

16. Where an Authorised Representative is accredited and approved by Libertas Financial Planning to provide Managed Discretionary Account Services to clients, in addition to the relevant requirements above all the requirements in relation to reporting contained in Libertas Financial Planning Managed Discretionary Accounts Policy must also be adhered to.




Libertas Financial Planning Managed Discretionary Accounts Policy




Corporations Act 2001 - Section 761G & 761GA and supporting Regulations



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Part 2 INITIAL AND ONGOING TRAINING................................................................................................141

MONITORING AND SUPERVISION………………………………………………………………….……......143



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INITIAL AND ONGOING TRAINING Regulatory Requirements Libertas Financial Planning is under a general obligation to ensure that all its Representatives are adequately trained, and are competent to provide financial services covered under the licence (s 912A of the Corporations Act). ASIC’s approach to the enforcement of the above obligations are outlined in Regulatory Guide 146 – Licensing: Training of financial product advisers and Regulatory Guide 164 – Licensing: Organisational capacities. RG 146 sets out the minimum training standards required of Licensees and their Representatives. RG 164 provides guidance on the non-financial requirements of Libertas Financial Planning imposed under s 912A of the Act and in particular having in place adequate resources and procedures to train, monitor and supervise Representatives as part of Libertas Financial Planning overall compliance system.

In summary Regulatory Guide 146 requires:

Licensees to demonstrate that its Representatives have undertaken education and training that meet ASIC’s requirements for knowledge, skills and integrity; and

Representatives of a Licensee to have undertaken approved training programs prior to conducting licensed activities and to undertake an appropriate induction program upon commencement with the Licensee; and

Licensees must ensure that Representatives meet their continuing responsibility to ensure that Representatives are adequately trained and competent to provide the financial services under the licence (Corporations Act s.912A (e)).

Libertas Financial Planning Policy To meet licence and industry training requirements, Libertas Financial Planning have implemented a structured initial and continuing training program for all Representatives. The content of this training program has been structured to meet RG 146 requirements.

Training for Representatives who will not provide financial product advice, will be reflective of their position descriptions.

Libertas Financial Planning will comply with industry best practice for Continuing Professional Development, and will maintain records of all training undertaken by Representatives.

Scope of the Training Program Initial Training – Recruitment process As part of the recruitment process, a Training Needs Analysis (“TNA”) will be conducted by Libertas Financial Planning designated training officer. The objective of the TNA is to identify the tasks and functions the Representative will perform, determine the appropriate knowledge and skill requirements and to ensure that they have completed training courses at an appropriate education level that are relevant to those tasks and functions.

For Representatives who will also provide financial product advice under the licence, the TNA will be guided by RG 146 requirements for knowledge, skill and integrity. Authorisation will only be granted after compliance with RG 146 standards for the activities that they will be performing has been confirmed.

Libertas Financial Planning Authorised Representative Recruitment Criteria The minimum education and experience criteria for authorised representatives of Libertas Financial Planning licence providing financial advice is the Foundation Diploma units (DFP 1-4) or ASIC approved equivalent and at least 3 out of the last 5 years relevant industry experience. In addition, the following good fame and character checks must be undertaken:

Criminal History Check

Two Business reference checks

ASIC Register Check

ASIC Banned Representatives Check

ASIC Company Check

Any training deficiencies identified with a Representative at during the recruitment process will be considered and an appropriate training plan will be developed for that Representative. In some cases it will be necessary for Libertas Financial Planning to limit the activities of the Representative and defer authorising the Representative until adequate training has been completed.



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Induction training All Representatives must attend an induction training session when they commence to act as a Representative of Libertas Financial Planning . Normally, the induction training will be undertaken within one month of the Representative having commenced duties with Libertas Financial Planning . Induction training will at all times be appropriate to the activities to be conducted by the Representative, and the specific requirements of Libertas Financial Planning . Accordingly, the induction program will cover:

An introduction to Libertas Financial Planning business structures, philosophy and general orientation

An information session on Libertas Financial Planning policy and procedure, and an introduction to the

Compliance Manual

An information session on the software/IT systems used by Libertas Financial Planning

An information session on the administration processes supporting the advisory functions

An information session on any advisory limitations or specific requirements applicable to the job description of the Representative

An information session on the technical strategies and advisory processes used by Representatives in the provision of advice (if appropriate)

A standard induction training program has been developed by Libertas Financial Planning inclusive of all of these elements. Authorised Representatives must sign off on their understanding of their requirements as an authorised representative on completion of the Induction Training to verify their comprehension of their obligations.

Continuing Professional Development

Individual Training Plans

An individual training plan will be developed for each Representative on an annual basis. The content of the program will be based on the outcome of the Training Needs Analysis that is conducted on each Representative during the recruitment process. The program will outline the areas and number of hours of training the Representative will require. The training program will be reviewed on an annual basis to ensure that Representatives are meeting their pre-determined training goals.

Training Program

To ensure that all Representatives are meeting the requirements of on-going training, Libertas Financial Planning has developed and implemented an annual training program for all Representatives. The content of the program focuses on the areas of general and specific knowledge as outlined by ASIC RG 146. The training program has been tailored to the activities that Authorised Representatives of Libertas Financial Planning conduct.

The RG 146 areas of competency that will be covered within the on-going training program are listed below:

1. Specialist Knowledge

Basic and Non-Basic Deposit Products

Risk and Investment Insurance Products

Superannuation

Managed Investments

Securities

Government stocks, bonds or debentures

2. Generic Knowledge

Financial Markets/Economic Environment/General update on changes in the industry/monetary or fiscal policy

Compliance including Libertas Financial Planning procedural updates

Ethics

Product Updates

3. Skills

Complaints handling

Advisory Process requirements

Documentation requirements



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Libertas Financial Planning has developed a comprehensive Training Program inclusive of 2 Professional Development Days per annum, and the Kaplan On track on-line training system.

It is Libertas Financial Planning policy that advisers must complete a minimum of 30 hours per annum (40 hours per annum for CFP advisers). These hours must be made up through attendance at Professional Development days and the Kaplan On track on-line training.

In addition to the Training Program, advisers are able to source additional training through funds management organisations, stockbrokers or other professional associations and Professional Reading (see below Policy).

Representatives must adhere to their individual training plan in assessing the Appropriateness of their ongoing training in relation to their individual requirements and the activities that they

undertake as Representatives.

Record Keeping

Representatives must also keep on file agendas, certificates and other relevant information for each training session as evidence of attendance. These records should be kept for a minimum of five years. These must be made available to Libertas Financial Planning management upon request.

Training Registers will be reviewed by management on a regular basis to confirm completion of required training hours by advisers.

Remedial Action Libertas Financial Planning will ensure that the remedial actions outlined below are complied with.

If Libertas Financial Planning identifies any areas of deficiencies in the training undertaken by the Representative, Libertas Financial Planning may require the Representative to take certain remedial action to complete the outstanding training requirements. If training is deficient during the course of the year the Representative will be advised of the deficiencies and instructed by Libertas Financial Planning to ensure the additional training over the course of the year satisfies the requirements of the Representative’s training plan.

Non Compliance For Representatives who do not comply with their Continuing Professional Development requirements, Libertas Financial Planning will implement the following actions:

Less than 5 hours in a quarter – A reminder letter to be sent.

Less than 10 hours in six months – A warning letter will be issued detailing the actions to be taken if the adviser fails to attend 20 hours of structured training.

Less than 20 hours at the end of the financial year – Cancellation of Authorisation may occur.

MONITORING AND SUPERVISION

Regulatory requirements

Corporations Act 2001 Libertas Financial Planning is required under s.912A (a) (ca) of the Corporations Act to take reasonable steps to ensure that Representatives comply with the financial services laws, and that all activities under the licence are conducted efficiently, honestly and fairly. Monitoring and supervision of Representatives is a means of ensuring that this obligation is complied with.

ASIC Regulatory Guide 164 Also, ASIC Regulatory Guide 164 – Licensing: Organisational Capacities requires Libertas Financial Planning to monitor and supervise the activities of its Representatives to ensure they are complying with the financial services laws. RG 164 expects licensees to have adequate measures, processes and procedures in place to monitor, supervise and train representatives as part of their overall compliance measures, processes and procedures.

The Regulatory Guide requires licensees to have documented procedures in some form for meeting these obligations. Such procedures normally show how, among other things, the licensee analyses potential risks arising from Representatives’ conduct (e.g. recommending inappropriate products, not undertaking satisfactory needs analysis) and responds to compliance failures (or breaches).

The Regulatory Guide does not require every activity of all Representatives be monitored and supervised. However, it takes the position that a licensee’s monitoring and supervision measures, processes and procedures will generally be adequate only if they:



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(a) Allow the licensee to determine whether its representatives are complying with the legislation (including licence conditions); and

(b) Establish a robust mechanism for remedying any breaches.

Libertas Financial Planning Policy The onus is on Libertas Financial Planning to demonstrate adequate supervision, training and monitoring systems. If Libertas Financial Planning is not able to demonstrate adequate supervision, training and monitoring systems, it will be in breach of its general obligations under the law and its licence conditions. Possible consequences of this include suspension or revocation of Libertas Financial Planning licence, thus posing a significant risk to the business.

Libertas Financial Planning considers its policy and procedures on monitoring and supervision of its Representatives as an integral part of its risk management system. Apart from risk management from a legal/compliance point of view, Libertas Financial Planning is equally aware that the provision of financial services to retail clients is inherently risky.

Significant claims may arise from the negligence on the part of Representatives. Accordingly, the implementation of monitoring and supervision procedures is intended to identify risk areas in the provision of licensed services and respond to them before they result in clients suffering losses, which in turn will invariably lead to litigation and other disciplinary actions taken against Libertas Financial Planning .

Accordingly, Libertas Financial Planning has developed a comprehensive Monitoring and Supervision Program to ensure that the following areas are targeted and any risks to Libertas Financial Planning are identified and treated appropriately. The program will apply on a continuing basis.

Scope of the Monitoring and Supervision Program Authorisation of Representatives The program will ensure that Representatives are authorised in an appropriate manner. The Corporations Act recognises four (4) types of Representatives:

Libertas Financial Planning employees and directors

Employees and directors of Libertas Financial Planning related bodies corporate

Authorised Representatives (those not employees or directors of Libertas Financial Planning or its

related bodies corporate

Any other person acting on behalf of Libertas Financial Planning

Because Libertas Financial Planning is responsible for the conduct of all Representatives, it is in the interest of Libertas Financial Planning to authorise each Representative appropriately. This is to ensure that there is a clear understanding regarding the activities that the Representative is allowed to conduct on behalf of Libertas Financial Planning .

Appropriate authorisation will enable Libertas Financial Planning to tailor its Training, Monitoring and Supervision Program to suit the requirements of the tasks or activities conducted by the Representative.

Through the Monitoring and Supervision Program, Libertas Financial Planning will ensure that each Representative remains appropriately authorised and that the activities the Representative conducts is within the scope of the licence at all times.

Libertas Financial Planning will review authorisations regularly taking into consideration any further training or education completed by a Representative or taking into consideration persistent failure of a Representative to comply with regulatory standards and Libertas Financial Planning policy and procedures when providing authorised financial services.

Accordingly, in some cases, a Representative’s authorisation may be amended to include activities commensurate with training and education completed since the previous authorisation. Correspondingly, some activities may be excluded where a Representative has failed consistently to remedy shortcomings in the provision of particular financial services.

Compliance with financial services laws Libertas Financial Planning monitoring and Supervision Program will ensure that Representatives are complying with financial services laws at all times. All areas of the provision of financial services on behalf of Libertas Financial Planning will be monitored to ensure that Representatives are following Libertas Financial Planning procedures and processes. Where failure to follow procedures and processes are detected, Libertas Financial Planning will implement additional procedures including requiring the Representative to take certain remedial actions or undertake additional training.

Appropriate training



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The Monitoring and Supervision Program will ensure that at all times; Representatives are appropriately trained, are competent and remain competent to provide the financial services on Libertas Financial Planning behalf. Remedial action will be implemented to fill identified gaps in training and/or competency requirements.

Complaint handling The Monitoring and Supervision Program will ensure that client complaints against Representatives are being handled in accordance with Libertas Financial Planning policy and procedures. Libertas Financial Planning views client complaints as one measure of how well it is complying with its obligations under the law and licence conditions. Furthermore, it is desirous that client complaints are handled efficiently, and if possible, at the Representative/Client level.

Reporting breaches Libertas Financial Planning Monitoring and Supervision Program is intended to identify any breaches of the licence in order to report these to ASIC in accordance with the Licensee’s general obligations under s. 912A and s. 912B of the Corporations Act. For more information on breach reporting, see the “Breach Reporting” policy within this Section.

Notifications to ASIC Furthermore, Libertas Financial Planning Monitoring and Supervision Program will enable Libertas Financial Planning to fulfil its obligation regarding notifying ASIC about certain information and any changes thereto about Authorised Representatives (s 916F of the Corporations Act and Regulation 7.6.04).

Systematic monitoring and supervision will identify any changes in the information held by ASIC in its Register on Authorised Representatives. Any such change must be notified to ASIC so that ASIC can update the Register.

Record Keeping and Reporting Mechanisms To support the Monitoring and Supervision Program, a Licensee is required to maintain adequate records of any supervision undertaken. A clear reporting and supervisory structure has been established to facilitate reporting to Libertas Financial Planning Responsible Officer(s), especially in situations relating to compliance breaches.

Methods of monitoring and supervision In order to comply with its obligation to monitor and supervise Representatives, Libertas Financial Planning will adopt the following methods on a continuing basis

Recruitment The recruitment stage is the first opportunity for Libertas Financial Planning to obtain as much information on the Representative regarding, among others, training, competencies and experience in the provision of financial services.

As a result, it is the point at which Libertas Financial Planning uses the information gathered on the applicant to form a preliminary view as to whether the applicant will be able to perform the duties relating to the provision of financial services efficiently, honestly and fairly.

Libertas Financial Planning will require all applicants to complete an Authorisation Application form and enclose certificates of all relevant industry qualifications and training completed by the applicant. Also, Libertas Financial Planning will require the names of two professional referees.

Libertas Financial Planning will use the information provided on an applicant’s industry qualifications, training and experience to conduct a Training Needs Analysis (“TNA”) on the applicant. The Authorisation Application form also provides scope to capture information on any other business interests that the applicant has at the time of the application. This information will enable Libertas Financial Planning to be satisfied on a number of issues including:

Whether the applicant has effective arrangements in place for the management of those other Business interests;

Whether there will be a potential conflict of interest; and

Whether Libertas Financial Planning will need to allocate more resources towards effective monitoring and supervision of the Representative after being appointed.

Libertas Financial Planning will also request that the applicant sign an authority to conduct a background check to obtain information relating to, among others, bankruptcy and criminal histories. In addition, Libertas Financial Planning will check relevant ASIC Registers to ensure there has not been a banning and/or disqualification order made against the applicant.



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If Libertas Financial Planning considers that the applicant is suitable to act as a Representative, it will make an offer to the applicant conditional upon the successful completion of background checks and completion of a Representative agreement.

Authorisation Representatives are not permitted to hold authorisations with other licensees whilst authorised to Libertas Financial Planning . Representatives will only be authorised to act in those areas in which they have been determined to be competent by Libertas Financial Planning .

The outcome of the Training Needs Analysis (“TNA”) conducted on each applicant at the recruitment stage will determine which financial services Representative will be authorised to perform. The areas of competency will be documented within the Authorisation Certificate issued by the licensee upon authorisation of the Representative.

Where the activities of a Representative change as a result of additional training being completed or supervisory or remedial requirements, their authority will be reviewed to ensure that it remains consistent. All authorisations will be reviewed at least annually for this purpose, as part of the Adviser Audit Review process.

Initial Supervision An initial supervision period will be enforced for all authorised representatives. It is a requirement that the first two (2) Statement of Advice recommendations written by the adviser must be reviewed by Professional Standards prior to providing to the client.

Ongoing Supervision All representatives of Libertas Financial Planning must forward all requests for SOA production via the Libertas Financial Planning Para Planning division. No SOA’s are to be prepared by representatives.

Para-planners Para-planners who play a role in the advisory process, e.g. collecting information from clients, preparing draft Statements of Advice, or assisting in the explanation of financial products to clients, are required to be supervised by a fully qualified Representative.

The method of supervision will include the Representative either:

(a) Review of all draft Statement of Advice prepared by a Para-planner to assess legal compliance and the appropriateness of the advice provided; and

(b) Lead any verbal explanation of the financial product advice to clients.

Para-planners will be reviewed annually by Libertas Financial Planning in the same manner as advisory Personnel to ensure they are complying with all requirements in relation to the provision of advice and ongoing training.

Non-advisory Personnel Representatives (including call centre or front desk and general administration staff) who are not authorised to provide financial product advice on behalf of Libertas Financial Planning will be supervised systematically to ensure that staff are not exceeding the terms of their authorisation.

Formal performance appraisals will be undertaken on an annual basis and a record of performance issues and steps taken to remedy them will be maintained. The staff member will be required to verify any such record by signature.

If the issues are not addressed after a reasonable time has been allowed, the staff member will be required to provide a written response outlining why the issues have not been addressed. Other disciplinary actions may be taken against the staff member if an inadequate explanation of why the issues have not been addressed.

Advisory Personnel Monitoring and Supervision of advisory staff is more systematic and intense than other Representatives. This is because advisory personnel will be involved in the provision of financial product advice to clients on a day - to-day basis and this may pose more significant risk to Libertas Financial Planning licence than other Representatives. The following methods will be applied in respect of advisory personnel.

Compliance Review Scope A complete review of all Representatives will be conducted annually. Representatives will be notified at least two weeks in advance of the date of the review. The review will cover the examination of Representatives’



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understanding of all relevant regulatory requirements, adherence to Libertas Financial Planning policy and procedures. The review will focus on the following areas.

1. Review of Regulatory Requirements The following documentation will be reviewed with the objective of verifying Representatives’ understanding of the requirements regarding their maintenance, availability for inspection and providing them to the relevant persons. These will include:

Authorisation Certificate

Continuing Professional Development Training Register

Identification documents including – stationery advertising and promotional material

Financial Services Guide and Adviser Profile

Alternative Remuneration Register

2. Processes The following processes will be reviewed to ensure their compliance with regulatory requirements and Libertas Financial Planning policy and procedures.

Control of Client funds

Charging of Fees for Service

Provision of advice to clients - general advice and personal advice

Provision of required documents to clients (FSG, SOA and PDS)

Record keeping and file maintenance

Client reviews

Referral Arrangements

Anti-hawking provisions

Privacy procedures

Conflicts of Interest & soft dollar disclosure

3. Client Files A selection of client files will be requested at the time of the review. The files will be reflective of the types of advice provided during the previous 6 to 12 month period.

The objective is to verify the extent to which completed client files are reflective of a Representative’s understanding of regulatory requirements and Libertas Financial Planning policy and procedures. A minimum of five (5) files will be reviewed.

Remedial Action Upon completion of review, each Representative will be issued with an exceptions report outlining any issues identified in the review, with appropriate action items for remedying the issue, as well as defined time frames for remedial action.

All Audit Review Reports will be followed up by your relevant State Manager within two months of receiving your review (earlier if risks identified) and one or a combination of the following remedial actions implemented as appropriate:

1. Feedback and further training This is generally the approach used where the issues identified are not serious concern and can be addressed through instruction and appropriate training being provided.

2. Specific training Specific training may be required in a particular administrative, advisory or procedural area to address recurring or more serious issues.

3. Additional supervision This may be applied where the issue has the potential for greater advisory or administrative risk to the business.

4. Specific actions Where a serious compliance issue is identified, Libertas Financial Planning may require certain actions to be undertaken to remedy the issue. This may include a requirement that all SOA’s be pre-vetted for a specified period, follow-up reviews within a specified time, and withholding of commissions until a problem is rectified. In cases where remedial actions have not rectified the concerns, suspension or revocation of a Representative’s authority may considered by Libertas Financial Planning .



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Representatives should be aware that failure to comply with the directions of Libertas Financial Planning , particularly as an outcome of an Adviser

Audit Review may result in the revocation of their authorisation.



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Part 3 BREACH REPORTING ....................................................................................................................... 150

CLIENT’S MONEY AND ASSETS ...................................................................................................... 151

DISPUTE RESOLUTION .................................................................................................................... 153

FINANCIAL TRANSACTIONS REPORTING ACT PROCEDURES .................................................. 155



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BREACH REPORTING Regulatory requirements Section 912D of the Corporations Act provides that if an AFS Licensee

Breaches any of the specified obligations; or

Is likely to breach any of the specified obligations; and

That breach is ‘significant’ then the licensee must give a written report to ASIC as soon as practicable, and in any case within 5 business days of becoming aware of the breach or likely breach.

Libertas Financial Planning Policy As part of its compliance and risk management program, Libertas Financial Planning has implemented a system for identification, reporting and remedying of compliance breaches, including breaches of regulations, ASIC Policy, Industry guidelines and Licensee compliance guidelines. This includes, but is not limited to, a process for reporting ‘significant’ breaches of financial services laws to the regulator as required under 792B of the Corporations Act.

Breach Identification

What is a breach? In simple terms, a compliance breach can be described as the failure to comply with a required guideline or regulation, as prescribed by law, industry bodies or the licensee.

In this context, compliance breaches can therefore include the following:

Breaches of licence conditions

do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; and

have adequate mechanisms to manage conflicts of interest; and

comply with the conditions on the licence; and

comply with the financial services laws; and

take reasonable steps to ensure that its representatives comply with the financial

services laws; and

have available adequate resources (including financial, technological and human resources) to provide the financial services covered by the licence and to carry out supervisory arrangements; and

maintain the competence to provide those financial services; and

ensure that its representatives are adequately trained, and are competent, to provide those financial services; and

have a dispute resolution system complying with subsection (2); and

have adequate risk management systems; and

have adequate compensation arrangements in place including Performance Bond and Professional Indemnity cover; and

Maintain personal advice records including FSG and SOA records

Breaches of Libertas Financial Planning compliance policy and procedure

Breaches of terms of the Adviser/Dealer Agreement.

Significant Breaches Any breach deemed as ‘significant’ in nature must be reported through to ASIC within 5 days of identifying the breach. When determining whether a breach is significant and thus requires reporting to the regulator, a number of factors must be considered including:

The number or frequency of similar previous breaches, e.g. a number of similar breaches may

reveal a systemic compliance problem

The impact of the breach on your ability to provide the financial services covered by your

licence

The extent to which the breach indicates that your compliance arrangements are inadequate

The actual or potential financial loss to your clients, or you, arising from the breach or likely

Breach For example if you provided inappropriate advice to a client, this would be considered a ‘significant breach’, as the breach would impact on the ability of the licensee to comply with financial



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services laws (breach of s.945a), as well as the ability to take reasonable steps to ensure that representatives complied with financial services laws.

Breach Reporting All compliance failures, breaches, suspected breaches of the law and Licensee Compliance Policies and procedures must be reported to the Licensee as soon as is Practicable once the breach has been identified.

To assist in the process of breach reporting, Libertas Financial Planning have developed a Breach Report Record. A copy of the Breach Report Record can be found at Appendix 4 of Corporate Documents.

Procedure for Breach Reporting Where a representative identifies a possible or actual breach, the following process is to be adhered to:

1. Complete a Breach Report Record detailing the particulars of the breach

2. Fax or email the Breach Report Record to Libertas Financial Planning Compliance as soon as Practicable and no later than 24 hours after breach identification

3. Libertas Financial Planning Compliance will then note the Breach in the Breach Register, and assess the breach to determine whether it is significant

4. If deemed significant, the breach will be reported to ASIC within 5 days.

5. Remedial action will then be implemented to remedy the breach. This may include training, supervision or monitoring of a representative (where the breach relates to the actions of a representative), and in some instances, revocation of authority.

It is important that you recognise that there will be no direct retribution for the action of reporting of a breach, whether it be your own, or that of a fellow adviser.

Breach Documentation Upon notification or identification of a breach, Libertas Financial Planning enter all breach details onto a central Breach Register.

This register is maintained by the Compliance Manager, and tracks the following information:

The date the breach was noted;

Statement of Breach;

Severity of Breach;

Actions to be taken to remedy breach

Notification to the Regulator;

Individual responsible for noting and reporting breach;

Status of the breach.

Access to this Breach Register is limited to compliance staff, senior management and Board Members.

CLIENT’S MONEY AND ASSETS Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Specific obligations are imposed on Libertas Financial Planning under the Corporations Act in relation to the handling of clients’ money and property that are received by Libertas Financial Planning .

It is Libertas Financial Planning policy in general that Authorised Representatives are prohibited from taking possession, custody or control of client securities or client property. This restriction is to limit the potential for Authorised Representatives to act without the express instructions of the clients, and remove any potential for direct access to client accounts.



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Representatives are not permitted to enter into any arrangement to take control of client monies or property or to make transactions on behalf of client(s) accounts unless approved by Libertas Financial Planning .







Advisory Guidelines

Dealing with client money Libertas Financial Planning is required under s 981H to maintain in a separate account in trust for the client certain money paid to Libertas Financial Planning . Such money includes money paid in connection with either:

Financial services provided, to be provided or may be provided to a client; or

A financial product held by a client.

Examples of such money are money held in a stock broking account for the settlement of orders given by the client and money received by a custodian as a return on an investment. Also interests earned on any amount held and on the client’s investments are included in the meaning of client money. (See also Regulation 7.8.01).

The obligation does not apply to moneys paid to Libertas Financial Planning and its Authorised Representatives as remuneration for the provision of financial services to a client and money paid to reimburse Libertas Financial Planning and its Representatives to acquire an interest in a financial product. Also excluded is money paid to acquire a financial product or an interest therein from Libertas Financial Planning . Loan money is also excluded.

Treatment of money held in trust Client money, as identified above, is regarded as money held in trust for the client’s benefit. An exception applies to money paid in relation to an insurance product for which the insurer has accepted the risk, and the premium has been paid to the insurance company In that case, the money is treated as belonging to the insurer.

Trust accounts Licensees are permitted to operate trust accounts in relation to client money and may only make withdrawals from the account or accounts in accordance of the terms of Regulation 7.8.02. Regulation 7.8.03 deals with consequences for trust accounts where a Licensee ceases to be licensed or becomes insolvent and as a result cannot trade.

Discretionary Accounts It is a condition of Libertas Financial Planning licence that the licensee and its representatives cannot operate a discretionary portfolio account. This includes, but is not limited to, utilizing a Power of Attorney to utilize discretionary control over a client’s monies.

Dealing with client property other than money The obligations in relation to other client property apply to also a Licensee who provides custodial or depository services under s 766E of the Corporations Act.

Property in this context is property other than money. An example is a share certificate. The obligations in the Act and Regulations will apply if such property is given to the licensee by the client or on behalf of the client, and it is in connection with either:

A financial service that has been or will be provided to a client; or

A financial product held by the client.

In any such case, Financial Partnership must comply with the requirements in Regulation 7.8.07, and subject to the terms of the Regulation, with the conditions on which the property was given to the client.



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Trust accounts

Furthermore whilst the legislation permits the use of trust accounts it is Libertas Financial Planning policy that it will not operate a trust account to accept client monies.

Powers of Attorney

Representatives are not permitted to enter into Power of Attorney arrangements for clients. This restriction also applies to the acceptance of appointments to act on behalf of the client.

An exemption to this policy is if Powers of Attorney are held for family members, irrespective of whether they are clients or not.

Discretionary Accounts

Representatives are not permitted to operate discretionary portfolio accounts, nor utilize Powers of Attorney for client investments where they have the ability to acquire, apply, vary or dispose of financial products on behalf of the client.

Where a Mastertrust or WRAP facility allows an on-line switching authority for advisers, a Representative must ensure that prior to facilitating a switch, an SOA or SOAA is provided to the client and consent sought from the client in relation to the transaction, prior to the transaction.

Client Mail

The client address on any database must be the client’s address and not the address of an adviser’s office. The original certificates and documentation for a security, investment or insurance policy should be held by the client.

Where cheques are to be received by the Representative from Fund Managers and other third parties on behalf of the client, the client must provide written authorisation. For example, when funds are being rolled over from a superannuation fund to a rollover fund, the client must provide written instructions to the fund manager to rollover the super funds and for those funds to be sent to the adviser. A copy of the client letter must be kept on the client file.

DISPUTE RESOLUTION

Regulatory requirements Libertas Financial Planning is required under s 912A of the Corporations Act, to have in place both an internal and external dispute resolution system. Any such system is to be used for the resolution of complaints by retail clients in relation to the provision of all the financial services covered by Libertas Financial Planning licence. An internal complaint handling procedure must meet the requirements of the Australian Standard for Complaints Handling (AS-4269 2995). An external complaint handling system must be approved by ASIC external Complaints Resolution Scheme.

Libertas Financial Planning Policy Libertas Financial Planning is committed to the speedy and efficient resolution of complaints received in relation to the services offered by Libertas Financial Planning and its Representatives.

Libertas Financial Planning is committed to providing a complaints handling framework that: - Increases the level of consumer satisfaction with the delivery of products and services and enhance the

consumer/provider relationship Recognises, promotes and protects consumers' rights, including the right to comment and complain. Provides an efficient, fair and accessible mechanism for resolving consumer complaints. Provides information to consumers on the complaints handling process for the services of Libertas

Financial Planning Monitors complaints in an endeavour to improve the quality of products and services. Promotes a positive attitude towards consumers, compliance and complaints handling. Libertas Financial Planning requires that Representatives comply with the Complaint Handling

Procedures outlined below.

Internal Complaints Handling Procedures Libertas Financial Planning has established an internal complaint handling procedure compliant with the Australian Standard. The elements of the procedure are:

Scope Information on the type of complaints dealt with by Libertas Financial Planning .



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Commitment Details on Libertas Financial Planning commitment to efficient and fair resolution of complaints at all levels within the structure of Libertas Financial Planning . The resolution process is to be fully documented in writing.

Fairness The premise of the complaints handling procedures is to treat any complaint against Libertas Financial Planning or its representatives in a fair manner, and that fair treatment applies not only to the client but also to Libertas Financial Planning and its representatives.

Access The complaints handling process is to be accessible to all with information readily available on the details of making and resolving complaints. The process is to be easy to understand and in plain English. Access to the complaints and disputes resolution process may be by letter, fax, and telephone or in person to a member of staff.

Responsiveness Complaints are to be dealt with quickly and complainants are to be treated courteously.

Charges The process is to be free of charge to the complainant, subject to statutory requirements.

Systematic There is to be an appropriate and systematic recording of complaints. Complaints need to be classified and analysed for the identification and rectification of recurrent problems.

Definitions For the purpose of the procedure, the following definitions apply:

Complaint Any expression of dissatisfaction conveyed to Libertas Financial Planning about a product or service provided by the Licensee, a member of staff or one of its Representatives coupled with a request to remedy the situation.

Serious Complaint A complaint where the complainant is requesting financial and/or legal retribution such as compensation; and complainant lays blame on the adviser for negligible acts.

Dispute An expression of dissatisfaction by a client to the Licensee response to their complaint.

Complaints Process While in some instances clients may initially appear to have a complaint, it may turn out to be a misunderstanding or misinformation. Therefore, the first step is to establish whether the client wishes to make an official complaint, i.e. is seeking a remedy to the complaint. All complaints must be documented whether they are able to be resolved immediately or after further investigation. Similarly, all events that a Representative believes may lead to a complaint at a later stage must be notified to Libertas Financial Planning . This is particularly important for professional indemnity claims purposes.

When dealing with an initial complaint, it is also important that the Representative does not admit or deny liability.

Allegations of Misconduct or Financial Loss If the complaint relates to an alleged financial loss or inappropriateness of advice, the client is advised that the details of the complaint be made in writing and directed to Libertas Financial Planning .

Complaints Received from Regulatory Bodies If a complaint is received from ASIC, this must be forwarded immediately to the Complaints Manager/Professional Standards Manager of Libertas Financial Planning .

A response is then expected from the client. It is anticipated that a satisfactory resolution can be reached at this stage, however if this it not possible further communication will take place. Resolution can be sought through formal communication or by direct discussion with the client.

If the client is not satisfied with the resolution proposal made, within 45 working days, Libertas Financial Planning will advise the client of their right to seek resolution through the external dispute resolution body. Libertas Financial Planning is a member of the Financial Industry Complaints Service Limited (FICS).



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At this stage, for any complaints relating to privacy matters, the client is to be directed to the Office of the Federal Privacy Commissioner. An unresolved complaint at this stage is referred to as a dispute.

FINANCIAL TRANSACTIONS REPORTING ACT PROCEDURES Regulatory Guidelines Libertas Financial Planning must take reasonable steps to ensure that its representatives comply with the financial services laws (s.912). These laws extend to the provision of financial product advice by representatives on behalf of the Licensee, and more specifically to the requirement to act in the best interest of the client when providing advice to a client (s.961).


Libertas Financial Planning Policy Under the Financial Transactions Reporting Act (FTR Act), and Section 243D of the ASIC Act, Licensees are under obligation to report particular transactions to the Director of AUSTRAC. They must also ensure that all account signatories are identified to maintain the integrity of the system and to reduce the opportunity for money laundering. Cash dealers are required to report:

Significant cash transactions – a transaction of $10,000 or more in Australian currency, or the

equivalent of $10,000 or more in foreign currency

International funds transfer instructions – an instruction for a transfer of funds that is transmitted into or out of Australia electronically or by telegraph

Suspect transactions – any transaction which the cash dealer has reasonable grounds to suspect is relevant to criminal activity There are also requirements for the public to report cash transfers into and out of Australia of A$10,000 or more or the foreign currency equivalent.

The legislation provides penalties for avoiding the reporting requirements and in respect of false or incomplete information. It also has penalties for persons who facilitate or assist in these activities.







Definitions

Cash Dealers Cash dealers as defined in the FTR Act include:

Banks, building societies and credit unions referred to as ‘financial institutions’

Financial corporations;

Insurance companies and insurance intermediaries;

Australian Financial Services Licensees and futures brokers;

Cash carriers;

Managers and trustees of unit trusts

Firms that deal in traveller’s cheques, money orders and the like;

Persons who collect, hold, exchange or remit currency on behalf of other persons;

Currency and bullion dealers

Casinos and gambling houses

Totalisator



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An Australian Financial Services licensee is a “cash dealer” under the Act and is therefore subject to its requirements.

Significant Cash Transactions A significant cash transaction is a transaction:

Involving a physical transfer from one person to another;

Of Australian or foreign currency or paper money;

Of AUD $10,000 or more in value.

International Fund Transfers An international fund transfer is the physical transfer into or out of Australia of Australian or foreign coin or paper money of AUD $10,000 or more. An international fund transfer instruction is:

Sending an electronic instruction out of Australia to transfer funds; or

Receiving an electronic instruction electronically transmitted into Australia to transfer funds, on behalf of or at the request of a person who is not a bank.

Suspect Transactions A suspect transaction is where the dealer is party to a transaction or a negotiation in relation to a transaction and has reasonable grounds to suspect that the information about the transaction may be:

Relevant to investigation of an evasion, or attempted evasion, of a taxation law;

Relevant to investigation of, or prosecution of a person for, a Commonwealth offence;

Assistance in enforcement of the Proceeds of Crimes Act 1987; or

Relevant to investigation of, or prosecution of a person for, an offence against the ASIC Act or the Corporations Act. Information that must be reported includes that obtained in negotiations or a discussion that may not result in an actual dealing but does not include information obtained through mere enquires. It applies to all transactions and there is no monitory limit as applies to significant cash transactions.

Identifying Suspect Transactions Factors, which should be considered in assessing whether or not a transaction is suspicious, should include:

The nature of, or unusual circumstances surrounding, the transaction;

The known business background of the person conducting the transaction;

The production of seemingly false identification in connection with any transaction, the use of aliases and a variety of similar but different addresses and in particular, the opening or operating of a false name account (which is an offence under the FTR Act);

Admissions or statements of involvement in tax evasion or other criminal activities made to a cash dealer or its employees or agents concerning a transaction;

Regular or unusual transactions involving known narcotic source or transit countries

The behaviour of the person or persons conducting the transaction (e.g. unusual nervousness);

Reporting Requirements The FTR Act requires cash dealers to report all suspect transactions to AUSTRAC by the lodgment of appropriate forms (Form 16) as soon as practicable. It is expected that this should be within a day or so of the suspect activity.

If as a Representative of Libertas Financial Planning , you encounter any such transactions, it is imperative that they are reported immediately to Libertas Financial Planning Compliance.



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Section 3 The Advice Process

Part 1

Summary of the Advice Process

INTRODUCTION ................................................................................................................................. 159

SUMMARY OF THE ADVICE PROCESS ........................................................................................... 159 PROSPECTING .................................................................................................................................. 159 CLIENT DISCOVERY .......................................................................................................................... 159 ADVICE PREPARATION ..................................................................................................................... 160 ADVICE PRESENTATION................................................................................................................... 161 IMPLEMENTATION ............................................................................................................................. 161 RENEWING CLIENT’S NEEDS AND OBJECTIONS ......................................................................... 162 ONGOING SERVICE .......................................................................................................................... 162



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Introduction As a Representative of Libertas Financial Planning you provide authorised financial services on behalf of Libertas Financial Planning . In doing so, you must comply with legal and regulatory requirements introduced to ensure that at all times the interests of consumers are adequately protected. In addition, you must comply with Libertas Financial Planning policies and procedures introduced to complement the legal and regulatory standards and enforce best practice industry standards.

This section of the Manual deals with your responsibilities when providing financial product advice to clients. It envisages your relationship with your clients as you providing advice and guidance. A relationship in which your advice is necessary to guide the client through a maze of strategies, processes and products that you consider as being the most appropriate at successive stages in meeting the client’s needs and objectives.

Your role is to provide advice in the form of recommendations, and allow the client to make an informed decision based upon on your recommendations. Your role is to “educate” the client so as to empower them to make decisions for their own financial security or independence.

The successful discharge of your legal and regulatory responsibility will be determined by the test of whether in any given case you have acted towards your clients appropriately and in their best interest.

Summary of the Advice Process The Advice Process is the core process for providing appropriate financial advice to your clients. There are seven steps in the Advice Process, commencing with the initial client discovery, including understanding your client’s situation, needs and objectives. The Advice Process does not necessarily cease at the implementation of the initial advice. If the client wishes, it is important to regularly review their situation and assist them in continuing to achieve their needs and objectives as their personal circumstances change.

By developing and managing your business practices around an Advice Process, greater efficiency and consistency can be built into your business, whilst providing a greater level of service for your clients.

Prospecting Attracting clients is the start of the Advice Process and the relationship with the client, offering you the opportunity to differentiate your service from other financial advisers. It covers the generation of customer leads and referrals, a component of business growth, and the most effective ways of promoting a financial planning business.

Activities within this step may include: Marketing to new clients

Marketing to existing clients

Referral sources/processes

Seminars

Related Libertas Financial Planning Policies and Procedures Libertas Financial Planning General Advice

Libertas Financial Planning Marketing via telephone and Email

Libertas Financial Planning Promotion and Identification of Advisers and their Practices

Libertas Financial Planning Authorised Representative Responsibilities

Libertas Financial Planning Conflicts of Interests

Libertas Financial Planning Other Business Activities

Libertas Financial Planning Referral Arrangements

Client Discovery Getting to know the client is the initial stage of the Advice Process. The core purpose of this stage is to assist in identifying and collecting client needs and objectives. This may be completed via a number of discovery meetings, a mail out, as an initial phone discussion, or as a combination of these.

The initial client appointment, as a part of the discovery phase, provides the opportunity to review all personal and financial details, position your business, present the services a client can expect to receive, explain investment issues and set realistic expectations for a productive, long-term relationship.

Success is based on the demonstration of how your advice can help the client achieve their needs and objectives.



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Activities within this step may include: Hold initial appointment/s

Create client file

Post appointment file note

Gather client data

Obtaining client privacy and authorities

Related Libertas Financial Planning Policies and Procedures Libertas Financial Planning Financial Services Guide

Libertas Financial Planning Fact Finding and Other Investigations

Libertas Financial Planning Clients with Special Circumstances and Needs

Libertas Financial Planning Client Files

Libertas Financial Planning Collection, Use, Disclosure and Security of Client Personal Information

Advice Preparation It is important to develop strategies which will assist the client in achieving their needs and objectives. Whether strategies are backed by financial modelling, or a needs analysis it is important to link the strategy recommendation to the respective need and/or objective it will assist in achieving.

A single strategy may assist the client in achieving more than one need or objective, just as multiple strategies may be required to achieve a single client need or objective.

Unable to Achieve a Client’s Needs and Objectives – Needs and Objectives, Tolerance to Risk, and Alternative Strategies When developing the advice strategies to assist a client in achieving their needs and objectives, it may become clear the client’s needs and objectives may not be reached. Based on the initial client discussion regarding possible trade-offs or alternative strategies, it is important to explore a number of alternatives strategies indicating:

Where possible trade-offs may be required, what these are and their impacts to a client’s situation

If greater risk is required to achieve the client needs and objectives, what are the associated risks

If timing required for achieving a need and/or objective can be altered

The impact of reducing one-off or ongoing expenses

If there are any alternative strategies with a greater cost, what these costs are, and their impact to the client’s situation

It is important that all impacts to a client’s situation and the relevant discussion should be captured through a detailed file note.

Related Libertas Financial Planning Policies and Procedures Libertas Financial Planning Statement of Advice

Libertas Financial Planning Strategy Papers and Presentations

Libertas Financial Planning Record of advice

Specific advice Specific product advice

Direct property Agribusiness investments

External portfolio administration services Basic deposit product advice

Gearing Derivatives

Limited advice Employer sponsored superannuation

Personal and business insurance advice Internally geared funds

Time critical advice Listed securities

Wholesale clients Managed discretionary accounts

Limited recourse borrowing by SMSFs Non approved products

Reverse mortgages

Self managed superannuation funds



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Advice Presentation A client's commitment to proceed is followed by the presentation of the Statement of Advice (SOA). This stage allows you to demonstrate the value you bring to the relationship by demonstrating how the recommended strategies outlined in the SOA, will assist the client in achieving their needs and objectives.

Activities within this step may include: Presentation meeting

Presentation Supporting Material

Presenting the advice This should mirror closely to initial client discussion regarding possible trade-offs or alternative strategies. Through this discussion it should be determined if the client is willing and able to:

make trade-offs, what these are and their impacts to a client’s situation

take on greater risk to achieve the client needs and objectives, what are the associated risks

increase the time required for achieving a need and/or objective

reduce one-off or ongoing expenses

implement alternative strategies with a greater cost, what these costs are, and their impact to the client’s situation

It is important that all impacts to a client’s situation and the relevant discussion should be captured through a detailed file note.

Related Libertas Financial Planning Policies and Procedures

Libertas Financial Planning Client Files

Libertas Financial Planning Clients with Special Circumstances and Needs

Libertas Financial Planning Collection, Use, Disclosure and Security of Client Personal Information

Implementation Once your advice has been presented to your client, and they are happy with the recommendations, it is time to put the advice into practice. The key to implementation is ensuring your client is familiar with the process and reassured of the suitability of their insurance and/or investment choices.

In addition, this stage offers the opportunity to introduce your client to the financial planning business' operating model and confirm the services they will receive over the course of the relationship.

Activities within this step may include: Implement Ongoing Service Package

Implement product

Confirm implementation

Related Libertas Financial Planning Policies and Procedures: Libertas Financial Planning Client Identification Procedure

Libertas Financial Planning Execution Only Services

Libertas Financial Planning Implementing Recommendations

Reviewing a client’s needs and objectives Collecting and developing financial advice to assist clients in meeting their needs and objectives does not always stop after the initial implementation. If an ongoing advice arrangement is in place, it is just as important as the initial Client Discovery, for the client’s situation and needs and objectives to be Reviewed and Re-evaluated.

A large part of knowing your client is understanding how what they need and want changes over time.

Reviewing a Client’s Needs and Objectives: It is important to examine the degree of achievement and/or value of the needs and objectives.

Have there been any significant changes to a client’s relevant personal circumstances, resulting in changes to the client’s needs and objectives?

Have the needs and objectives been achieved?

Are there new client needs and objectives?



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Are further changes in strategy needed in order to achieve the needs and objectives? Does the client need to make further trade-offs?

During a client review, the Reverse Fact Find can be used to determine whether existing needs and objectives have changed and are still relevant, or if there are new client needs and objectives.

Related Libertas Financial Planning Policies and Procedures Libertas Financial Planning Client Review Process

Libertas Financial Planning Record of Advice

Libertas Financial Planning Fee for Advice

Ongoing service Ongoing Service is a vital component for sustainable, long-term client relationships. A comprehensive client ongoing service offer incorporates annual client review meetings, regular communications such as newsletters and access to your expertise in addressing your clients’ needs and concerns. Providing ongoing service will reassure your clients of the value of advice, and can assist your financial planning business in differentiating itself from its competitors.

Activities within this step may include: Ongoing Service Offerings

Related Libertas Financial Planning Policies and Procedures

Libertas Financial Planning Marketing via telephone and Email

Libertas Financial Planning Client Review Process

Libertas Financial Planning Record of Advice

Libertas Financial Planning Fee for Advice



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Section 3 The Advice Process

Part 2 INTRODUCTION ................................................................................................................................. 166

MEANING OF FINANCIAL PRODUCT ADVICE ................................................................................ .166 Personal Advice and General Advice .................................................................................................. 166 Personal Advice ................................................................................................................................... 166 General Advice .................................................................................................................................... 166

BEFORE YOU PROVIDE ADVICE ..................................................................................................... 168 Obligation to provide a Financial Services Guide..........................................................................168 Purpose of FSG ................................................................................................................................... 168 Contents of the FSG ............................................................................................................................ 168 Only the approved FSG is to be handed out ....................................................................................... 169 Record Keeping ................................................................................................................................... 169 Timing of giving FSG ........................................................................................................................... 169 When do you not have to provide FSG ............................................................................................... 169 FSG was previously provided .............................................................................................................. 169 General Advice .................................................................................................................................... 170 Provision of Privacy Statement .......................................................................................................... 170 Obtaining Client Consent .................................................................................................................... 170 Collection of Tax File Numbers (“TFN’s”) ........................................................................................... 170 Authority from the client ....................................................................................................................... 171 Referrals .............................................................................................................................................. 171 Storage, security and disposal of Tax file Numbers ............................................................................ 171 Penalties .............................................................................................................................................. 171

OBLIGATION TO PROVIDE APPROPRIATE ADVICE ..................................................................... 171

PROVISION OF ADVICE .................................................................................................................... 172 Knowing your client – Collection of all relevant information ................................................................ 172 Libertas Financial Planning Policy ...................................................................................................... 172 Use of the Fact Find ............................................................................................................................ 172 Risk Profiling........................................................................................................................................ 173 Client Approval .................................................................................................................................... 174 Risks associated with investing ........................................................................................................... 174 Identify the client’s needs and objectives ............................................................................................ 174 Time Frame ........................................................................................................................................ 174 Optimising Objectives .......................................................................................................................... 174

IDENTIFICATION OF FINANCIAL PROBLEMS AND DEVELOPMENT OF STRATEGY ................ 175 Matching Current Situation to Current Financial Goals ....................................................................... 175 Matching Future Outcomes to Future Financial Goals ....................................................................... 175

STRATEGIES & PRODUCTS ............................................................................................................. 175 Knowing your strategies ...................................................................................................................... 176 Discussion of alternative strategies ..................................................................................................... 176 Knowing Your Products ....................................................................................................................... 176 Approved Product List ......................................................................................................................... 176 Non-Approved Products ...................................................................................................................... 176



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DOCUMENTING YOUR ADVICE - STATEMENT OF ADVICE .......................................................... 177 What is a Statement of Advice? ......................................................................................................... 177 Requirement to provide ....................................................................................................................... 177 When does it need to be given? .......................................................................................................... 177 When not to give a SOA ...................................................................................................................... 178 Libertas Financial Planning Policy ...................................................................................................... 178 Oral Recommendations ....................................................................................................................... 178 Types of advice ................................................................................................................................... 178 Full advice ........................................................................................................................................... 178 Defined scope advice .......................................................................................................................... 178 No Advice/Execution Only Agreements ............................................................................................... 178 Format of Advice ................................................................................................................................. 179 Use of plain English ............................................................................................................................. 179 Contents of Statement of Advice ......................................................................................................... 179 Scope and limitations of advice ........................................................................................................... 179 Client’s personal circumstances and needs ........................................................................................ 180 Statement setting out advice ............................................................................................................... 180 Reasons for recommendation ............................................................................................................. 181 Implications of recommendations ........................................................................................................ 181 Client provides incomplete or inaccurate information ......................................................................... 181 Format of the Limited Advice Warning ................................................................................................ 181 Recommendations to replace existing products ................................................................................. 181 Disclosure Requirements .................................................................................................................... 182 Regulatory requirements ..................................................................................................................... 182 Libertas Financial Planning Policy ...................................................................................................... 183

FEE’S COMMISSIONS, BENEFITS OR INTERESTS ....................................................................... 183 Commissions ....................................................................................................................................... 183 Format ................................................................................................................................................. 183 Rebates ............................................................................................................................................... 184 Commission Splits ............................................................................................................................... 184 Goods and Services Tax ..................................................................................................................... 184 Other Costs ......................................................................................................................................... 184 Referral Commissions ......................................................................................................................... 184 Other interests or benefits – Soft Dollar Arrangements & Associations with Product Providers ......... 185 Fees directly charged to client............................................................................................................. 186 Disclosure of Commissions - Insurance and Regular Premium .......................................................... 186 Commission Disclosure – Statement of Additional Advice (SOAA) .................................................... 186 Disclaimers and Warnings ................................................................................................................... 186

REFERRALS TO THIRD PARTIES ................................................................................................... 188 Specialist Advice ................................................................................................................................. 188

PRODUCT DISCLOSURE STATEMENTS ........................................................................................ 188 When to give PDS ............................................................................................................................... 188 Provision of PDS within an IPDS facility ............................................................................................. 188 Provision of PDS within a Superannuation facility/fund ...................................................................... 188

PRESENTATION OF STATEMENT OF ADVICE ................................................................................ 189 Preliminaries ........................................................................................................................................ 189 PDS and other documents .................................................................................................................. 189 Method of delivery ............................................................................................................................... 189



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IMPLEMENTING YOUR ADVICE ...................................................................................................... 189 Ensure client comprehends advice ..................................................................................................... 189 Variations to your advice ..................................................................................................................... 189 Minor variations ................................................................................................................................... 189 Significant variations ........................................................................................................................... 189 Authority to Proceed ............................................................................................................................ 189 Placement of Funds ............................................................................................................................ 189 Application Forms ................................................................................................................................ 189 Confirmation of Transactions ............................................................................................................... 189 Regulatory Requirements .................................................................................................................... 189 How transactions are to be confirmed ................................................................................................. 189 When confirmation must be provided .................................................................................................. 190 Cooling off period ................................................................................................................................ 190 Regulatory requirements ..................................................................................................................... 190 Cooling off period and when it begins to run ....................................................................................... 190 Rights of client ..................................................................................................................................... 190

CLIENT FILE MANAGEMENT AND RECORD KEEPING REQUIREMENTS .................................. 191 Regulatory Requirement ..................................................................................................................... 191 Libertas Financial Planning Policy ...................................................................................................... 191 Requirement to maintain client file ...................................................................................................... 191 Content of Client Files ......................................................................................................................... 191 Format of Client Files .......................................................................................................................... 192 Statement of Advice Records .............................................................................................................. 192 FSG Records ....................................................................................................................................... 192 File Notes ............................................................................................................................................ 192 Privacy Storage and Access ................................................................................................................ 192 Security of Files and Personal Information ......................................................................................... 192 Client Access to Their Personal Information ....................................................................................... 193 Restrictions on Use of Client Personal Information ............................................................................ 193 File Retention ...................................................................................................................................... 193 Maintaining records in electronic format ............................................................................................. 193 Disaster Recovery Program ................................................................................................................ 194

REVIEWS OF CLIENT PORTFOLIOS ............................................................................................... 194 Review format ..................................................................................................................................... 194 The Review Meeting ............................................................................................................................ 194 Provision of current FSG ..................................................................................................................... 194 Review of Client Data .......................................................................................................................... 194 Privacy Issues ..................................................................................................................................... 195 Adherence to Privacy Act Requirements ............................................................................................. 195 Procedure ............................................................................................................................................ 195 Review of Advice – Statement of Additional Advice ............................................................................ 195 Statement of Additional Advice (SOAA) .............................................................................................. 195 Implementation .................................................................................................................................... 196



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Meaning of Financial Product Advice The starting point of your obligations here is the understanding of what is meant by “financial product advice”.

Section 766B of Corporations Act defines the expression to mean any recommendation, or statement of opinion, or a report of either of those things, that either:

“(a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in particular financial products, or class of financial products; or

(b) could reasonably be regarded as being intended to have such an influence.”

From the above definition, it is clear that it is the purpose behind the making of the statement, opinion or report which is the important consideration. If, in making a statement, you intend it to influence another person in deciding to acquire a financial product for instance, then you are providing financial product advice.

Also, based on the circumstances in which the statement is made, it is reasonable to infer that you intended it to influence the other person in making a decision to acquire a financial product, you will also be providing financial product advice. Accordingly, it is not necessary that you specifically state that you wish the statement to influence the other person in making a decision to acquire a financial product.

The latter position imposes an obligation on you to make your intentions clear at the time that you make a statement. You should not let clients guess your intentions. If you have no commitment to provide financial product advice, ensure you tell your prospective clients or readers that your statement is not intended to influence them in making a decision about a financial product. This is called making a “disclaimer” in relation to the statement.

There are two types of financial product advice, namely, “personal advice” and “general advice”.

Personal Advice and General Advice Personal Advice “Personal advice” is defined under s.766B (3) of Corporations Act as financial product advice that is given or directed to a person (including by electronic means) in circumstances where:-

“(a) the provider of the advice has considered one or more of the person’s objectives, financial situation and needs; or

(b) A reasonable person might expect the provider to have considered one or more of those matters.” To be considered personal advice it is sufficient that either a person’s objectives or their financial situation or their needs is taken into account when providing advice, e.g. when providing insurance advice you might only consider the needs, of a client when recommending a certain policy.

Advice may be personal advice even where:

The advice is not given during a face to face meeting

Advice is given in a seminar

The adviser did not (subjectively intend to provide personal advice)

The adviser has not had direct contact with the client (e.g. where the advice is based on information supplied by a third person) an example of personal advice is advice provided after having conducted inquiries into an individual client’s circumstances and needs. Normally such advice is provided in writing and contained in a document known in the industry as a “financial plan”. The Corporations Act refers to this as a “Statement of Advice”.

General Advice “General advice” is considered advice that is not “personal advice” as defined above (s.766B (4) of Corporations Act). In any such case, the advice is not specific to any individual person’s circumstances.

Such advice may, for instance, consist of comments about the investment industry generally, the performance of particular asset classes at relevant times or investment strategies. General advice is normally provided in newspapers, newsletters, brochures, flyers, information on Websites, during seminars or in general discussions.

You must comply with certain obligations when you provide general advice to a “retail client”. You are required under s.949A of Corporations Act to warn the client that:-

The advice is provided without having taken into consideration the client’s objectives, financial situation or needs;



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As a result, before acting on the advice the client should consider the appropriateness of the advice by having regard to the client’s own objective, financial situation and needs; and

If the client wishes to acquire any financial product as a result of the advice, the client should obtain a Product Disclosure Statement (“PDS”) in relation to that product and consider the PDS before making any decision to acquire the product.

You must provide the above warning at the same time that you provide the general advice and by the same means that you provide the advice. Accordingly, you cannot give a verbal warning if your general advice is in writing. It is an offence to fail to comply with this obligation.

You must comply with Libertas Financial Planning procedures regarding the provision of general advice including the use of standard text general advice warnings.

you provided financial services “honestly” and “fairly” (refer to section 1 of this Manual).

You are in breach of these financial services laws if you treat a client with special needs and circumstances unfairly or without due consideration given to their special needs or circumstances. There are other provisions in financial services laws, which have implications for your conduct towards such clients.

Clients with special needs or circumstances include those with physical or intellectual disabilities (such as the visually and hearing impaired), older clients with associated ageing conditions and minors. The group may also include clients who fall into the following cases:

Clients with little or no understanding of English,

Advice is requested to be given to more than one person but contact is restricted to one person,

Investments are requested to be made in a child’s name for parents or vice versa,

Separated or divorced couples; and

Powers of Attorney.

When dealing with clients with special needs or circumstances, you may need to go beyond the specific obligations imposed on you under financial services laws in order to ensure that your conduct towards them does not amount to, in particular, unconscionable conduct or results in treating them unfairly.

Unconscionable conduct will be found where it is concluded that you exploited the disability of a client. You can take simple steps to avoid the charge of engaging in unconscionable conduct or treating a client unfairly. Always ensure the client or their representative:

Fully understands the product and its characteristics, and

Is in a position to assess the suitability of your advice.

Procedures There is no one-fits-all approach when dealing with clients with special needs or circumstances. The individual needs of the client will determine what procedures are required. For example, you may need to consider whether you should request a client with impaired hearing to have a nominated representative through whom information relating to the client’s objectives, financial situation and needs may be explained to and who conveys your recommendations back to the client.

If in any situation where you are unclear about the appropriate form of action to be taken, contact Libertas Financial Planning for further information.

If your client wishes to act through a Power of Attorney (“POA”), you must not forget that your duty of care is to the client not the holder of the POA. The major consideration is that the advice provided to the client should be in accordance with the goals of the person on whose behalf the Power of Attorney is held.

Accordingly, you should ensure that you confirm that the facts collected through the POA holder are relevant to the client, not the POA holder. To ensure that you are acting in the best interests of the client, it is advisable to view and verify the Power of Attorney prior to commencing the interview or presenting the recommendation. A certified copy of the POA should be retained on the client’s file.

The role of documentation In all cases, encourage the client to seek additional advice, if required. Know that in the end you are responsible for demonstrating that the advice you have provided does not exploit or discriminate against the client in any way. As in all cases, it is important to clearly document all dealings with clients.

This obligation is even more onerous when you provide advice to a client with special needs or circumstances. Ensure that there is documentation relating to the steps that you have taken to ensure that the client has understood your advice.

Ensure that, as a minimum, the following matters are documented:



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The client’s special needs or circumstances

Steps taken to ensure that the client seeks independent advice or nominate a representative

The presence of other nominated individuals involved in the advising process, as well as the date the attended, their capacity and their role.

Signature of the nominated representatives

Steps taken to verify that the information you gathered is accurate

Steps taken to verify that the client has understood your advice.

Before You Provide Advice The advisory process commences when you begin to collect information from a client for the purpose of providing financial advice to a client. However, there are certain legal obligations you have to comply with even before this process begins. This subsection of the Manual discusses these obligations.

Obligation to provide a Financial Services Guide The general rule under s.941B of Corporations Act is that you must give a retail client a Financial Services Guide (“FSG”) as soon as practicable after it becomes clear to you that you will provide financial services to that client (s.941D of Corporations Act).

Purpose of FSG The purpose of the FSG is to assist the client in deciding whether to use any of the services offered in the FSG. At a minimum, it contains information in a summary format about the following:

Identity of the Licensee

Your capacity as a Representative;

The financial services and products your are authorised to provide;

How you and the Licensee, among others, are remunerated;

The rights of the clients; and

The complaints resolution process

Contents of the FSG An FSG must include the following information:

The title “Financial Services Guide”

The Date of the FSG

The name and contact details of the providing entity (authorised representative) and the authorising licensee

The authorised representative number of the authorised representative

A statement of the purpose of the FSG, and information about other disclosure documents that the client may receive (e.g. Statement of Advice and Product Disclosure Statements)

Information about the kinds of financial services and products the licensee and authorised Representative can provide Information on the remuneration, commission and other benefits that the providing entity, Licensee and any other related parties may receive that is attributable to the advice provided

A statement detailing that full disclosure information will be provided within the SOA

Details of the dispute resolution procedures the licensee has in place

In terms of the level of disclosure of required for commissions, remuneration and other benefits within an FSG, ASIC Regulatory Guide 175 defines that:

(a) Where the amount of a benefit can be ascertained within the FSG, this should be detailed

(b) Otherwise, a description of the means by which a benefit will be calculated must be set out, E.g. as a range or % figure

Only the approved FSG is to be handed out As a Representative of Libertas Financial Planning , you must only give your clients the FSG approved by the Licensee as required under s.941B (3) of Corporations Act. It is best practice to offer to explain the contents of the FSG to the client.

Libertas Financial Planning pro forma FSG is located in Appendix 3 of Corporate Documents.



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Libertas Financial Planning will update or correct the information in the pro forma FSG from time to time. You will be notified any time this happens and will be asked to discontinue using any previous versions immediately or on a certain date. You must comply with any such request by the Licensee.

Also, from time to time, rather than update the information in the FSG, Libertas Financial Planning may issue a Supplementary FSG. Libertas Financial Planning will notify you any time this happens and instruct you on how to use any Supplementary FSG. You must comply with any such instruction.

Record Keeping You must maintain accurate records of the FSG’s and Supplementary FSG’s that have been issued to each client. The record must include the version/date of each FSG or Supplementary FSG and the date that it was given to the client. For Libertas Financial Planning representatives, this record is within the Fact Finder. FSG records are to be maintained on the Fact Finder. Libertas Financial Planning will monitor your client records to ensure you comply with these requirements.

Timing of giving FSG The general rule is that you must give the client the FSG as soon as practicable after it becomes clear to you that you will or are likely to provide financial services to the client. However, if the client request that the financial services be provided “immediately” or by a specified time and it is not reasonably practicable to give the client the FSG before the service is provided (s.941D (2) of Corporations Act); you must give the client a statement containing information about:

The Licensee;

Remuneration that will be received by you, the Licensee and others for the service you will provide; and

Dispute resolution procedures available to the client in relation to the advice. Alternatively, you may give the client a statement containing information about:

Remuneration that you, the Licensee or others will receive for the service you will be providing;

Any relationship between you or the Licensee and the issuer of the products you will recommend; and

If you act under a binder, i.e. with an authority to bind the product issuer, the scope of your authority under the binder and the significance of the services you provide under that binder.

However, you must give the client the FSG within 5 days after giving the client the above statement or sooner if practicable (s.941D (3) and (4) of Corporations Act).

When do you not have to provide FSG?

FSG was previously provided You do not have to give a new FSG to a client if the client has already received an FSG that contains all the information that the new FSG contains (s.941C (1) of Corporations Act). This exception applies in relation to existing or prospective clients who have already received the FSG on a previous occasion.

General Advice You do not have to provide an FSG to a client if the advice you give is general advice in a public forum (s.941C (4) and (5) of Corporations Act). General advice is advice which is not personal advice (see definition above). In this case, you must give the client a statement that sets out the following information:

Your name and contact details;

Name and contact details of the Licensee and your status as Representative, e.g. ‘Authorised

Representative’; and

Remuneration that you, the Licensee and others will receive for providing the services; and

Any association between the Licensee and yourself and the issuers of the financial products that might reasonably be expected to influence you in providing the services.

This statement can be provided verbally. Libertas Financial Planning has also produced a written general advice disclaimer for this purpose. An example is located at Appendix 3 of Corporate Documents.

Provision of Privacy Statement It is a requirement under the Privacy Amendment (Private Sector) Act 2000 (“Privacy Act”), that individuals are informed about the collection, use, security and disclosure of personal information about themselves.

“Personal information” according to section 6 of the Privacy Act means: “Information or an opinion (including information or an opinion forming part of a database), whether true or not, and whether recorded in a material form or not, about an individual whose identity is apparent, or can reasonably be ascertained, from the information or opinion.”



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This means that any information collected on a client for the purposes of providing financial services to the client is personal information whose collection, use and disclosure, among others, must comply with the relevant provisions of the Privacy Act. Any material developed from that information, including a Statement of Advice, which can identify the client, is considered personal information.

The Privacy Act has specified 10 National Privacy Principles regarding circumstances under which personal information may be collected, used and disclosed in the private sector. A breach of any of those principles may constitute interference with the privacy of the individual. An affected individual may complain to the Privacy Commissioner. Where appropriate, the individual may seek compensation for interference with their privacy.

To comply with the provisions of the Privacy Act, Libertas Financial Planning has developed a Privacy Policy, and a précis of this document, the Privacy Disclosure Statement. The Privacy Policy and Privacy Disclosure Statement outline how Libertas Financial Planning may collect, use, disclose and store personal information.

The Privacy Statement must be provided to all new clients prior to collecting personal information about them. They may be fully informed and agree to the collection, use, security and disclosure of the information they are about to provide.

Obtaining Client Consent Advisers must secure the client’s consent to the collection, use etc of personal information either at or before the time of collection (or as soon as practicable after). This is achieved by requesting the client to sign the Privacy acknowledgement within the Client Declaration of the Fact Find.

Collection of Tax File Numbers (“TFN’s”) In some cases, it will be necessary for you to collect, use or disclose a client’s TFN. According to the Tax File Number Guidelines 1992 (annotated version) issued by the Privacy Commissioner, the collection of Tax File Numbers is restricted to those persons who are authorised for the purposes of “carrying out responsibilities under taxation or assistance agency law.” Such persons include Libertas Financial Planning and its Representatives and financial institutions.

When requesting TFN’s from clients, it is important that you take steps to ensure that the client is informed as to the purpose of this request. Paragraph 5.2 of the Tax File Number Guidelines provides that when collecting TFN’s, a client must be informed about the following:

The legal basis for the collection, for example required for ATO and superannuation funds for administration purposes;

That they do not have to provide the TFN to you; and

The consequences of not providing the information, for example that they may be taxed at a higher marginal rate.

Authority from the client The client must provide authority for you to record and retain the TFN. Libertas Financial Planning has Incorporated a tax file number authorisation within the Fact Find - If you are recording your client’s Tax File numbers it is imperative that authorisation is completed and signed by the client.

Referrals Where client information is provided to an external party under a referral arrangement to provide specialist advice, the Representative is to inform the client verbally that they will be passing on their information in line with the disclosure outlined in the Privacy Statement.

Storage, security and disposal of Tax file Numbers As the recipient of the TFN you must take reasonable steps to ensure that the information is protected, to prevent their loss, disclosure and/or misuse by third parties.

Reasonable steps would include that the client files containing this information are kept in lockable cabinets, and user identity or access codes for computer systems on which this information is recorded. You might also restrict access to records of files containing this information to only certain personnel within your office.

Penalties

The misuse and unauthorised disclosure of TFN’s carries penalties under the Taxation Administration Act 1953. Penalties include up to $10,000 fine, two years imprisonment, or both

Obligation to provide appropriate advice When providing financial product advice to clients, you have an obligation under s.961 of Corporations Act to provide advice that is appropriate to the client. The provision requires you to:



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Identify the objectives, financial situation and needs of the client;

Identify the subject matter of the advice being sought by the client (explicitly or implicitly);

Identify the objectives, financial situation and needs of the client that would reasonably be considered as relevant to the advice being sought;

Where it was "reasonably apparent" that relevant information was incomplete or inaccurate, you have made reasonable inquiries to obtain that information;

Have the required expertise to provide advice;

To conduct a reasonable investigation into the financial products being recommended;

Base all judgements on the relevant circumstances of the client;

Provide warnings where there is incomplete and/or inaccurate information;

Take all other steps that is in the client’s best interests.

Failure to observe this provision is a strict liability offence under the Act.

These requirements supplement your existing obligation to provide financial services to retail clients efficiently, honestly and fairly. Also, ASIC Act s.12ED should be taken into consideration here. Under that provision, there is an implied warranty that you will exercise “due care and skill” when you provide financial services and that the services you provide will be “reasonably fit” for the purposes for which they were supplied.

The cumulative effect of these provisions imposes an onerous obligation on you to take all necessary steps to provide advice to a client that is in the best interest of the client given the needs and circumstances of the client. This obligation does not require you to provide the “best” advice, only advice that is in the best interest of the client given the client’s needs and circumstances, as you understand them at the time.

Provision of Advice The following information sets out the steps that are necessary when providing advice. They include the collection of information, consideration of the client’s needs and objectives, as well as the discussion of risks and trade-offs that may be evident.

Knowing your client Collection of all relevant information Your statutory obligations, outlined in the previous section, require that you conduct thorough inquiries into the financial needs and other circumstances of the client in order to obtain sufficient information to assist you in providing the client appropriate advice (s.961 of Corporations Act).

While more information on a client is better than little or no information, you should be mindful of the fact that the level of personal information needed from each client for the purposes of providing a reasonably-based personal advice will vary.

What constitutes relevant information depends on the needs and circumstances of the individual client, and the type of advice that they require. The nature and extent of client queries will therefore vary from client to client. However, ASIC Regulatory Guide 175 clearly defines the minimum information that should be collected from a client where advice is provided on an investment product (see below section on Fact Find).

ASIC Regulatory Guide 175 also clearly states that to satisfy the client inquiries requirements under s.961 of the Corporations Act, an adviser may need to make inquiries additional to those that they normally make.

In order to assist with the collection of relevant information from clients, Libertas Financial Planning has developed a standard Fact Find.

Libertas Financial Planning Policy It is Libertas Financial Planning policy that all Representatives use the approved Libertas Financial Planning Fact Find. The Fact Find not only assists you to determine what kind of information to collect from a client, but its completion provides permanent documentation of the fact that you have taken steps to know your client’s needs and circumstances.

The Fact Find must be completed for each client and must be maintained on the client’s file. A copy of the Fact Find must be made available to the client upon request.

A pro forma Fact Find is contained in the Appendix 3 of Corporate Documents.



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Use of the Fact Find The Fact Find makes reference to all relevant information required by s.961 of Corporations Act and ASIC Regulatory Guide 175 (RG 175), as a basis for the preparation of the Statement of Advice and must be considered before providing advice.

In summary these are:-

The client's needs and objectives for income, capital growth, security, retirement income, liquidity, and the time period the client is planning for;

The client's personal financial circumstances such as liabilities and potential liabilities, nature of any assets held and any retirement benefits expected (including those of a partner, when relevant);

The client’s level of sophistication as an investor, including the client's desire and capacity to actively manage their investments;

The client's individual investment preferences and aversion or tolerance to risk; and

The provider must only provide advice to the client ( individually ) and not on behalf of any other person/spouse/partner/sibling/child.( ie separate SOA’ or separate advice to each individual may be contained in one bound SOA.

Capacity to service any loan provided in relation to a financial product

Desire to minimize fees and costs

The clients tax position, social security entitlements, family commitments, employment security and expected retirement age. It is to be noted that RG 175 defines that the above information would normally be the minimum required where advice related to a product with an investment component.

All relevant information pertaining to the client’s situation must be recorded in the Fact Find. If a section is not relevant, mark it as “Not Applicable” and cross a line through that section. If the client will not provide, write “Client would not provide” and mark through that section.

Privacy Act Requirements – It is Libertas Financial Planning policy that the Fact Find should be signed by the client and by the Representative, once the form is complete. This is necessary to ensure that the client acknowledges the accuracy of the information, to verify that the information has been collected in

line with the National Privacy Principles as outlined in the Privacy Statement, as well as obtain the client’s specific consent for collection of personal information.

Risk Profiling An important step in the development of appropriate advice is to determine a client’s level of risk tolerance (RG 175).

“Risk” in the financial services context simply means the possibility, if not probability, that an expected investment outcome may not be achieved.

Risks can be broken down into four categories:-

Personal risk

Legislative risk

Market risks

Fund Manager/Product risk

The financial services industry has used risk profiling as a means of determining the types of investment strategy and/or investment products that are suitable for a client. For example, a person with a high risk tolerance level is better advised to invest more in growth assets and a person who has a low risk tolerance profile is better advised to invest more in capital guaranteed assets including cash and fixed interests.

There are different approaches to risk profiling. Libertas Financial Planning policy favours the following approach or methodology.

Client Education and Questionnaire Method Ascertaining a client’s risk profile is an essential process in the investigation of a client’s needs, objectives and circumstances. The Risk Profile will basically ascertain where the client sits on the Risk-Return continuum, which in turn defines the asset allocation and risk nature of the portfolio selected for the client.

The following defines Libertas Financial Planning method of Risk Profiling.



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Education Educating the client about risk and return will ensure that the client fully understands their investment decisions in light of their own situation, objectives and needs. Managing client’s expectations and informing the client as to the nature of markets and investments is essential in this process.

Questionnaire Libertas Financial Planning has developed a comprehensive Risk Profile Questionnaire which has been Incorporated within the Fact Find document. This Risk Profile Questionnaire covers information essential to properly determining a client’s Risk Profile, including but not limited to:

Client’s time horizon

Clients objectives and requirements in relation to capital security, income and capital growth

Client’s investment experience and preference

Client’s attitude to risk including tolerance of the risk that the advice will not produce the expected benefits and tolerance of the risk of capital loss

Each client response is weighted to provide an overall Risk Profile score. This score is then married to a particular Risk Profile Category with defined asset allocation guidelines.

It is Libertas Financial Planning policy that advisers complete the Risk Profile Questionnaire to ensure that it can be demonstrated that an adequate

Investigation has been made into the client’s circumstances.

Client Approval It is important to obtain the client’s sign-off on the risk tolerance assessment. To this end Libertas Financial Planning has incorporated a client sign-off confirming acceptance of the Risk Profile within both the fact find and the Authority to Proceed document within the Statement of Advice.

Risks associated with investing It is also important that you explain to the client the consequences or risks associated with investing in the different asset classes. This will ensure that the client can make informed investment decisions. This is a requirement under ASIC Regulatory Guide 175.

As a Representative, your role in this respect is to educate the client on the possible risks associated with various investment strategies. The level of information given to clients must be able to assist the client to make an informed decision as to whether and the extent to which to invest in the various asset classes or assume the risks associated with investing in the asset classes or recommended investment strategies.

The discussion of investment risks is a continuous part of your role as a Representative. It will form part of your initial discussions with the client, your recommendations as well as during the implementation of the recommendations.

Identify the client’s needs and objectives An integral part of the advice process is the identification of a client's investment and lifestyle objectives.

Typically, these might include:-

Maintenance of existing lifestyle against inflation

Risk/return profile

Providing low, medium or high income

Providing low, medium or high asset accumulation

Placing investments in a secure manner

Funding future education expenses

Upgrading the family home

Protecting the family's occupational income through adequate death, disability and income protection cover

Accumulating assets to a defined level by a defined date

Maintaining an agreed level of investment accessibility and flexibility.

The client's needs and objectives are to be documented in the written Statement of Advice.

Time Frame Time frame is particularly important. In every instance it is necessary that the expressed objectives of the client include the relevant time frame i.e. whether they are:



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short (1-3yrs)

medium (3-5yrs)

long term (5yrs+)

The determined time frame must be documented in the SOA.

Optimising Objectives The client’s objectives should be matched with the client's resources to ensure that the objectives are achievable. To satisfy the client's needs in formulating a Statement of Advice the level of a client's capital base and their income sources must also be considered. Where objectives are unrealistic, the client must be informed that it may be necessary to make sacrifices in lifestyle and financial aspirations in order to achieve their objectives or, alternatively, that the objectives may have to be modified.

Identification of Financial Problems and Development of Strategy Matching Current Situation to Current Financial Goals Certain financial goals are current and immediate. A checklist approach can often be helpful in determining whether the client's current situation reflects where he or she wants to be.

Where an issue, gap, or deficiency is immediate, such as the lack of a current will, or the need for income protection, then the issue becomes a "problem". Current problems are, by their very nature, immediate. They must be addressed first within the written SOA.

Matching Future Outcomes to Future Financial Goals Where a client has defined some specific financial goals for the future, such as sufficient funds for retirement, then the task falling to the Representative is to determine whether, on the basis of current behaviour, these goals will be met (or exceeded).

Strategies & Products Knowing your strategies Knowing your client is just the starting point of your obligation to provide appropriate advice. After you have gathered as much information from or about the client to be in a position to know them, you need to develop a strategy that can assist the client to achieve their objectives.

While it is difficult to define “strategy” with precision in the financial services context, the expression simply refers to an approach or plan that is used to achieve a particular investment goal.

There are many strategies that may be suitable to the client. Examples include wealth accumulation, gearing or margin lending, establishment of a corporate superannuation fund, self-managed-superannuation fund, savings plan, or family trust, salary packaging and/or sacrificing, purchase of a retirement income stream (e.g. Allocated Pension or Annuity), succession planning, debt reduction, mortgage origination, estate planning and risk management. These strategies are not mutually exclusive and more than one may be recommended to a client depending upon the client’s needs and circumstances.

Identification of the appropriate strategy involves the application of great skill. Some strategies including wealth accumulation and gearing involve investment over lengthy time frames. Accordingly, they may not be suitable for a client whose only objective is, say, saving money to buy a boat in three years time. However, this may be suitable for a young client with high disposable income and who expects to continue working for many years to come.

Accordingly, the appropriate strategy will depend on the needs and circumstances of the client. As a minimum, the following factors must be taken into consideration when developing an appropriate strategy:

Asset allocation

Cash flow requirements

Estate planning issues

Future financial needs

Income versus growth needs

Insurance needs

Investment and investment class risk

Liquidity needs

Ownership of assets i.e. client, spouse, joint, trust etc

Social security issues



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Source of funds for investment e.g. inheritance, ETP’s

Strategy risk

Taxation issues

Time horizon(s), and

Client’s risk profile.

It is important to specify in the Statement of Advice the strategy you recommend to your client. You should explain to the client the overall objectives behind the strategies you recommend and how the strategies will help the client achieve their goals. In doing so, you should not limit yourself to the positive outcomes of implementing the strategy. Representatives are also expected to explain any short and/or long term risks associated with the recommended strategy.

Discussion of alternative strategies Where you have discussed alternative strategies with a client in establishing the most appropriate strategy, this must also be clearly stated within the Statement of Advice, including why these options were not considered appropriate (ASIC RG 175.26).

Knowing Your Products Knowing your client and your strategies are very important steps in providing appropriate financial services advice to the client. The next step is to select a product or products that may be used to achieve the client’s goals. This calls for a thorough understanding of the range of products available on Libertas Financial Planning Approved Products List (“APL”).

In order to comply with the s.961 of the Corporations Act requirement to ensure advice is appropriate, you must conduct reasonable investigations into the subject matter. This includes having adequate knowledge of the products you recommend, understand the market and industry risks associated with the product, the economic and political environment, the product issuer’s track record, the nature of the underlying investments and assets, and have adequate knowledge about a reasonable range of other comparable products.

While Libertas Financial Planning has an Approved Product List (“APL”) from which you are primarily required to recommend products to clients, you still have the responsibility to understand the products on that list so that you may be in a position to select appropriate ones for your clients from that list. You do not need to conduct any research of products outside the APL.

Discussion of alternative products ASIC Regulatory Guide 175 also requires that you state within the Statement of Advice, any alternative products discussed with the client as part of your investigations into the product, including why these products were not considered appropriate.

Approved Product List You must only recommend products included on Libertas Financial Planning Approved Product List (“APL”).

These products have been thoroughly researched by the professional research houses used by Libertas Financial Planning , as well as by Libertas Financial Planning dedicated Research personnel, and are therefore considered appropriate for recommendation to clients.

Representatives are not permitted to recommend products that are not included on the Approved Product List

Research and Approved/Preferred products

As a Representative your responsibilities include conducting reasonable investigation or research into the financial products on the APL in order to understand the investment strategies or objectives of individual products. It is only through such knowledge that you will feel confident to recommend a particular product or sets of products to a client whose needs or circumstances you have by now come to understand very well. Non-Approved Products

Client requests non-approved product

You must not recommend any product that is not on Libertas Financial Planning APL. As mentioned earlier, products on the APL have been thoroughly researched professionally and their performances regularly monitored.

If a client requests a non-approved product, then you should advise them that the product is not approved by Libertas Financial Planning , and suggest an alternative product. If the client still wishes to proceed, then the



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Non- Approved clause must be completed within the Authority to Proceed which includes information in relation to the investment, and a disclaimer disclosing the risks inherent in proceeding with an investment on this basis.

Advisers cannot utilise the non-approved clause if they have actively solicited the client to invest in the product. The disclaimer will be invalid as the information on which the disclaimer is based will be deemed false.

Advisers will not be covered by Professional Indemnity insurance in the event of a claim made against the adviser in relation to the product in this instance.

Representative wishes to use a non approved Product

As a Representative of Libertas Financial Planning , you are not permitted to recommend products that have not been included on the APL. In the event that you wish to propose a non approved product, you must (prior to recommending the product) seek approval for the product through the Investment Committee.

If the product is approved, you will be duly notified, and the product will be included on the “Non-core product listing” for use ONLY by the adviser who has requested the product. A client has an existing portfolio that has a number of non approved investments

If a client has an existing portfolio with non-approved products, for example, if you have recently joined Libertas Financial Planning , or you have recently taken over a client’s portfolio who was managed by another adviser, then you must notify the dealer immediately.

Details of the non-approved products must be provided to the Dealer Manager who will review and provide an assessment and recommendation of the products. This is achieved through providing a commission listing (where there is multiple portfolios), or an email listing of the products to your Dealer Manager.

Your Manager will then advise of approval, and whether other action is to be taken including recommendations to dispose of the product, or instructions to make no further additions or contributions to the product.

Documenting Your Advice - Statement of Advice What is a Statement of Advice? Your advice, whether initial or ongoing, must be contained in a written document. The old terminology for such a document is “financial plan” or “Customer Advice Record” under FSR, this is now deemed to be a “Statement of Advice” (“SOA”).

Requirement to provide You must give a client an SOA when you provide personal advice to a retail client unless a specific exclusion applies (s.946A). The SOA may be the advice itself or a record of the advice. Accordingly, the SOA may be used to document verbal advice. It is an offence not to provide an SOA.

When does it need to be given? As mentioned above, the SOA may be the advice itself (that is, the means of giving the advice) or a record of the advice (that is, it follows the giving of the advice).

Where SOA is the means of giving advice Where the SOA is the means by which the advice is given, it must be given at the same time that the advice is provided.

Where the SOA is the confirmation of advice Where the advice precedes the provision of the SOA, the SOA must be given to the client when or as soon as practicable after the advice is provided and, in any case, before the client is given any further financial service, such as the completion of an application form. In that situation you must give the client the following information at the time you provide the advice:

The remuneration (including commissions) or other benefits that you, Libertas Financial Planning and any associate of Libertas Financial Planning will receive that might reasonably be expected to be or have been capable of influencing your advice

Disclosure of any relationship or association between yourself or Libertas Financial Planning and the

issuers of the financial products you have recommended.



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If you have recommended that the client replaces an existing product, then in addition to the above information, you must also provide the information referred to under the subheading “Recommendation to replace existing products” below.

When not to give a SOA The legislation provides limited exclusions to the SOA requirements (s.946B). More specifically, the exclusion only to certain basic deposit products.

Libertas Financial Planning Policy It is Libertas Financial Planning Policy that a SOA must be provided at all times when advice is provided.

Oral Recommendations While the Corporations Act does not prohibit the provision of verbal advice, it is now a requirement that the advice must be confirmed in a SOA. As mentioned above, the SOA may be the means of giving advice or a record of advice already provided. If you provide verbal advice, you must comply with the requirements referred to under the subheading “Where the SOA is the confirmation of advice” above.

Types of advice The financial services industry has always differentiated between “full” and “defined scope” advice. Some sections of the industry also employ the expression “limited” advice. In this section, an explanation of these expressions is provided. The Act does not prescribe any separate requirements in relation to these different types of advice. Accordingly, regardless of whether the advice is “limited” or “full’, it must be contained in an SOA. Nevertheless it is important to understand the different types of advice.

Full advice Advice is said to be “full” if the advice covers all of a client’s investment needs. Normally, such advice takes into account not only the client’s investment needs but also all relevant risk management and estate planning needs.

In such a case, you must adopt a holistic approach to the client’s needs and provide advice that is comprehensive enough to address all possible investment and risk management options. In a full advice situation, you must complete all sections of the Fact Find.

It is industry best practice to initially approach advice situations with the view of providing comprehensive investment advice.

Defined scope advice Defined scope advice is advice that has not considered all the client’s investment requirements and/or needs. Such advice is normally restricted to one or two areas of a client’s investment or risk management needs.

Defined scope advice may become necessary after the initial client interview. Information obtained from the client will determine whether you should provide full or defined scope advice. Such advice may be provided where, for instance, a client specifically requests that you only consider specified needs or circumstances.

Also, defined scope advice may be provided where a client specifies that your advice only relates to certain investment strategy (e.g. rollover, gearing etc) or to a specified class of financial products.

Whether advice is deemed to be ‘full advice’ or ‘advice of a defined scope’ should not necessarily depend on the amount of funds available for investment.

It is necessary to approach each initial interview as a full advice situation and obtain relevant information from the client.

The Fact Find should contain notations as to why some sections are not relevant to the advice.

No Advice/Execution Only Agreements In rare situations, you may be asked by a client to effect certain transactions on their behalf without the additional request that you provide them any advice.

You must ensure that the client understands that you have not provided any advice to them.

Procedure

Libertas Financial Planning has formulated an Execution Only template for situations where a client requests an execution only service. This template contains all required warnings in relation to proceeding with advice on this basis. This template may be accessed only upon request through to Dealer management.

Format of Advice The title “Statement of Advice” must be written on the cover or near the front of the SOA. In any other part of the document the Statement of Advice may be abbreviated to ‘SOA’.



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The SOA should be designed to provide the client with all the relevant information that they would require to make a decision to or not to invest in the product. Some of the more specific information that should be included within a SOA has been included below.

Use of plain English There is a general obligation that any information included in the SOA must be worded and presented in clear, concise and effective manner (s.947B (6) and s.947C (6) of Corporations Act). Information that is not relevant to the advice given should not be included in the SOA. Whatever information is relevant, must be presented in a concise manner. The detail of any relevant information is only required to be to a level that would reasonably be required to assist the client to decide whether to act on the advice as a retail client.

Contents of Statement of Advice Your name and contact details, Libertas Financial Planning name and contact details and the fact that

you are a Representative of Libertas Financial Planning ;

A statement setting out your advice;

The basis on which the advice is given including

A summary of the client’s relevant personal circumstances

A generic description of the range of financial products, classes of financial product or strategies considered and investigated; and

A concise statement of the reasons why the advice was considered appropriate, including the advantages and disadvantages for the client if the advice is acted upon.

Remuneration (including commissions) and other benefits that you will receive that might reasonably be expected to have been capable of influencing the provision of the advice.

This information is also required in relation to Libertas Financial Planning and any of Libertas Financial Planning related bodies corporate, its directors, employees or associates. Additionally, you will need to disclose the following information:-

o Any other interests, whether pecuniary or not and whether direct or indirect that you and any person or entity mentioned above will receive; and

o Any associations or relationships between you, the Licensee or its associates and the issuers of any of the financial products recommended.

o Any warning in relation to incomplete or inaccurate information provided by the client (see “Warnings” below).

o When advice recommends the replacement of one product with another, the following should be included: -

- Any information about the charges the client may incur in respect of the disposal of the old product and the acquisition of the new product.

- Any pecuniary or other benefits that the client will or may lose as a result of acting on the advice

- Any information about any significant consequences for the client of taking the recommended action that you know or ought to reasonably to know.

The Corporations Act does not prescribe any order for the inclusion of the above matters in the SOA. Libertas Financial Planning procedures require that the inclusion of the various matters in the following order.

Scope and limitations of advice This is the general introduction section of the SOA. It should refer, to, among others, the client’s request for advice, brief description of initial meetings or interviews leading to the preparation of the SOA, the nature of the advice or any limitations to the advice. If you have failed to define the scope or limitations of the advice, it may be regarded as a full advice.

Limitations to Advice

It is important to clearly outline the limitations or the scope of the advice.

Example The advice provided is given on the basis that you specifically instructed that you do not wish us to make a full analysis of your personal and financial situation but wish us to limit our advice to:

the investment of $___________ that you presently have available.

OR

the areas of superannuation and insurance planning Accordingly, we will not be covering risk management, estate planning or taxation issues.



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Other factors may limit the scope of the advice. Some of these are discussed as follows:

Future events

Where the advice is qualified by reference to particular contingencies which have not yet occurred, for example an inheritance or the sale of a house. Where this is the case, you must clearly state in the SOA the nature of the event and any implications for the advice given. Limited Product Range

Where you are only able to provide advice on a limited range of products either because of any restrictions imposed on you by the Licensee, or because you do not have the knowledge or competence to provide advice on a more comprehensive range of product. In any such case, you must not provide advice to the client in relation to those products. Instead, refer the client to another Representative with the appropriate knowledge and experience.

Client’s personal circumstances and needs This section of the SOA must provide a summary of relevant information collected from the client in order to provide financial advice. It should cover the following matters:

Summary of client’s current position including:

o Age;

o marital status;

o dependants;

o income and expenditure;

o assets and liabilities (including superannuation, insurances); and

o estate planning arrangements.

Client objectives including reasons for seeking advice, such as:-

o Saving for retirement;

o major future expenses;

o savings plan;

o children’s education; and

o personal or business protection.

Client’s risk tolerance and investment time frame.

Statement setting out advice This section should discuss the steps you have recommended the client should take to achieve the objectives. It is more about “how” the client can achieve the objectives that you discovered. Include a discussion of:

Strategies including:

o Wealth accumulation;

o gearing;

o margin lending;

o investment in superannuation;

o rollover;

o taking out insurance cover;

o purchasing an income stream;

o estate planning;

o salary packaging; etc.

Asset allocation

Financial products including administrative platforms or master trusts

This section should also include a summary of any alternative products or strategies considered when conducting investigations into the appropriate products and strategies for the client, including why the alternative strategies and/or products were not considered appropriate.



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Reasons for recommendation This section should include a discussion of “why” you have recommended the strategies and products. This is essentially explaining the strategies and products in light of the client’s objectives and risk profile. The discussion should include:

Why you have recommended the strategy or strategies

Why you have recommended the asset allocation

Why you have recommended the products

Why you have recommended the products the particular product issuers or fund managers

Implications of recommendations You should explain any implications of your recommendations, including any advantages and/or disadvantages relating to the advice provided. The discussion should include as far as relevant:-

Any advantages of the recommendation

Any disadvantages of the recommendation

Any risks associated with the recommendation

Any tax implications of the strategy/recommendation made such as future capital gains tax liability

Any social security implications of the strategy

Any relevant cash-flow statements and projections

Client provides incomplete or inaccurate information Where the client declines to provide all relevant information or the client provides information you consider is inaccurate, you must warn the client in the SOA or advice that:-

The advice is based on incomplete or inaccurate information relating to the client’s personal circumstances; and

Because of that, the client should, before acting on the advice, consider the appropriateness of the advice by reference to the client’s relevant personal circumstances.

Format of the Limited Advice Warning The warning must enable the client to clearly understand that:

The Representative has not been able to undertake a full needs analysis for them because they have not been given complete and accurate personal information;

There are limits on how appropriate the personal recommendations are because they were not based on full or accurate information about them. Clients must understand, for example, that they may be given an investment recommendation which is not appropriate to their individual needs and circumstances; and

The client should carefully assess how appropriate the recommendations are in light of their

individual investment objectives, financial situation and particular needs prior to proceeding with the recommendation.

The limited advice warning has been incorporated within the Statement of Advice to be included as applicable when limited advice is provided. A standard limited advice warning has been included in the Appendix of section 3 of this Manual.

Recommendations to replace existing products In some cases, you may advise a client to dispose of or reduce their interests in some products in order to acquire or increase their interests in another product or other products. A portfolio review activity, in particular, furnishes the basis for such a recommendation.

This type of recommendation constitutes advice. Therefore, the SOA requirements must be met. Section 947D of Corporations Act imposes some obligations on you when you make a recommendation of this nature. You are required to provide the following additional information in the SOA in relation to such a recommendation:

Any charges the client will or may incur for exiting the existing product;

Any charges the client will or may incur for entering the new product;

Any pecuniary or other benefits that the client will or may lose temporarily or permanently as a result of taking the recommendation; and

Any other significant consequences for the client of accepting the recommendation.

Disclosure Requirements All Statements of Advice (“SOA”) must comply with regulatory requirements for disclosure.



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Regulatory requirements

Corporations Act

You are required under s.947C (2) of Corporations Act to disclose in the SOA particulars of commissions, fees, and any other benefit or advantage that may be capable of influencing you in providing the advice.

You must disclose any remuneration or benefits that the following persons or entities will receive as a result of the advice:-

Yourself and your employer, as the case may be

The Licensee

A director or employee of the Licensee

An associate of the Licensee

Regulations may also include any other person or entity for the purpose of this disclosure obligation.

Disclosure within a SOA must be set out in a clear and concise fashion, and include:

(a) The circumstances in which the remuneration, commission and benefits are expected to be received, the source of these benefits, and who will be receiving the benefits

(b) In the case of monetary benefits, the actual dollar ($) amount of any remuneration, commission, fee payable, or if this cannot be ascertained at the time of providing the SOA, a worked dollar example or % figure. The total of all monetary benefits must also be expressed as a single dollar amount where this can be identified.

Soft Dollar Disclosure

Specifically in relation to soft dollar disclosure, Libertas Financial Planning and its Representatives also abide by industry best practice on Alternative Remuneration, on Rebates and Related Payments in the Wealth Management Industry, and with Managing Conflicts of Interest.

This includes, but is not limited to:

Maintenance of a Soft Dollar Register as of 1 January 2005

Banning of certain soft dollar benefits including volume based conferences, receipt of cash/gifts over $300, provision of hardware and office accommodation and unbundled business tools

Full disclosure of any soft dollar benefits received within FSG & SOA disclosure documents

Disclosure of volume bonuses, marketing allowances and fee rebates as ‘commission’ and

banning the use of the word ‘rebate’ except where it applies to monies passed through to the client.

For full details on Libertas Financial Planning policy on soft dollar benefits, refer to Section 4 “Managing Conflicts of Interest”.

Libertas Financial Planning Policy Libertas Financial Planning has formulated its policy on the disclosure of fees and commissions in line with current regulatory requirements and industry best practice. These requirements are to be adhered to in all instances where recommendations are provided to clients. All SOA must meet the legal requirements as at the date the SOA was prepared.

Fees, commissions, benefits or interests Payment The following is a summary of the fees and commission benefits and interests required to be disclosed, and paid in full, directly to the licensee: Fees for preparing a Statement Of Advice (SOA)

Entry fees applicable to investment vehicles Brokerage fees and stamp duty where applicable, for direct share transactions Initial commissions On-going commission Management Expense Ratio (“MER”) Switching fees Exit fees



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More Clearly Defined:

Fee for Service Revenue means All fees paid directly by clients to Libertas Financial Planning for services. For the avoidance of doubt, it excludes New Business Revenue, Renewal Revenue and Trail Revenue as defined in this Agreement. Miscellaneous Revenue means All fees, brokerage or commission paid by the issuer or administrator of a product issued or administered in respect of a client to Libertas Financial Planning that is neither Fee for Service Revenue, New Business Revenue, Renewal Revenue nor Trail Revenue. New Business Revenue means All fees, brokerage or commission paid by the issuer or administrator of an investment product, portfolio administration platform product, risk products issued, or administered in respect of a client to Libertas Financial Planning at inception of the product (but not renewal of the product). For the avoidance of doubt, it excludes Renewal Revenue and Trail Revenue. Renewal Revenue means All fees, brokerage or commission paid by the issuer or administrator of a life risk product, trauma product, income protection product or another life insurance product based on periodic renewal issued or administered in respect of a client to Libertas Financial Planning for the annual renewal product. For the avoidance of doubt, it excludes New Business Revenue and Trail Revenue. Trail Revenue means All fees, a brokerage or commission paid by the issue or administrator of an investment product and portfolio administration platform product issued or administered in respect of a client to Libertas Financial Planning for ongoing servicing of the client (whether the client is a wholesale client or a retail client). For the avoidance of doubt, it excludes New Business Revenue and Renewal Revenue. A product that consists of both risk and investment elements will be categorised by reference to the principal element or, if there is no principal element, the element that accounts for the largest proportion of the amount paid for the product. Services means Services provided by Libertas Financial Planning and paid by retained fees / remuneration from AR are outlined in Schedule 6. of this Agreement which may be varied from time to time by Libertas Financial Planning .

Bank Account Information:

Account Name: Libertas Financial Planning Bank Name: NAB BSB: 082-201 Account Number: 148854950

Format Disclosure must be made in a manner that is easy for the client to understand.

Disclosure must be made as a minimum as an actual dollar amount (where this can be ascertained at the time of providing advice) as well as a percentage figure. Where dollar amounts cannot be ascertained at the time the Statement of Advice is provided, worked dollar examples or percentages can be provided. Where a total dollar figure amount can be identified, this also needs to be disclosed.

It is therefore Libertas Financial Planning policy that all figures are to be shown in dollar ($) and percentage (%) terms. This is particularly important in the disclosure of ongoing or annual fees. As a minimum the fee for the first year should be calculated and disclosed in dollar terms.

Rebates Where fees for service are charged and commissions are rebated the effect of the rebate on the overall costs should be explained. This involves disclosing the commission that would have been payable as a result of the recommendation had the fee for service not been negotiated.

Sample wording is as follows:

Rebate of Commission This amount reflects the rebate of commission. We have rebated the initial commission by x%. The term ‘rebate’ can only be used to describe amounts of money that are provided back to the client. If a fund manager provides a ‘rebate’ that is retained by the adviser or licensee, this amount must be disclosed as commission, and cannot be referred to in the SOA as a rebate.



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Commission Splits In order for Representatives to make accurate disclosure of their remuneration it is necessary for the disclosure to include the amount that is paid to the Licensee as well as the amount that is received by you, your office, or any other related entities.

Specific commission splits between Libertas Financial Planning and advisers are outlined in a separate statement within the Disclosure page, which is tailored by each adviser, dependent on their specific commission split arrangement.

Goods and Services Tax All figures used in the disclosure statement should be inclusive of the Goods and Services Tax (GST) and a note to this effect should be included in the disclosure. This has been included as a standard in all Statement of Advice templates.

Other Costs This requirement extends to the range of other costs associated with the investment strategy recommended. Additionally clients need to appreciate the total range of initial and ongoing costs to be incurred for the extra benefits and services associated with master funds, IDPS and wrap account service vehicles. As a minimum the following information, as applicable, should be clearly documented and explained to the client:

On-going fees of the investment manager or master trust

Management Expense Ratio (MER)

Exit fees

Transaction or switching costs

Administration fees

These costs should also be explained in percentage (%) and dollar ($) terms. The same disclosure requirements apply for mortgage facilities. The client must be advised of all costs to be incurred in establishing a loan or gearing facility, e.g. establishment fees, valuation fees, etc.

Referral Commissions Where some form of payment, whether it is pecuniary or otherwise, is made to a referral source, disclosure must be made to clients as to the nature of the referral commission. This applies equally to payments that are made and payments that are received. You must advise the Licensee of all referral arrangements that you have or intend to enter into. Libertas Financial Planning will determine the appropriate manner for the payments to be made.

Format

Disclosure is required to be made in the SOA and should be included in the same section as other commission disclosures. The referral source must be named and the amount shown in percentage and dollar terms.

Making a referral payment

When making a payment for a referral the following text should be included in your letter of advice:“An amount of [$ amount / % of commission] will be paid to [name of referring party] as a referral fee.”

Receiving a referral payment

You are also required to disclose to clients the receipt of a referral fee or commission. The reason is to avoid such payments being construed as receiving secret commissions.

When receiving a referral payment the following text should be included in your client letter of advice:

“An amount of [$ amount / % of commission] has been received from [name of referring party] as a referral fee.” Goods and Services Tax in relation to referrals

All referral payments will be subject to the Goods and Services Tax (GST), irrespective of when the referral payment is made or received.

A Tax Invoice must be supplied for services provided to or by referral parties.

Other interests or benefits – Soft Dollar Arrangements and Associations with Product Providers You must also disclose information about:

Any other interests, whether monetary or non-monetary, and whether direct or indirect that you, your employer, the Licensee or any associate of these will receive; and



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Any associations or relationships between you, your employer (if any), the Licensee and the issuers of the products or products recommended in the SOA. You must disclose the above if they might reasonably be expected to be or have been capable of influencing you in providing the advice.

Soft Dollar Benefits Examples of interests which may reasonably be capable of influencing the recommendations made by a Representative include those arrangements known as ‘soft dollar’ benefits. For example:

non-volume conferences, accommodation and/or travel

volume bonuses or fee rebates

Sponsorship monies for client functions, etc

Subsidised services, e.g. Para planning

Entertainment expenses over $300

Where possible the disclosure of these benefits must be as a dollar figure. Where the dollar figure cannot be ascertained, disclosure should be as a percentage figure and include a worked example. In order to be effective, disclosure should also include the following:

Context – how is the benefit relevant to the consumer

Scale how big is the potential benefit

Eligibility – under what circumstances would the adviser or licensee gets the benefit

Source – who pays the benefit? If the benefit system creates a preference for certain providers, who are they?

Associations with Product Providers

Any associations with product providers that could potentially create a bias must be disclosed within both the FSG, and the SOA, as relevant to the advice provided. Disclosure should be sufficient to provide the client with an understanding as to the impact of the association on their advice, i.e. detail what benefits that the representative will receive as a specific result of the association. For example, this involves disclosing the ownership of Libertas Financial Planning by any other entity, as well as the monetary and non-monetary incentives provided to Libertas Financial Planning by any other entity.

Fees directly charged to client All remuneration received by the representative relating to the provision of the financial service must be disclosed within the disclosure section of the SOA.

Disclosure of Commissions - Insurance and Regular Premium You must not distinguish between securities and other financial product advice for the purpose of fulfilling your disclosure obligation. In the case of regular premium insurance products, it may not be possible to calculate and disclose the exact commission receivable in terms that are easily understood by the client. As a minimum the following information must be provided to the client in writing, using dollar (%) and percentage (%) terms:-

annual / monthly premium for the insurance

ongoing commission for the first year

renewal commission as a percentage of the annual premium

Commission Disclosure – Statement of Additional Advice (SOAA) Where a Statement of Additional Advice (SOAA) is provided, disclosure of remuneration can be incorporated by reference to an identified eligible advice document (where eligible advice document includes a previous SOA, Financial Plan (pre-FSR) or SOAA) except where specifically relevant to the advice provided in the SOAA, or where the disclosure has not previously been made/or has changed since last disclosure.

Disclosure details (including soft dollar benefits) that have not previously been disclosed in an eligible advice document, or that are no longer, must be disclosed within the SOAA.

Disclaimers and Warnings You must include all relevant disclaimers and warnings in the SOA. The distinction between the two is not always clear. They have overlapping meanings and applications in many respects.

A disclaimer is a statement that excludes your liability in relation to a certain matter. For instance,



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changes in taxation rules are outside your control as provider of financial services. Accordingly, you should exclude your liability in respect to any changes in future that may affect the taxation rates you use to make certain projections or to indicate after tax earnings in the SOA.

A warning can be described as a statement that draws a client’s attention to the consequences of certain actions either on your part or the client’s part. Examples include the possible consequences for the client’s failure if not refusal, to provide full and/or accurate personal information and the possible consequences for investing in shares (volatility warning) or through a gearing facility. The following is a list of possible disclaimers and warnings that you may need to include in the SOA:

Volatility (warning regarding equity investments)

Strategy risk (warning about the additional risks involved, e.g. Gearing/Margin Lending)

Performance/Future returns projections (warning when any performance figures are used)

Insufficient client information (warning when client refuses to supply incomplete or inaccurate

personal information)

Limited scope advice (warning where client requests advice for a limited purpose)

Non-Approved Products (warning where client wishes to invest in products not on Libertas Financial Planning APL)

Non-Approved Product in existing portfolio (self explanatory)

Legislative/Regulatory (warning regarding possible changes in legislative and regulatory

requirements and effects on advice)

Economic (changes affecting the domestic or global economy and effects on advice)

Expiry/Sunset (warning regarding date on which the advice may cease to be current)

Investment risk (including financial market risk, lack of diversification, portfolio risk, re-investment risk, liquidity risk, foreign currency risk, timing risk, pricing/value risk, manager risk) Libertas Financial Planning has incorporated these warnings within Statement of Advice documents.



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Referrals to Third Parties Specialist Advice Circumstances may arise which are outside your area of expertise. In these instances do not hesitate to obtain assistance either from another Representative of the Licensee or a related body corporate of the Licensee. In this case, referral fees do not need to be disclosed. You may also refer the client to an external professional service provider. In that case, you are required by Regulation 7.6.01, as amended, to limit the referral information to the contact details of the external service provider.

According to this Regulation, you must also disclose to the client any remuneration that will be received from the external professional for services provided by the external professional that are attributable to the referral. Please refer to section 4 of this Manual for procedural information on referrals and to the relevant chapter on disclosures earlier in this section.

Any information about the client can only be provided to an external service provider with their consent.

If the client refuses to obtain specialist advice, then you must confirm in writing that such specialist advice was recommended, that the client preferred not to obtain it and that you cannot provide it as you are not a specialist in the field.

Under no circumstances should Representatives attempt to provide the advice themselves unless you are very sure of your ability and are authorised to do so by Libertas Financial Planning .

Product Disclosure Statements Part 7.9 of the Corporations Act deals with the circumstances in which you must give a Product Disclosure Statement (“PDS”) to a retail client. PDS’s have now replaced the former Prospectuses, Key Feature Statements and Customer Information Brochures (“CIB”). When to give PDS There are three main situations when a PDS must be given to a client:

Recommendation situation - when you provide advice (s.1012A)

Issue situation – when you offer to issue or arrange for the issue of a financial product (s.1012B)

Sale situation – when you offer to sell a financial product (s.1012C)

You must give the PDS to a client at the same time as you provide the advice or are presenting the SOA to the client. In any case it must be given before the client is committed to adopting the recommendations made. In relation to the provision of PDS’s, the Financial Services Reform Act 2001 (FSR Act) introduced a new requirement to the Corporations Act 2001 (Corporations Act) for providers of certain types of custodial arrangements.

Before the FSR Act, similar requirements applied to investor directed portfolio services (IDPS) (e.g. wrap accounts) and IDPS-like registered managed investment schemes (e.g. mastertrusts) (ASIC Regulatory Guide 146). However, these requirements did not apply to the superannuation industry, although there were, and continue to be, specific disclosure requirements under the Superannuation Industry (Supervision) Act 1993 and regulations about the investment strategies that members of a superannuation entity can select.

Provision of PDS within an IPDS facility Where providing advice to invest in a mastertrust or wrap account (an Investor Directed Portfolio Service (IDPS)), advisers therefore must ensure that clients receive disclosure documents or PDS’s for each of the recommended underlying funds at the time the SOA is presented to the client. This is to ensure that clients receive the same level of disclosure as if they were investing directly it should be noted that ASIC Regulatory Guide 148 allows the provision of Product Disclosure Statements in electronic format.

It is important to note that an offer document or an IDPS guide for a mastertrust or wrap facility is NOT a PDS.

Provision of PDS within a Superannuation facility/fund The s1012IA requirements also apply to certain superannuation products. However, ASIC has currently granted relief via a class order until 30th June 2005 from 1012IA requirements. This class order is effectively an extension of reg. 10.2.50A, which delayed the application of s1012IA to superannuation products until 11 March 2004. This relief is dependent on trustees providing information on investment strategies within the fund being available through the Product Disclosure Statement or Supplementary Product Disclosure Statement for the Superannuation Fund.



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It is best practice that advisers provide PDS’s for all underlying funds recommended within a Superannuation Fund/Allocated Pension facility.

Presentation of Statement of Advice Preliminaries Having completed the SOA, you must read it to ensure that the SOA :

Includes the following on the cover page:

o Licensee details (Name, licence number and contact details)

o Your name, Authorised Representative Number and a statement to the effect you are an Authorised Representative of Libertas Financial Planning

o The client’s name

o Date of completion or preparation of the SOA

A Statement explaining the purpose of the SOA

Accurately represents the client’s personal needs, circumstances and/or objectives

Addresses any limitations to the scope of the advice

Addresses the recommended strategy and the reasons for recommending the strategy

Addresses the products recommended and the reasons for recommending them

Provides replacement product information as required

Describes accurately any document referred to in the text and instructs the client about its significance and necessity to read it before deciding to act upon the advice

Contains all disclosures, disclaimers and warnings, including the inaccurate and incomplete information warning as applicable

Is readable and capable of being understood by the client.

It is also important to insert page numbers in the document.

PDS and other documents Attach the research documents and PDS’s for recommended products to the SOA. Ensure that all documents that are referred to in the SOA are attached.

Method of delivery The Representative should present the SOA to the client(s) and go through the document with the client(s) pointing out the important areas to the client. The Representative should also vigorously invite any questions that the client(s) may have and invite the client to take the SOA away to read it thoroughly prior to proceeding.

Implementing your advice Ensure client comprehends advice It is best practice to arrange a meeting with the client, to ensure that they fully understand and are comfortable with your advice. Always offer to provide further assistance to them to understand the advice.

Variations to your advice Where the client wishes to vary your advice, you need to determine whether the suggested variation amounts to an amended recommendation or a different request by the client.

Minor variations Normally, if there is no change in the products you recommended and there is only a minor difference in the amount(s) to be invested, a file note should be completed and maintained on the client’s file. You may even go further to obtain their sign-off on the variation although this is not necessary given the minor nature of the variation.

Significant variations If significant variations are made to the initial investment recommendation, the adviser should add an addendum to the initial Statement of Advice, or re-document the Statement of Advice.

Authority to Proceed If the client decides to accept your recommendations, you must ask the client to complete the Authority to Proceed form.



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The form is not a contract but an acknowledgment by the client that they have understood and accepted the recommendations made. It also identifies Libertas Financial Planning as the entity responsible for the quality of the advice.

Ensure that the date of the SOA is referred to in the Authority to Proceed

Ensure that the client signs and dates the form. The client’s signature acts as confirmation that the personal financial details and other relevant information are correct, they understand and consent to the provisions of the Privacy Statement, and that the client accepts the advice and fees and wishes to implement the recommended strategy.

The original Authority to Proceed must be given to the client and a copy kept on the client file.

Application Forms You must complete all application forms and other relevant documentation for the products you recommend. Ensure these forms and the documentation are correctly completed and efficiently processed.

Placement of Funds You must ensure that all clients' cheques covering investments are made out in the manner prescribed on the application forms.

You must lodge investment applications forms directly with the appropriate financial institutions within two (2) business days of acceptance and receipt of cheques.

Confirmation of Transactions

Regulatory Requirements Section 1017F of Corporations Act and Regulations place the primary obligation to confirm transactions on the product issuer. However, to ensure that you are in a position to assist your clients when necessary, a brief summary of the requirements to confirm transactions is provided here. These requirements only apply where the client is a retail client.

How transactions are to be confirmed Financial institutions are required to confirm investment transactions directly with the investing client. Transactions may be confirmed in writing, electronically or through Internet access provided to the client.

The following information must be provided in a confirmation:-

The issuer and the holder of the product

The name of the financial product

Date/description of transaction

Any amount payable by the holder in relation to the transaction

The number or amount of financial products that are subject to the transaction

If more than one financial product is involved, the price per unit of the financial products

Any taxes and stamp duties payable in respect of the transaction

For superannuation or RSA products which include preserved benefits or restricted non-preserved benefits, information about the cooling off period

If a withdrawal, the amount paid or payable to the holder

Any other information as prescribed (when the regulations are issued)

Exempt from the requirements are certain transactions including regular saving plans, periodic debits and automatically increased payments

When confirmation must be provided

Cooling off period Product issuers bear the responsibility for the implementation of the cooling-off provisions in the Corporations Act and Regulations. However, it is important that you are aware of the requirements to be able to assist your clients with their enquiries in this area.

Regulatory requirements The provisions apply in respect of retail clients as defined above (s.1019A and s. 1019B). Financial products in relation to which the provisions apply are:

Risk insurance (both general and life)

Investment life insurance products

Managed investment products



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Superannuation products

RSA products

Cooling off period and when it begins to run The cooling off period is 14 days and commences on the earlier of:

When the client receives confirmation of the transaction (if confirmation is required to be provided); or

At the end of the fifth day after the day on which the product was issued or sold to the client.

Rights of client During this period the client may return the product by notifying the product issuer in writing, electronically, or as required by Regulation. No Regulation has been introduced at the time of the writing of this section of the Manual. The notification entitles the client to cancel the application for the product and obtain a refund of the money they paid to acquire it.

Client File Management and Record keeping requirements Regulatory Requirement It is a licence condition under Libertas Financial Planning licence that a copy of every SOA provided to a client by an authorised representative must be maintained for a period of 7 years. In addition, information relating to the SOA, including fact finds, research documents, strategy notes, etc must also be maintained for this period (RG 175.133).

It is also a licence requirement that licensees keep records of FSG’s provided to clients including the date provided, and the date version of the FSG provided (RG 175.42)

Libertas Financial Planning Policy Representatives of Libertas Financial Planning must ensure that all client records are maintained securely, in an orderly fashion, and for a minimum period of 7 years in line with regulations. Client records may be maintained electronically or in hard copy, or as a combination of both.

Requirement to maintain client file You must maintain a file for each client regardless of the advice type (whether full, defined scope, limited or no advice) provided. This general rule applies even if a client has not proceeded with your advice.

A file must be stored in a manner that will lend itself to easy retrieval. It is suggested that you store your client files in alphabetical order.

Content of Client Files A client file must contain all relevant client, research and product information which was used to establish a reasonable basis for the advice provided. The following documents, among others must be kept in a client file:

Client contact (including initial contact or referrals) notes

Fact Find and other documents used to obtain client information relied on for the advice. It is best practice that these are signed by the Representative and the client

File notes of all discussions with, instructions by, or containing information on, the client

Working papers or copies of these

Exact copies of all correspondence to and from the client and copies of any forms

Copies of all research information and Product Disclosure Statements given to the client or a record of these

Exact copy of the Statement of Advice and/Execution Only Letter given to the client

Copies of application forms

Copies of client cheques received

Format of Client Files A separate file is to be maintained for each client. Where kept in hard copy, all files are to be bound and securely stored.

Libertas Financial Planning client files are to be maintained separately from other business activity client files. For example: one file should be maintained for Accounting and one for Licensee business.

The file copy should be an exact copy of what is issued. Therefore, a copy should be made of the Statement of Advice on letterhead including the adviser’s signature and any attachments.



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Files should be separated into tabbed sections which contain the following information:- Client Data Correspondence Applications Investment Recommendations Reviews

Statement of Advice Records Records or copies of Statement of Advice documents provided to retail clients must be maintained for a period of 7 years from the date the document was provided to the client. Representatives must ensure that records of SOA’s are an exact copy of what was provided to the client.

A copy of each client’s SOA will be maintained at Head Office, and must also be retained by the Adviser on the clients file.

FSG Records As mentioned earlier in this Section, representatives must ensure that both the date the FSG was provided to a retail client, and the date version of the FSG must be maintained for a period of 7 years from the date the FSG was provided to the client.

FSG records must be maintained on each client file, and captured on the Fact Find, and on the client management system (XPLAN).

File Notes File notes are a useful means of recording details of conversations with clients or actions to be taken either by the client or the adviser. File notes should not be considered as a replacement for written advice to clients.

Some instances where file notes may be used are:- Conversations in person or by phone regarding strategic or specific issues which do not constitute

recommendations To record the provision of Warnings as appropriate Follow-up actions by the adviser Requests for applications, Product Disclosure Statements etc. by clients Recommendations to seek professional advice not able to be provided by the adviser Contacts with fund managers, Centrelink, Tax Office etc. on behalf of clients.

Privacy Storage and Access Security of Files and Personal Information You must take reasonable measures to ensure that all client files and personal information are kept secure and protected from misuse, loss or modification. In line with the Privacy Policy, this means hard copy files must be kept in secure areas such as lockable filing cabinets/rooms with access to the filing area restricted to the relevant staff members who require such access.

When files are not in use, they are to be stored in the secure cabinet/area rather than on desks. Access to the work area by clients and others is to be kept to a minimum, with clients supervised at all times, to ensure information on clients is kept secure.

Electronic records are to be similarly protected through the use of password access to personal information and restrictions on who can access such information on the network.

Personal information not required to be held on file is to be destroyed in a secure manner, e.g. shredding of documents.

Client Access to Their Personal Information Any requests from clients to access the personal information, held by the Licensee, are to be forwarded to the Privacy Officer. The Privacy Officer will provide the Representative with instructions on how to proceed with the request and what communications are required with the client. Representatives must not provide clients with access to any information without first obtaining authorisation from the Privacy Officer.

Restrictions on Use of Client Personal Information A situation may arise where the client has consented to provide personal information but not provide their full consent to disclosure of their information as per the privacy policy. The client record on the database is to be modified to reflect the restrictions on the use of the information.

Similarly, the client file is to be marked in some way, e.g. writing of ‘privacy’ or include a red dot on the file cover. A separate list is to be maintained within the office of all clients with restrictions on the use of



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information. This list is to be used as a cross check when mail-outs are conducted to prevent the unauthorised use of client information.

File Retention All files are to be kept for a minimum of 7 years. This time frame allows an additional year over the limit allowable for claims to be made against the company for advice received.

The requirement to retain files includes files of prospective clients who did not proceed with recommendations as well as files for those individuals who are no longer clients. Such files can be kept offsite in secure storage. It is a term of your agreement that post termination, all client files must be maintained seven (7) years post termination date, and access made available to files by Libertas Financial Planning , in the event of a claim or ASIC investigation.

Maintaining records in electronic format Given today’s fast and growing technological advances, it seems logical that some records are maintained electronically. Libertas Financial Planning recognises that most Representatives maintain some form of electronic records. The following guidelines must be adhered to when maintaining electronic records.

The method of storage must be able to reproduce the document precisely in the format and wording provided to the client. For example, where a document contains dates and unit prices current at the time of preparation, the storage method must store the dates and data as per date of issue;

All reasonable precautions are to be taken to guard all documents kept or prepared by the

corporation against any damage, destruction or falsification;

The method of storage must ensure easy access to individual client files; and

A suitable and regular back up regime must be in operation.



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Disaster Recovery Program It is an AFS licence condition that adequate Disaster Recovery Mechanisms are in place to ensure that, at all times, there are sufficient IT resources available to the licensee in order to provide financial services under the licence.

Therefore, where representatives maintain records electronically relating to the provision of advice, representatives must also ensure that Disaster Recovery mechanisms are in place within their office.

As a minimum, any Disaster Recovery mechanisms should include:

Daily back ups

Off-site storage (at least weekly)

Firewall protection

Password protection

Anti-virus software

Reviews of Client Portfolios The preparation of a Statement of Advice and its implementation inaugurates a long-term ongoing Client-Representative relationship.

Libertas Financial Planning policy requires that Client reviews are conducted on a regular basis (at least annually) to ensure the ongoing appropriateness of advice, and as part of maintaining the client-adviser relationship. You should note that, whether it is contained in an agreement or in the SOA, you can only make an offer to review the portfolio.

Review format The frequency and format of the review will vary from client to client depending on the type of review service offering the client has entered in to. In most circumstances, clients would be formally reviewed on at least an annual basis. However, in some cases it may not be necessary to conduct a formal review with a client annually.

Therefore two services are available:

Where the client is contacted by the Representative to arrange the regular review;

Where the client is required to contact the Representative when they wish to arrange for a review.

The provision of these services will constitute the provision of additional recommendations to clients. This being the case, such advice must meet SOA requirements, just as if it were the initial recommendation [see “Formulate Strategy and Document Recommendations” later in this section]. However in some cases you may not be making additional recommendations, but rather reviewing existing strategies and plans. It is important to distinguish when advice is being provided and when purely factual information is being provided.

The following information provides guidance on the provision of advice in such situations.

The Review Meeting When conducting a review there are a number of actions that are to be taken as a matter of course with all clients.

Provision of current FSG Prior to the provision of a further financial service (e.g. through the conduct of a review), advisers are to ensure that clients have received a current FSG. Where the client has not yet received a current FSG, this should be provided at, or prior to the commencement of the review, and the date and date version of the FSG provided recorded on the client records.

Records of provision of FSG’s are to be recorded via the Fact Finder.

Review of Client Data Libertas Financial Planning policy requires Representatives to conduct a review of the client’s situation to determine:-

Any changes to the client’s personal situation, goals or attitudes that may impact on the SOA; and accordingly;

Whether the SOA remains appropriate for the client. Client details have not altered

The client's circumstances, needs and objectives should be confirmed with them. This includes reviewing the client’s risk tolerance levels and corresponding Risk Profile to ensure the client is still comfortable with the



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asset allocation. If no change is noted by the client, this is to be documented on the client file by the Representative by means of a file note or Review Fact Find. A copy of the Review Fact Find is contained at Appendix 4 of Corporate Documents. Client details have altered

If client details have changed these should be recorded by means of a Review Fact Find. If significant changes have been noted or if has been more than two years since the last Fact Find was conducted, then consideration should be given to the completion of a new Fact Find.

Privacy Issues Adherence to Privacy Act Requirements It is a requirement of the Privacy Act that you need to ensure that all data held is accurate and up to date.

Procedure

Provision of a Statement of Additional Advice upon review Prior to providing further advice, advisers must make reasonable investigations into whether or not a client’s circumstances have changed since advice was last provided. A statement must then be included in the SOAA noting that client information had been reviewed, and whether any changes had been noted or updated.

Onus on client Where sending portfolio valuation reports or other correspondence to clients, advisers should ask clients to contact their adviser if their circumstances have changed to ensure information on which recommendations are based remains accurate.

Review of Advice – Statement of Additional Advice As part of the ongoing review process, you may wish to provide clients with information in relation to their portfolio, or general market and economic data, e.g.

investment market and economic information

product performance details

asset allocation details

The provision of statistical information or information which is of a factual nature only may not constitute a recommendation. However, where an opinion or recommendation is made to a client as part of ongoing services, this advice must be documented in a Statement of Advice, or Statement of Additional Advice.

Statement of Additional Advice (SOAA) Under ASIC Class Order 04/1556 an adviser is able, under certain circumstances, to provide a client with an abridged version of a Statement of Advice, known as a “Statement of Additional Advice (SOAA)” instead of providing a full SOA Circumstances where an SOAA can be provided include those situations where an adviser has previously provided an eligible advice document to a client, that contains information that would have been replicated if included within the SOAA.

In this context, an ‘eligible advice document’ includes documents such as a Fact Find, SOA, SOAA or pre-FSR Financial Plan that has previously been provided to a client.

Basically, the SOAA can include, by reference, information that has previously been provided in eligible advice documents and that are relevant to the advice being provided within the SOA. An adviser will be able to incorporate by reference information from an eligible advice document provided to the client by a different adviser representing the same licensee.

The only information that cannot be included through reference to an eligible advice document is that information that is relevant only to the specific advice being provided within the SOAA, as well as information that is no longer correct, accurate, or that was not included in the original eligible advice Document.

In addition, ASIC Class Order CO 04/1556 prescribes that certain information or statements must be included within the SOAA including replacement product information, and an inaccurate or incomplete advice warning, as relevant to the advice.

The following provides a summary of what must be included within an SOAA:

The title “Statement of Additional Advice” must be included on the cover or near the front of the advice document. This may be abbreviated to “SOAA” within the remainder of the document;

The SOAA must be dated (the date the document was prepared);

A statement identifying the eligible advice document/s from which statements are incorporated or referred to (i.e. through reference to the date and name of the document);



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A statement to the effect that the SOAA should be read together with the original eligible advice document, and that all statements in the original eligible advice documents are taken to be incorporated into the SOAA unless stated otherwise;

Any new advice provided since the original eligible advice documents;

Where there has been a change in information/statements provided since the original eligible advice documents; this must be clearly stated (e.g. if personal details had changed this would need to be noted that the original statements of details were no longer accurate and detail the new information);

A statement that a person can obtain a copy of the original eligible advice documents free of charge upon request.

Replacement product information as relating to the specific transaction made/recommended in the SOAA;

Incomplete or inaccurate advice warning as relevant;

Remuneration relating specifically to the advice provided (not to original advice provided in the initial eligible advice documents). It should be noted that remuneration details are only required to be included (rather than referred to) if they specifically relate to the transaction/advice detailed in the SOAA. Of note, re-disclosure is not required for hold recommendations where the original disclosure statements remain accurate.

Similarly, ‘descriptions’ of remuneration, e.g. how ongoing commission is calculated can be included by reference.

Limitations on use of SOAA’s

The scope of advice within an SOAA cannot be greater than the scope of advice provided within the original SOA. If the client requires advice that would constitute the creation of a new strategy, then this should be documented within an SOA. Also, remuneration and conflicts information that relates specifically to the new personal advice needs to be included in the SOAA.

Implementation Completion and lodgement of documentation and funds is to be done in the manner prescribed earlier in this section.



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Section 4 Code of Conduct

Code of Ethics .............................................................................................................................................. 197

Integrity ......................................................................................................................................................... 197

Objectivity ..................................................................................................................................................... 197

Competence ................................................................................................................................................. 197

Fairness ........................................................................................................................................................ 197

Diligence ....................................................................................................................................................... 197

Professionalism ............................................................................................................................................ 197

Confidentiality ............................................................................................................................................... 197

Compliance................................................................................................................................................... 197

Rules of Professional Conduct ..................................................................................................................... 197

General Conduct .......................................................................................................................................... 197

Disclosure Statements to Prospective Clients ............................................................................................. 197

Financial Plan Preparation ........................................................................................................................... 199

Explanation of Financial Plan ....................................................................................................................... 199

Financial Plan Implementation ..................................................................................................................... 199

Client Service ............................................................................................................................................... 200

Complaints.................................................................................................................................................... 200

Document Administration ............................................................................................................................. 200

Minimum Education and Competencies ....................................................................................................... 200



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Libertas Financial Planning and its representatives are required to abide by a Code of Ethics and Rules of Professional Conduct.

The Code of Ethics and Rules of Professional Conduct are provided below, please take the time to familiarise yourself with these requirements.

Code of Ethics The Code of Ethics are general standards of a mandatory and enforceable nature. Each general standard will apply, unless otherwise stated.

Integrity Representatives shall observe high standards of honesty and integrity in conducting their financial planning business and in the provision of financial planning services.

Objectivity Representatives shall disclose to the client any limitations on their ability to provide objective financial planning services.

Competence Representatives shall provide competent financial planning services and maintain the necessary knowledge and skill to continue to do so in those areas in which the Representative is engaged.

Fairness Representatives shall provide financial planning services in a manner that is fair and reasonable.

Diligence Representatives shall act with skill, care and diligence in the provision of financial planning services.

Professionalism Representatives shall ensure their conduct does not bring discredit to the financial planning profession.

Confidentiality

Representatives shall not disclose any confidential information without the specific consent of the provider.

Compliance Representatives shall ensure their conduct complies with the Compliance requirements of Libertas Financial Planning .

Rules of Professional Conduct These rules are specific standards of a mandatory and enforceable nature.

General Conduct In the conduct of professional and business activities a Representative shall not engage in any act or omission of a misleading, deceptive, dishonest or fraudulent nature.

Disclosure Statements to Prospective Clients A Representative shall ensure that prospective clients are clearly informed in writing about: (a) The identity of the Principal responsible for the advice, and if the advice is provided through a

Representative, the identity of the Representative; (b) The nature of the services offered; (c) The method of remuneration, fees, commission or charges associated with the delivery of services; (d) Access to internal and external complaint handling mechanisms; and (e) The nature and extent of any significant financial relationship or connection with a product supplier and

any other material conflict of interest.

A Representative shall clearly disclose to all prospective clients the capacity in which they are able to provide financial planning services.



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Financial Plan Preparation At the earliest point in the relationship, a Representative shall disclose in writing to the client if the Representative is only authorised to sell or advise on a restricted range of products, and any other limitation of their capacity to serve the client. In the provision of any written recommendation a Representative must disclose the following particulars to the client in writing:

(a) Remuneration, fees, commissions or any other pecuniary or non-pecuniary benefit whether direct or indirect, received or receivable by the Representative, the Representative’s Principal, or an Associate in connection with the financial planning service;

(b) Any other benefit reasonably capable of influencing the making of the recommendation;

(c) Any benefit that a third party may receive in connection with the recommendation; and

(d) Any other costs borne by the client should they accept all or part of the recommendation. The disclosure of particulars must be expressed as a minimum in percentage terms and included in the recommendation prepared and issued by the Representative. These particulars should be expressed in dollar terms where practicable. If financial planning services are provided orally, a Representative must disclose orally to the client the particulars. In preparing oral or written recommendations to clients, a Representative shall collect sufficient information to ensure appropriate advice can be given. In preparing oral or written recommendations to clients, a Representative shall conduct, or have access to; research on financial strategies and products that may be appropriate to achieve the client’s identified needs and objectives. In preparing oral or written recommendations to clients, a Representative shall develop a suitable financial strategy or plan for the client based on the relevant information collected and analysed. In preparing oral or written recommendations to clients, a Representative shall provide an explanation of the nature of the investment risks involved in terms that the client is likely to understand. A Representative must ensure all significant recommendations are made in writing. If any significant recommendations are given orally, then confirmation must be given in writing as soon as practicable.

Explanation of Financial Plan A Representative must take reasonable steps to place the client in a position to comprehend the recommendations and the basis for the recommendations. Financial Plan Implementation A Representative’s adherence to Rules 108 to 111 inclusive is subject to an express documented instruction by a client to limit or restrict the scope of the financial planning service normally offered by the Representative (for example an execution only transaction service or advice limited to a particular area or product or where a client refuses to provide information sought). The client must be warned prior to implementing the relevant transactions about the consequences of the Representative following these instructions. A Representative must implement all agreed upon recommendations in an accurate, efficient and timely manner. A Representative shall confirm in writing to a client where a subsequent instruction given by that client significantly alters the financial strategy or balance of an existing portfolio under the supervision of the Representative. Client Service Should an actual or potential conflict of interest develops after a professional relationship has been commenced, a Representative shall promptly disclose in writing the conflict(s) of interest(s) to the client. The



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Representative must be able to demonstrate that the client was made aware of any actual or potential conflict of interest. A Representative shall not move a client or cause a client to move from an investment to another investment without explaining to the client, in terms that the client is likely to understand, the reasons for the move. The Representative must demonstrate that the move is appropriate for the client. Complaints All Representatives must comply with the relevant Regulations concerning complaints handling, dispute resolution and disciplinary procedures.

Document Administration A Representative shall ensure that information and relevant documents given to or gathered by the Representative are securely stored to establish at any time that it has complied with Libertas Financial Planning Professional Standards and be available for inspection when required. Such records shall be retained for seven (7) years from the date the document was last acted upon. A Principal Representative must, when requested to do so by a client, give to the client or another person authorised by the client, any original documents (not photocopies) related to the provision of financial planning advice for which the client has paid or will pay for. This does not include documents which have been prepared or received by the Principal Representative in undertaking the advisory task, such as internal notes, memoranda, quotes or other working documents. Minimum Education and Competencies In order to maintain and improve professional knowledge, skills and competence, a Member must satisfy all continuing professional development requirements set by the Licensee from time to time. A Member shall offer advice only in those areas in which the Member is competent. In areas where the Member is not professionally competent, the Member shall seek the counsel of qualified individuals and/or refer clients to such parties. A Licensee shall have reasonable and appropriate standards for the appointment of Authorised Representatives.



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Section 5 Prohibited Conduct

INTRODUCTION ................................................................................................................................. 202 Dishonest conduct ............................................................................................................................... 202 Holding out ......................................................................................................................................... 202 Hawking ............................................................................................................................................... 203 General Exceptions ............................................................................................................................. 203 Specific Exceptions ............................................................................................................................. 203 Penalties .............................................................................................................................................. 203 False or misleading statements .......................................................................................................... 204 Misleading or deceptive conduct ........................................................................................................ 204 Payment for unsolicited financial services .......................................................................................... 204 Referral selling .................................................................................................................................... 205 Accepting payment without providing a financial service ................................................................... 205 Unconscionable conduct ..................................................................................................................... 205 Harassment and Coercion ................................................................................................................... 206 Restriction on use of certain words ..................................................................................................... 206



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As a Representative, you must take all necessary steps to understand the types of conduct that you are prohibited from engaging in when providing financial services on behalf of Libertas Financial Planning . Your obligation is not to engage in such conduct.

This section of the Manual summarises the most common types of prohibited conduct and discusses some key general obligations of Representatives under the Corporations Act and ASIC Act.

Dishonest conduct You have a general obligation under the law as a Representative to provide financial services “efficiently, honestly and fairly” (s.912A (1) of the Corporations Act). This obligation overlaps with several others under the current financial services regime, including the specific “dishonesty” prohibitions in s.1041G (in relation to conduct generally) and s.1041F (in relation to concealment of material facts).

Other comparable provisions include those prohibiting conduct that is misleading, deceptive or false. Also, the prohibition of “holding out” has implications for the requirement that financial services must be provided efficiently, honestly and fairly.

The cumulative effect of all these provisions is the requirement that you must not engage in any “dishonest” conduct when providing “authorised” financial services. By implication, the provision of “unauthorised” financial services is caught by this general prohibition.

The emphasis in the law on “honesty” in the provision of financial services is crucial to the achievement of the overall objectives of the current licensing regime, i.e. to ensure protection for consumers of financial services and products and to increase confidence in the Australian investment market.

“Dishonest” is given a simple meaning in this context. It means:

Dishonest according to the standards of ordinary people; and

Known by the person to be dishonest according to the standards of ordinary people.

It is not necessary to explain this prohibited conduct any further or give examples of it.

Holding out Section 911C of the Corporations Act 2001 prohibits the conduct of “holding out”. You must not, either expressly or by implication, hold out that:

You have an AFS licence.

You act on behalf of another person or licensee other than Libertas Financial Planning when providing a Financial service.

Some conduct of yours has been authorised by Libertas Financial Planning or another licensee if that is not the case.

It is an offence to breach any of the above holding out provisions.

Holding out may occur if you either expressly or by implication make a false statement to clients or prospects on key business documents including business cards, letterheads and marketing or promotional material. For example, you may be holding out that you hold an AFS licence if you fail to disclose yourself as a Representative of Libertas Financial Planning on the business card you use to introduce yourself and your authorised financial planning services. Also, you may be holding out if you provide financial services that are not covered in your Authorisation Certificate.

Note that in some respects, you may be in breach of other provisions of the Act if you are found to be guilty of holding out in any of the above circumstances. For example, if you are found to be guilty of holding out that you have an AFS licence, the same conduct may give rise to liability under s.1041E (making a false and misleading statement), or s.1041F (inducing a person to deal by making a false or deceptive statement).

The same conduct may give rise to separate criminal and/or civil liabilities under the provisions referred to, as well as any other applicable laws (see s1041I and s.1041J of the Corporations Act 2001). One way to avoid liability for holding out is by complying with Libertas Financial Planning procedures on the preparation and use of key business documents (see section 4 of this Manual). Another way to avoid liability in this area is to exercise extreme care in what you say to clients or potential clients when promoting yourself or your services or when providing financial product advice.

Hawking In the financial services context, “hawking” occurs when you offer a financial product to any person for sale or issue. Hawking is prohibited if the offer is made in the course of or because of an unsolicited “meeting” or “telephone call”. The provisions that prohibit hawking of specified financial products in the circumstances outlined are:

Section 736 — in relation to securities (e.g. shares and debentures);



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Section 992AA — in relation to interests in managed investments (e.g. units in trusts); and

Section 992A — in relation to other financial products (e.g. superannuation, life and general insurance, derivatives and deposit products).

The rationale behind the hawking provisions is to prevent pressure or ambush selling of financial products to retail clients.

General Exceptions Hawking is not prohibited in the following circumstances:

Where the offer of a financial product is made through means other than a meeting or phone call (e.g., in written promotional, marketing or Website material).

Where the offer relates to a “financial service” as opposed to a “financial product”.

Where a meeting or phone call is requested by a consumer, provided the consumer knows or reasonably can be said to have known that a financial product will be offered or discussed during the meeting or phone call.

Specific Exceptions Certain specific exceptions are recognised in the Corporations Act to the general rule prohibiting the hawking of financial products. The availability of any of these specific exceptions depends upon whether the financial product in question belongs to the classes of “securities”, “managed investments” or other financial products. Securities and Managed Investments For the exception in relation to Securities and Managed Investments to apply, the offer must only:

Relate to listed securities or managed investments; and

Be made by means of telephone; or

Be made by a licensee through whom the client has bought or sold securities or managed

investments in the previous 12 months.

“Other” financial products The exception in relation to the hawking of “other financial products”, as identified above, is more stringent. First, you are only allowed to make the offer by means of a phone call not a meeting.

Secondly you must have in place a “No Contact, No Call” client register, on which the person to whom the offer is to be made, is not listed. Even if the above conditions are satisfied, an offer of a financial product may only be made lawfully to that person, if:

You contact the person between the hours of 8am-9pm on any day which is not a

Sunday, New Year’s Day, Australia Day, Good Friday, Easter Monday, Anzac Day, Christmas Day and 26 December/Boxing Day (see Regulation 7.8.22).

The person is given an opportunity to be listed on the “No-contact, No Call” register and the person selects the time and frequency of any future contacts;

The person is given a Product Disclosure Statement (PDS) before becoming bound to acquire the financial product;

The person is clearly informed about the importance of the PDS when making a decision to acquire the financial product; and

The person is given the option of having the information in the PDS read out to them.

Libertas Financial Planning procedures to prevent unlawful hawking are located in section 4 of this Manual.

Penalties A breach of the hawking provisions is a criminal offence.

The maximum penalties are:

(a) A fine of $2,750 for an individual or $13,750 for a body corporate;

(b) 6 months jail; or

(c) Both.

The consumer may also have a right to:

(a) Return the product (section 738 and 992A (4)); or

(b) Undertake civil proceedings against you (section1324).



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False or misleading statements You must not make any statement or disseminate any information that is false or misleading, if it is likely to induce a persons in Australia to apply for, dispose of, or acquire, a financial products (s.1041E of the Corporations Act).

Additionally, you must not make any statement or disseminate any information in relation to securities if it is likely to influence the price of a security, which is traded in the Australian financial market. This is considered insider trading and is an offence. The offence can be committed even if the statement is made or the information is disseminated outside Australia.

Note that you may commit an offence regardless of whether the conduct actually induces a person or influences the price of a financial product in Australia. It is the likelihood of the conduct leading to any of these results, which is the focus of the offence. The offence may be prosecuted as a strict liability offence.

This means that the prosecution only needs to prove is that you made the prohibited statement or disseminated the prohibited information. The prosecution will not need to prove that you intended to bring about the consequences envisaged by the conduct or that you knew or should have known that the intended consequences would occur. Commission of this offence will also mean that you have breached the general obligation in the Corporations Act to provide financial services honestly and fairly (s.912A (1)(a) of Corporations Act).

You must exercise considerable care when preparing key business documents, notably promotional and marketing material, to ensure you do not include false or misleading statements or information. In all cases, include only statements or information you know is true. If you are not sure of the truthfulness of the material, do not include it as you may be held to be reckless as to whether information or statements are true or not.

Liability for false and misleading statements or information is not limited to what you include in promotional or marketing material. Other key business documents including business cards and letterheads may contain such information.

For example, be careful not to overstate your qualifications or experience, as these are capable of influencing a potential client to use your services to purchase a financial product. Furthermore, exercise great care in what you say to clients verbally about yourself, your services or the financial products you are authorised to provide advice on.

Misleading or deceptive conduct You must not, in relation to any financial product or service you provide, engage in conduct that is misleading or deceptive or conduct that is likely to mislead or deceive (s.1041H of the Corporations Act; s.12DA of the ASIC Act). You may be liable in civil proceedings to any person who suffers loss or damages as a result of your conduct.

Note that you may still be found to have engaged in misleading or deceptive conduct even if you had no intention to mislead or deceive any person. Also, you may be liable even though your conduct does not actually mislead or deceive anyone.

The rationale behind this prohibited conduct is to make those who provide financial products or services think carefully about what they say or write about themselves and their products or services. From the point of view of the law, nothing but the truth should be said or written about yourself or the financial products or services that you are allowed to provide. A mistake on your part will only count towards mitigating civil penalties. It will not itself absolve you from liability. Taking steps to avoid misleading or deceptive conduct is easy. Simply, exercise great care when you make claims about the services you are authorised to provide or about the products on which you can provide advice. You must comply with Libertas Financial Planning procedures when preparing and distributing key business documents.

These procedures have been introduced to ensure that the services and products you are authorised to offer to clients are described in accurate terms and any issues on the document are identified prior to publication through the Licensee approval process.

Payment for unsolicited financial services You must not ask anyone to make a payment for any financial service you provide if the person has not requested the service (s.12DM of the ASIC Act). To do so constitutes an offence.

However, you may demand payment for services you provide to a person if you have reasonable cause to believe that you have a right to the payment. The onus lies on you to prove that you believe that you have a right to be paid. Note that even if you have reasonable cause to believe you have a right to payment for services you provide, you cannot use harassment or coercion to enforce payment.



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Referral selling Referral selling is prohibited by s.12DH of the ASIC Act. Referral selling will occur when you induce a consumer to use your services on the promise that the customer will receive a rebate, commission or some benefit if the customer refers other customers to you after you provide financial service to the first customer. Referral selling is prohibited if:

An agreement regarding the client’s receipt of benefits precedes the client’s acceptance of your offer to provide them financial services; and

The client’s receipt of the benefits is conditional upon the occurrence of some event in the future. The rationale behind the prohibition of referral selling is that any benefit the consumer may receive must not be dependent upon an event occurring in the future, that is, after the consumer has accepted your offer to provide the service. The event may never occur. The law’s position is that at the time that a customer accepts your offer to provide them financial services, they must know what benefits they are entitled to.

Benefits they are entitled to must not be contingent upon the happening of a future event. As a result, rebates or other benefits for referrals can be offered before the consumer accepts or “signs up” for your service (e.g. “Bring a friend and get half price”). In such a scenario, the benefits are identified and quantified before the client accepts the offer.

Also, there is no breach of the law if a rebate is given to a client after the client has accepted your offer to provide them financial services. (e.g. offering a rebate to an existing customer who subsequently introduces other customers). It is an offence to engage in referral selling.

Accepting payment without providing a financial service You must not accept payment or any benefits for financial services you do not intend to provide. Also, you must not accept payment or benefits if you intend to provide services that will be materially different to the services for which you received the payment or benefit.

Finally, you will be in breach of the law if you accept payment or benefit for a service, if at the time that you receive the payment, you know or ought to have known that you will not be able to provide the services within the period you promise or within a reasonable time.

It is an offence to engage in any of the above types of conduct (s.12DI of the ASIC Act).

Unconscionable conduct You must not engage in unconscionable conduct when acting on behalf of the licensee (s.991A of Corporations Act; s.12CA and12CB of the ASIC Act). Unconscionable conduct is also prohibited under the unwritten law of any State or Territory.

Unconscionable conduct is not defined under either the Corporations Act or the ASIC Act. Traditionally, unconscionable conduct refers to a situation where Person A takes unfair advantage of Person B, who is under a “special disability” in circumstances where Person A is aware of, or ought to be aware of Person B’s special disability. It involves a stronger party exploiting some disability or disadvantage suffered by the other party. It has been left to the courts to decide what forms of conduct can be said to be unconscionable. First, the courts look for the presence of some disability or disadvantage suffered by Person B, including consumers of financial services.

Some considerations applied by the courts are, Person B’s ignorance of important facts known to Person A (including Person B’s illiteracy, lack of education, poor understanding of English or the language of business).

Also, poverty, infirmity or disability (including impaired poor eyesight or hearing, drunkenness or being under the influence of medication or some other substance) have been taken into consideration. In some cases, ethnic characteristics and lack of assistance or explanation where these are necessary have also been considered.

Next, the courts look to see if Person A has taken advantage of or exploited Person B’s disability. This may happen if Person A fails to explain industry terms properly to Person B, exert undue pressure, influence or intimidate Person B, fails to explain adequately the consequences of purchasing or acquiring a financial product, require Person B to comply with an unreasonable condition or misrepresents the purpose of a financial product to Person B.

The courts must be satisfied that there was pressure exerted on Person B as a result of Person A’s conduct, which has the practical effect of compulsion or lack of choice on Person B’s part in purchasing a financial product.

The ASIC Act also provides a list of matters the court is entitled to take into account to determine whether a person’s conduct amounts to unconscionable conduct. These are:



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the relative strengths of the bargaining positions of the parties;

whether, as a result of the conduct, the consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the licensee or its representative;

whether the consumer was able to understand any documents relating to the supply or possible supply of the financial services;

whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer or a person acting on behalf of the consumer by the licensee or its representative in relation to the supply or possible supply of the financial services; and

the amount for which, and the circumstances under which, the consumer could have acquired

identical or equivalent services from a person other than the licensee or its representative.

If a consumer suffers loss or damages as a result of your unconscionable conduct, they may recover the loss or amount of damage through legal proceedings against you and/or the licensee. An action to recover the loss or amount of damage may be brought any time within 6 years after the day the course of action arose.

While it is quite easy for your conduct to be found unconscionable, it is equally easy to take some simple steps to avoid it. As a Representative in the financial services industry, you have the obligation to provide financial services efficiently, honestly and fairly (s.912A (a) of the Corporations Act).

To comply with this obligation, the law, and indeed, industry best practice, requires you to know your clients thoroughly before recommending financial products. This means that you need to discover any disabilities your clients may have.

Having discovered a client’s disability, you must take appropriate steps to ensure that the disability is not an obstacle to the client understanding your recommendations. Not doing so may be interpreted as exploitation of that disability.

For example, if you discover that your client has difficulties understanding the English language you may need to ask the client to attend the interview with a person who can assist them with understanding your advice. It may also require you to allow the client additional time so they can seek independent validation of your advice.



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Harassment and Coercion You must not use physical force, or undue harassment or coercion, in connection with the:

Supply or possible supply of financial services to a consumer; or

Payment for financial services by a consumer (s.12DJ of the ASIC Act).

It is an offence punishable by heavy fines to engage in harassment and coercion (s.12GB of the ASIC Act).

Restriction on use of certain words You must not use any of the following words or expressions to describe yourself or your activities when providing financial services on behalf of Libertas Financial Planning . These words or expressions are:

Independent

Impartial

Unbiased

See s.923A of the Corporations Act.

The rationale behind the restriction on the use of the above terms is to ensure that there is no misrepresentation regarding the capacity in which you provide financial services or the circumstances in which you recommend financial products to your clients. For instance, as a Representative you do not act independently of Libertas Financial Planning . The financial services you can provide are primarily determined by the terms of the authorisation given to you by Libertas Financial Planning .

The financial products you may recommend to your clients are those that are included on Libertas Financial Planning approved product list. Also when you recommend a financial product, you invariably, will receive commission from the issuers of the financial product. Taking these and other similar matters into consideration, it means that when acting as a Representative, you will not be acting “independently”, “impartially”, or in an “unbiased” way.

The Corporations Act imposes strict conditions for the use of these terms. In your current position as Representative of Libertas Financial Planning , you cannot utilise these terms.

The Corporations Act (s.923B) has also imposed restrictions on the use of certain terms to describe business activities. Libertas Financial Planning licence includes specific authorisation to describe activities when acting on behalf of Libertas Financial Planning .

Insurance Broker

Life Insurance Broker.



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Section 6 Licensee Obligations

INTRODUCTION .......................................................................................................................................... 200

PROVIDE FINANCIAL SERVICES EFFICIENTLY, HONESTLY AND FAIRLY .......................................... 200

MANAGING CONFLICTS OF INTEREST ................................................................................................... 201 Management Commitment ........................................................................................................................... 201 Identifying conflicts of Interest ...................................................................................................................... 201 Assessment and Evaluation of Conflicts ...................................................................................................... 201 Conflict Management ................................................................................................................................... 201 Communication ............................................................................................................................................ 201 Monitoring and Reporting ............................................................................................................................. 201

COMPLY WITH THE CONDITIONS OF THE LICENCE ............................................................................. 203 Conditions imposed by ASIC ........................................................................................................................ 203 Conditions imposed by Regulation ............................................................................................................... 203

LICENSEES AND REPRESENTATIVES TO COMPLY WITH FINANCIAL SERVICES ............................ 203

OBLIGATION TO HAVE ADEQUATE RESOURCES ................................................................................. 203

MAINTAIN COMPETENCE TO PROVIDE FINANCIAL SERVICES........................................................... 204

ENSURING REPRESENTATIVES ARE ADEQUATELY TRAINED ............................................................ 205

DISPUTE RESOLUTION SYSTEM ............................................................................................................. 205 Internal dispute resolution procedures (IDRs) ............................................................................................. 206 Section 2 of AS 4269 – 1995 ........................................................................................................................ 206 External dispute resolution schemes (“EDRs”) ............................................................................................ 207

ADEQUATE RISK MANAGEMENT SYSTEM ............................................................................................. 207 Management Commitment ........................................................................................................................... 207 Establish the Context ................................................................................................................................... 207 Identify Risks ................................................................................................................................................ 207 Evaluate Risks .............................................................................................................................................. 208 Treatment of Risks ....................................................................................................................................... 208 Communicate and Consult ........................................................................................................................... 208 Monitoring and Review ................................................................................................................................. 208

COMPENSATION ARRANGEMENTS ........................................................................................................ 207 Performance Bond ....................................................................................................................................... 207 Professional Indemnity Insurance ................................................................................................................ 207

NOTIFICATIONS AND STATEMENTS TO ASIC ........................................................................................ 207 Breaches of obligations ................................................................................................................................ 207 Authorised Representatives ......................................................................................................................... 207 Direction to provide a statement .................................................................................................................. 208

GIVE ASSISTANCE TO ASIC .......................................................................................................................... 208

CITATION OF LICENCE NUMBER IN DOCUMENTS ................................................................................ 208

RETENTION OF ADVICE DOCUMENTATION ........................................................................................... 208 Financial Services Guide ............................................................................................................................. 208 Personal Advice Records ............................................................................................................................. 208 Statement of Advice ..................................................................................................................................... 209

APPENDICES ................................................................................................................. 210 Refer to Corporate Documents



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Introduction As an Australian Financial Services licensee, Libertas Financial Planning must comply with a number of general obligations under the Corporations Act 2001 and must also comply with its licence conditions. The primary goals of all these obligations and conditions of licences are to promote consumer confidence in using financial services and the provision of efficient, honest and fair financial services by all licensees.

To a very large extent, Libertas Financial Planning Compliance with these obligations and licence conditions determines the nature and content of the day-to-day relationship between you as a Representative and Libertas Financial Planning .

For example, Libertas Financial Planning is required to ensure that you are adequately trained and remain competent to provide financial services on Libertas Financial Planning behalf. It is in compliance with this obligation that Libertas Financial Planning has introduced policies and procedures to ensure that you satisfy industry training and qualifications standards prior to appointment as a Representative.

After your appointment, Libertas Financial Planning procedures and processes are there to ensure that you will receive the appropriate ongoing training in line with the competency standards for the financial services you will be providing.

Also, the systematic monitoring and supervision procedures implemented by Libertas Financial Planning , will ensure that at all times Libertas Financial Planning is in position to detect gaps in your training, competency or simple failures to adhere to procedures and treat those appropriately. This section of the Manual provides a brief overview of the obligations of all licensees and the conditions, which are specific to Libertas Financial Planning under its licence.

Provide financial services efficiently, honestly and fairly All licensees are under a general obligation to do all things necessary to ensure that the financial services covered under their licences are provided efficiently, honestly and fairly: (s.912A(1)(a) of Corporations Act).

This obligation is far reaching in the sense that it affects practically all activities that a licensee will engage in. Licensees are required to do “all things necessary” to comply with this obligation. It is not necessary to read the words “efficiently” fairly” and “unfairly” separately, as each word will influence the meaning of the others.

Nevertheless, a better appreciation of the enormous nature of the obligation is possible if we look at the words separately and try to understand the sort of circumstances in which a licensee will need to take steps to ensure that it complies with the obligation.

Providing financial services “efficiently” means, among other things, providing the services professionally, capably, effectively or with minimum waste of either the licensee’s or client’s financial and other resources.

A licensee’s compliance with the obligation will require the licensee, among other things, to:-

Recruit adequately trained and experienced Representatives who can provide the services on the licensee’s behalf as described above, based on the functions they need to perform;

Undertake ongoing training, monitoring and supervision of Representatives to ensure that they retain the competence to provide, and are providing, the services to clients as required;

Develop and implement procedures and process that will ensure that the services are being provided in accordance with those procedures and processes as well as ensuring that

agreed performance or delivery standards are being met;

Ensure that external service providers meet acceptable and agreed service standards at all times; and

Ensure that there are, at all times, adequate resources, both human and financial, to provide the services efficiently.

Compliance with the obligation to provide financial services honestly also means the services must be provided openly, truthfully or frankly. In practice, the obligation will have implications for the development and implementation by licensees of procedures and processes that will ensure that:

o Remuneration and other benefits of the licensee and its Representatives that may influence recommendations to clients are disclosed fully and in easy to understand terms;

o Representatives are properly identified as acting on behalf of the licensee;

o Financial services are described in easy to understand terms;

o A licensee and its Representatives do not engage in misleading or deceptive conduct in any way;

o A licensee and its Representatives do not act in a fraudulent manner towards clients and potential clients; and



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Client money and other property are respected and treated in accordance with the requirements in the Corporations Act. Compliance with the obligation to provide financial services fairly means doing all things necessary, including the introduction of procedures and processes, to ensure that:

o Clients are not treated discriminatorily and their privacy is not unnecessarily interfered with;

o A licensee and its Representatives do not engage in unconscionable conduct in their treatment of clients in particular.

Even if some functions under the licensee’s financial services business are outsourced, the licensee is still required to observe the obligation to provide financial services efficiently, honestly and fairly in relation to the outsourced functions. (s.796B of Corporations Act).

The licensee is required, to have adequate measures and procedures in place for the engagement of suitable external service providers and the monitoring of the activities of the external service providers on an ongoing basis to ensure that they meet service standards.

Managing Conflicts of Interest A licensee must ensure that adequate arrangements are in place to manage conflicts of interest that arise from the provision of financial services (s.912a (1) (aa)). This obligation is complementary to the requirement to ensure that services are provided honestly, fairly and efficiently, as well as the obligation that financial services laws are complied with by the licensee, and representatives of the licensee.

ASIC Regulatory Guide 181 provides guidelines on implementation of conflicts management arrangements for licensees in order to ensure compliance with s.912a (1) (aa), including the requirement to have a documented conflicts management policy.

Management Commitment In order to be effective, conflict management must be integrated into all aspects of business management and activities, and be formally approved and endorsed by the Board and senior management.

Identifying conflicts of Interest A ‘conflict of interest’ is defined as any circumstances relating to the provision of financial services, where the interests of clients are inconsistent with the interests of the licensee and or representatives of the licensee. Conflicts of interest can include actual, perceived and potential conflicts of interest.

In the context of a financial services business, areas of potential or actual conflict are those areas where the licensee or representatives of the licensee receive any benefits which relate to the provision of a financial service to clients. Examples of areas of conflict may therefore include:

Remuneration of Advisers

Selection of Products on the Approved Product List

Associations between Product Providers and the Licensee/Representative

It is the responsibility of the licensee to determine and implement procedures for identifying the specific conflicts of interest that relate to the business conducted by the licensee.

Assessment and Evaluation of Conflicts Once identified, a licensee must then assess and evaluate the nature of the conflict, and the subsequent action to be taken in order to manage the actual, perceived or potential conflict of interest.

This may include establishing the severity of the conflict, as well comparing the current method or controls for management of conflict against current regulatory and industry standards.

In this context, severity of the conflict can be measured in terms of the impact of the conflict on the ability (and obligation) of the licensee to provide financial services honestly, efficiently and fairly, as well as the extent to which the conflict represents a breach of Corporations Act requirements to ensure relevant disclosure of all benefits and associations.

Where a conflict substantially impacts on either of these obligations, thus resulting in a breach of licence condition, the conflict will be deemed to be ‘significant’ and will be ‘banned’ or removed.

Through conduct of an analysis on identified conflicts, the licensee should be able to determine the following:

The adequacy of existing internal controls for conflict management

The adequacy of existing disclosures of conflicts of interest

Whether certain conflicts of interest could be managed through existing controls (including disclosure), or whether these conflicts needed to be managed through avoidance.



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Conflict Management Dependent on the nature and severity of the conflict, a licensee may decide to manage, disclose or avoid the conflict.

The majority of conflicts of interest that exist within a licensee can be adequately managed through ‘clear, concise and effective’ disclosure. However, where a conflict is such that a client may be adversely affected and/or the conflict impacts on the licensee’s ability to comply with licence conditions under s.912A, including the ability to provide financial services honestly, efficiently and fairly, then this conflict must be managed through avoidance.

In considering the appropriate response to identified conflicts, a licensee should consider a number of factors including:

Does your response to the conflict (i.e. your conflicts management arrangements) ensure that

any personal advice you give is appropriate to the client?

Do your conflicts management arrangements ensure that conflicts do not affect your compliance with your licensee obligations?

Do your conflicts management arrangements ensure that services are provided honestly, efficiently and fairly?

How do you ensure your remuneration and benefit practices do not result in the integrity and quality of the services you provide being significantly compromised? Where a licensee manages conflicts internally through disclosure or other measures, procedures and structural arrangements must be implemented within the business in order to facilitate these practices.

Communication Conflicts management measures should be formally communicated to staff and representatives through documentation of conflict management policy guidelines within Compliance Manuals, and through formal training on implementation of the policy.

Communication to clients should also be made through open publication of adherence to industry standards within client documentation such as the Financial Services Guide.

Monitoring and Reporting Once conflicts management procedures are implemented within a licensee’s business, a monitoring and supervision program should also be implemented in order to identify instances of non-compliance with conflicts management arrangements. Monitoring and Reporting mechanisms should be sufficient to cover:

A review of disclosure provided where both general and personal advice is given to retail or Wholesale clients

A review of the appropriateness of advice

A review of all disclosure documentation including standard disclaimers, FSG and SOA’s.

Commercial arrangements between the licensee and product providers

Soft dollar arrangements between the licensee/representative and product providers, and between the licensee and representative any instances of non-compliance identified should be formally recorded via the Breach Register, and reported to the Board for review and actioning.

Conflicts management arrangements should also be reviewed and updated on a regular basis to ensure that they remain appropriate for the licensee.

This should be the responsibility of Compliance or Senior Management within the organization. It is also recommended that arrangements are periodically reviewed via an external third party (e.g. an auditor) to ensure the efficacy of arrangements on an ongoing basis.

Comply with the conditions of the Licence A licensee must comply with the conditions imposed on the licence. “Conditions”, in this respect, are different to general obligations.

ASIC may impose conditions on a licence when it grants the licence. It may also impose conditions after it has granted the licence. Conditions imposed by ASIC may be revoked or varied by ASIC in certain circumstances. Regulations may also impose conditions, which ASIC cannot revoke or vary.

Conditions imposed by ASIC Specific conditions have been imposed on Libertas Financial Planning licence. For information on specific conditions, or a full copy of the licence, contact Professional Standards.



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Conditions imposed by Regulation The compulsory conditions imposed by Regulation 7.6.04, as amended, are:

A licensee must report to ASIC any material adverse changes in the financial position of the licensee

A licensee must report to ASIC any change in any matter about the licensee that is entered in a Register of Financial Services Licensees

A licensee must report to ASIC any change in a matter about the licensee’s Authorised Representatives that is entered in a Register of Authorised Representatives of Financial Services Licensees

A licensee must maintain a record of the training (relevant to the provision of financial services) that each of its Representatives has undertaken before and after becoming a Representative

A licensee must make reasonable enquiries to establish a Representative’s identity; and “Authorised Representative number” (if one has already been allocated by ASIC) before appointing the Authorised Representative

If ASIC has allocated a number to an Authorised Representative, the licensee must state that number any time it lodges a document with ASIC that refers to the Authorised Representative

A licensee must provide a copy of an authorisation of any of its Authorised Representatives on request by any person free of charge in no more than 10 business days after the day on which it received the request

A licensee must take reasonable steps to ensure that each of its Authorised Representatives supplies a copy of its authorisation on request by any person free of charge in no more than 10 Business days after the day on which it received the request.

A licensee must lodge with ASIC any change in the control of the licensee no later than 10 business days after the change

A licensee must make available a copy of its licence to any person upon request within a reasonable time for inspection by that person.

Licensees and Representatives to comply with financial services laws All licensees must comply with financial services laws and must take reasonable steps to ensure that their representatives comply with them. This obligation has been discussed sufficiently in section 1 of this Manual and reference should be made to that discussion for a more comprehensive understanding of the obligation.

Obligation to have adequate resources The obligation of all licensees to have adequate resources to provide the financial services covered by their licences is perhaps the most important obligation in the Corporations Act 2001. The obligation overlaps all other obligations and conditions. Before a licensee can discharge all other obligations, it must have adequate resources to enable it to fulfill the other obligations.

Having adequate resources will demonstrate to ASIC that a licensee is able to provide financial services efficiently, honestly and fairly, not only at the time of applying for the AFS licence, but also in the future.

ASIC will rely on this information to form a view as to whether the licensee will be able to meet most, if not all of its other obligations under the law. “Adequate resources” encompasses both financial and non-financial perspective. This is the approach taken by ASIC Regulatory Guide 164 – Licensing: Organisational Capacities, and RG 166 – Licensing: Financial Requirements.

To be in a position to meet this obligation, a licensee must determine, on an ongoing basis, the measures, processes and procedures it needs to have in place to ensure it satisfies its obligations, taking into consideration the nature, scale and complexity of its business. At the minimum, ASIC expects a licensee to:-

Establish and maintain documented compliance measures, processes and procedures that ensure that the licensee and its Representatives comply with financial services laws;

Implement documented measures for monitoring and reporting on its compliance processes and procedures so that these can be monitored and any compliance breaches can be reported and treated;

Comply with industry standards and practice;

Have adequate human (including competent “responsible officers” or “key persons”) and

technological resources to provide the services covered by the licence;

Establish and maintain adequately documented risk management systems (such as the Australian and New Zealand Standard on Risk Management) to identify the risks faced by the business and have measures in place to keep to keep the risks to an acceptable minimum; and



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Have adequate financial resources to introduce and implement the above requirements (see ASIC RG 166 – Licensing: Financial Requirements).

In determining whether a licensee’s compliance measures, processes and procedures are adequate, ASIC will have regard to the Australian Standard on Compliance Programs (AS 3806-1998).

So far, where financial resources are concerned, licensees must meet the following base (or minimum) level requirements:-

At all times to be solvent, i.e. to be able to pay all debts as and when they become due and payable;

Having assets that exceed liabilities (as shown in the annual balance sheet lodged with ASIC) and at all times have no reason to suspect that assets would no longer exceed liabilities on a current balance sheet;

Complying at all times with the cash needs requirements of ASIC

Meeting the audit requirements under s 989B (3) and s.912C of Corporations Act.

Maintain competence to provide financial services Licensees must maintain the competence to provide the financial services covered by their licence. Like most obligations, this is a continuing obligation. After a licensee has convinced ASIC during the licence application process that it possesses the competence to provide the financial services efficiently, honestly and fairly, it must continue to satisfy ASIC that it has maintained that competence throughout the life of the licence.

Other obligations come into play to assist the licensee to comply with this obligation. For instance, resources must continue to be adequate at all levels in order for the competency demonstrated when applying for the licence to be maintained.

The risk management system demonstrated by the licensee during the licence application process and implemented thereafter must remain effective in identifying and treating the risks, including, for example, the risk that financial resources will not be adequate to ensure that the licensee continues to provide the financial services efficiently, honestly and fairly.

To ensure that standards do not fall below a certain level, licensees have been reporting obligations under s.912D of Corporations Act and Regulation 7.6.04, as amended. Among others, licensees must report to ASIC:

“As soon as practicable” and in any event not later than three (3) days, if the licensee becomes aware that it can no longer meet, or has breached, any of its general obligations under s.912A (general obligations) or s.912B (compensation requirements);

Any change in any matter about the licensee that is entered in a Register of Financial Services Licensees within ten (10) business days; and

Any change in the control of the licensee no later than ten (10) business days after the change.

It can be seen from the above that satisfying ASIC during the application process that a licensee possesses the adequate resources to be able to perform the financial services efficiently, honestly and fairly, is only the beginning of a licensee’s obligations under the Corporations Act. At this stage, ASIC will use that information to decide whether they have no reason to believe that the applicant will not comply with its obligations and conditions of the licence.

After the licence has been granted, ASIC will use its surveillance powers to ensure that the resources relied on to obtain the licence are maintained by the licensee. ASIC can also rely on the outcome of the reporting obligations of licensees to ensure the resources are being maintained.

Ensuring Representatives are adequately trained The obligation to ensure that representatives are adequately trained must also be seen as going to the heart of the general obligation that financial services covered by the licence must be provided efficiently, honestly and fairly. The term “Representatives” is all embracing. It means:-

Directors and employees of a licensee.

Directors and employees of any related body corporate of the licensee.

Persons and bodies corporate that are not directors or employees of the licensee or any of its related bodies corporate, but who are “authorised” by the licensee to provide the services covered under the licensee’s licence on the licensee’s behalf (“Authorised Representatives”).

A body corporate that is an Authorised Representative may in turn authorise other individual persons (“Sub-authorised Representatives). These are also Representatives of the licensee.

Any person or body corporate acting on behalf of the licensee.



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The obligation to ensure that Representatives are adequately trained is a continuing one. A licensee must not only ensure that it appoints adequately trained and experienced Representatives, it must also ensure that after appointment, it trains, monitors and supervises them on a continuing basis.

This way, a licensee is able to ensure that financial services will be and are being provided at least efficiently. Because of the requirement that a licensee must provide financial services “honestly”, and “fairly” a licensee’s training obligation is expected to deal with also any conduct of Representatives that may bring about antisocial or criminal consequences.

Accordingly, adequate training must target the prevention, among others, of dishonest and misleading conduct, unconscionable conduct, discrimination and unnecessary interference with clients’ privacy and fraud on the part of Representatives.

ASIC RG 146 – Training of Financial Product Advisers deals specifically with the knowledge, skills and integrity requirements that apply to the providers of financial product advice to retail clients. The Regulatory Guide requires adequate prior and ongoing training of financial product advisers at various levels.

Additional obligations a licensee must comply with, is the maintenance of a register of training records in respect of its Representatives. A licensee is required to notify ASIC about any training undertaken by a Representative before and after becoming a Representative (Regulation 7.6.04, as amended).

Dispute resolution system All licensees who will be providing financial services to persons as retail clients are required under s.912A (2) of Corporations Act to have a complying dispute resolution system. For the definition “retail client” see section 3 of this Manual.

A complying dispute resolution system must consist of:

An internal dispute resolution procedure (“IDR”) approved by ASIC in accordance with regulations made for this purpose; and

Membership in one or more external dispute resolutions schemes (“EDR”) approved by ASIC in accordance with regulations made for this purpose and which covers or cover complaints made against licensees by their retail clients. An external dispute resolution system of this sort will have no jurisdiction over complaints that may be dealt with by the Superannuation Complaints Tribunal established by s.6 of the Superannuation (Resolution of Complaints) Act 1993.Regulation 7.6.02 prescribes the matters which ASIC must take into consideration in determining whether to make or approve standards relating to IDRs and EDRs. ASIC is required to take into consideration the requirements and standards prescribed in the Australian Standard on Complaints Handling (“AS 4269 – 1995”). Also, ASIC may vary or revoke a standard or requirement that it has approved or made in relation to an IDR.

ASIC Regulatory Guide 165 – Licensing Internal and External Dispute Resolution (“RG 165”) deals with ASIC’s approach to the interpretation and implementation of the dispute resolution obligation of licensees.

Internal dispute resolution procedures (IDR’s) A licensee’s IDR must contain effective procedures for resolving client complaints. ASIC states in RG 165 that wherever possible, a licensee must endeavour to resolve client complaints through the licensee’s IDR, as it is better for all parties that a complaint be dealt with at the earliest possible stage.

According to RG 165, a complying IDR must meet the following requirements: Satisfy the essential elements in section 2 of AS 4269 – 1995; Have appropriately documented procedures; and Have a system for informing complainants about the availability and accessibility of the relevant EDR

procedures.

Section 2 of AS 4269 – 1995 Section 2 requires an effective IDR to reflect the following features:

Commitment of the licensee to the procedures;

Fairness to complainants;

Allocation of sufficient resources to the procedures;

Visibility or transparency of the procedures;

Accessibility of the procedures to complainants (including giving free of charge access);

Assistance to complainants in using the procedures;

Response times for dealing with complaints;

Record keeping (including keeping details about complaints and identifying systemic issues);



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Accountability (including reports to senior management and ASIC); and

Review of procedures on periodic basis.

Apart from the requirements in section 2 of AS 4269 – 1995, ASIC considers in RG 165 that an IDR must satisfy additional criteria.

Documentation of procedures

Documentation is necessary to make the IDR procedures as transparent and accessible as possible and to assist with the training and awareness of Representatives. Documentation must cover procedures relating to the:

Receiving of complaints

Investigating of complaints

Responding to complaints within appropriate time limits

Referring of unresolved complaints to an EDR scheme

Recording of information about complaints

Identifying and recording of systemic issues

Types of remedies available to clients

Internal structures and reporting lines for complaint handling.

External dispute resolution schemes (“EDR’s”) External dispute resolution schemes (“EDR’s”) must be approved by ASIC in accordance with Regulation 7.6.02. ASIC is required by the Regulation to take the following matters into account in determining the approval of a scheme:

Accessibility;

Independence;

Fairness;

Accountability;

Efficiency;

Effectiveness; and

Other matter ASIC considers is relevant.

ASIC may approve a scheme for a specified period, subject to any condition or conditions and may vary or revoke an approval. ASIC has indicated in RG 165 that it will continue to apply Regulatory Guide 139 – Approval of External Complaints Resolution Schemes introduced under the old Corporations Act. Libertas Financial Planning is a member of the Financial Industry Complaints Service Limited (FICS), which has been approved by ASIC as a complying EDR.

Adequate risk management system Licensees are required to ensure that they have adequate risk management systems in place (s.912A (1) (h) of Corporations Act). Risk Management systems implemented by licensees must comply with the provision of the standard (AS/NZS 4360-1999).

The framework for a Risk Management Plan should be as follows:

Establish the Context

Identify Risks Communicate and Consult

Analyse Risks Monitor and Review

Evaluate Risks

Treat Risks

Management Commitment For a Risk Management Plan to be effective, management must be committed to the implementation and ongoing operation of the plan. The first step in the Risk Management Process is therefore obtaining the commitment of management. This will ensure that risks are effectively managed, and that risk management procedures are integrated within business operations.

Establish the Context Licensees should consider both the broader (macro) economic and regulatory context in which they are basing their analysis, as well as the micro context of the business and its strategic direction when conducting



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the analysis, as this will provide both the framework for the scope of the risk management project, as well as provide meaning to the risks identified (in terms of relevance to external factors).

Identify Risks A licensee should consider which risks are most pertinent for their business (in light of the context established), in terms of their likelihood and their level and area of impact within the business. Consideration should be given to the cause and effect of each risk on the business.

Evaluate Risks Identified Risks should then be evaluated in terms of whether the risk will be treated, maintained or avoided and, if treated, the level of control that will be applied to manage the risk, including the amount of monitoring required on an ongoing basis.

Treatment of Risks Appropriate strategy or treatment plans should be implemented by the licensee to manage identified risks. These Treatment Plans should be documented as part of the licensees’ overall compliance and risk management program and should clearly identify monitoring and reporting mechanisms in place.

Communicate and Consult A Risk Management Policy detailing the licensees approach to Risk Management, the process of analysis, as well as monitoring and reporting structure should be documented and communicated to relevant individuals within the organisation.

This will ensure that all representatives are cognisant of the risks of the business, as well as the policies and procedures in place to minimise those risks to ensure continued business operations.

Monitoring and Review The Risk Management Plan is to be monitored and reviewed on an ongoing basis to ensure that the treatment plans continue to be effective in minimising risks, and to ensure that any new risks (as they arise) are being monitored and treated appropriately.

Compensation arrangements A licensee is required under s.912B of Corporations Act to have arrangements for compensating retail clients for loss or damage suffered as a result of the provision of financial services by the Licensee and its Representatives. The compensation arrangements required are to maintain adequate professional indemnity insurance and the lodgment of a Performance/Security Bond with ASIC.

Performance Bond A licensee must ensure that adequate compensation measures are implemented within the business. A Licensee must lodge and maintain a Performance Bond of $20,000 with (ASIC).

Professional Indemnity Insurance Adequate Professional Indemnity Insurance must be maintained by the Licensee on behalf of its Representatives.

The Professional Indemnity Insurance policy must be reviewed and renewed at least on an annual basis to ensure that it is adequate and covers all activities under the licence on an ongoing basis.

The Professional Indemnity Insurance is only valid for those activities conducted by Representatives within the scope of their authorisation and agreement with the Licensee.

Notifications and statements to ASIC All licensees are under an obligation to notify or provide statements to ASIC about certain matters including the following.

Breaches of obligations Under s.912D (1) of Corporations Act, all licensees have the obligation to notify ASIC, as soon as practicable, and in any case within three (3) days, after a licensee becomes aware that it can no longer meet, or has breached, any of the obligations discussed so far.

Failure to comply with this obligation is an offence under the Act.

Authorised Representatives Under s.616F of Corporations Act, a licensee who has “authorised” a Representative to provide financial services, must, within 10 business days after such an authorisation, lodge with ASIC a notice containing the following particulars:

The name and business address of the Representative;



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Details of the authorisation, including the date on which it was made and what the Representative is authorised to do on behalf of the relevant licensee;

Details of all other financial services licensees on behalf of whom the Representative is an Authorised Representative (if applicable). Also, a licensee who has authorised a Representative must lodge a written notice with ASIC within 10 business days if:-

There is a change in any details relating to the Representative that are required to be included in any of the particulars above; or

The licensee revokes the authorisation of a Representative.

Failure to comply with this obligation is an offence.

Direction to provide a statement Under s.912C of Corporations Act, a licensee must provide ASIC a written statement containing information about:-

The financial services provided by the licensee or its Representatives; or

The financial services business carried on by the licensee if ASIC gives a written notice to the licensee to provide a statement. Failure to comply with this obligation is an offence.

Give assistance to ASIC A licensee and its Representatives must give ASIC or any person authorised by ASIC, such assistance as ASIC or the person reasonably requests in relation to any ASIC surveillance checks to determine whether the licensee or its Representatives are complying with their obligations under financial services laws (s 912E).

Also, such assistance must be given upon any reasonable request in relation to the performance of ASIC’s other functions. Assistance in this context may include showing ASIC the licensee’s books or giving ASIC other information.

It is an offence to fail to comply with this obligation.

Citation of Licence Number in documents A licensee is under an obligation to cite their licence numbers in any document used by the licensee in connection with providing financial services covered under the licensee’s AFS licence or any document used in connection with the licence (s 912F). It is an offence not to comply with this.

Retention of Advice Documentation Where a licensee provides financial product advice to retail clients, the licensee must ensure that copies (whether in hard copy or electronic format) of certain advice documentation, including Financial Services Guides and Statements of Advice, must be maintained for at least 7 years

Financial Services Guide A record of each FSG, (including any supplementary FSG) given by or on behalf of the licensee, or by any authorised representative of the licensee while acting in that capacity must be maintained for a period commencing on the date of the FSG and continuing on for at least 7 years from when the document was last provided to a retail client.

Records required to be maintained by representatives includes the date (date version) of every FSG or supplementary FSG given to a client, and the date that the document was given to the client. These records must be maintained for at least 7 years.

The licensee must also establish and maintain measures that ensure, as far as is reasonably practicable, that it and its representatives comply with their obligation to give clients an FSG as and when required under the Act. The licensee must keep records about how these measures are implemented and monitored.

Personal Advice Records A record of the following matters relating to the provision of personal advice to a retail client (other than personal advice for which an SOA is not required or for which a record of the advice is kept in accordance with section 946B (3A)) must be maintained for a period of at least 7 years from the date that the personal advice was provided:

(i) The client’s relevant personal circumstances within the meaning of section 961

(ii) The inquiries made in relation to those personal circumstances within the meaning of section 961

a. the consideration and investigation conducted in relation to the subject matter of the advice within the meaning of section 961



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b. the advice, including reasons why advice was considered to be ‘appropriate’ within the meaning of section 961

Statement of Advice Any SOA provided by or on behalf of the licensee, or by any authorised representative of the licensee while acting in that capacity must be maintained for a period of at least 7 years from the date the document was provided to the client.



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Appendices Refer to Corporate Documents

Appendix 1 Libertas Financial Planning AFS Licence

Appendix 2 Financial Services Guide

General Advice Disclaimer (Public forum, standard)

Limited Advice Warning

Fact Find

Review Fact Find

Appendix 3 No call-no contact register

Breach Report Record

Alternative Remuneration Register