Big Money Investments Ltd (Big Money) is a new Australian Financial Services Licensee (AFSL), ASIC having just issued to them a licence.

Paul Jones (Paul) and Ivy Smith (Ivy) are the Responsible Managers.

Paul and Fred McDonald, an employee of Big Money, will both provide personal financial product advice under this licence. Services will be provided to retail clients only.

Ivy will be in charge of the business operations.

The AFSL has authorisations to provide financial product advice and deal in a financial product in relation to the following financial products:

Basic deposit

Securities

Managed investments

Superannuation

Margin Lending

Paul and Ivy have determined that they will charge clients an hourly rate of $330 (GST inclusive) for any advice provided, in addition to a 1% fee on any funds under advice that they manage.

Ivy has also established a referral arrangement with a nearby accounting practice Nimble Numbers Pty Ltd (Numbers).The arrangement includes the payment to Numbers of 15% of any revenue earned by Big Money from that client in the first year.

A friend of Fred's - Keith Flinstone (Keith) has asked Fred to provide him with advice in relation to some life insurance coverage, retirement planning, now that he is just a few years away from retiring, and the selection of a suitable fund/s for him to invest $15,000 for each of his grandchildren as a reward for completing their university studies.

Big Money's legal counsel have advised them, now that they hold an AFSL that they have obligations in relation to anti-money laundering.

Paul and Ivy have a few queries about the new arrangements and what their obligations are, they have asked you to advise them on the following matters:

a)As responsible managers what are they specifically responsible for and do they have any ongoing requirements that they need to meet? (4 marks)

What is the role of Paul and Ivy?

What is this role responsible for?

Outline requirements under s912A but in particular those around organizational competency.

b)In relation to their employee Fred, what type of supervision and monitoring processes should they consider? (4 marks)

What is Fred's role?

Outline what the obligations are in relation to s912A e.g. comply with financial services law.

Provide examples of how they can meet these obligations: e.g. file audits, due diligence upon appointment, training plans, checklists etc - explain how these would work - don't just list them.

c)Paul knows that because they are providing advice to retail clients that he needs to provide them with a Financial Services Guide.Advise Paul on the content requirements and when the guide needs to be distributed.Ensure you note any specific information from the facts provided above that may impact on the content of Big Money's guide. (6 marks)

Outline what a FSG is and its purpose.

Cover when it is required to be provided and any exceptions

Cover content and specifically link this to the example e.g. types of authorisations, charging methodology, referral arrangements

d)Paul and Fred want you to provide them with an overview of the advisory process including any duties that they must meet and how they can demonstrate that they have met these (provide practical examples).Ensure that your response takes into consideration the facts noted above. (12 marks)

Detail what the personal advisory process is.

FSG, SOA/ROA, PDS, Implementation

Cover the purpose of the various documents (if you have covered information in an earlier question - you can refer to it).

Cover best interest duties in full, including the safe harbour provisions

e)Outline to Paul and Ivy what if any responsibilities Big Money has in relation to anti-money laundering. (4 marks)

Note their requirements as an Item 54 provider - type of AML program they require.If question is around id checks - note the type of entity andwhat types of checks need to be done.