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Revision Questions Your Planning, a wholly owned subsidiary of UNO bank (an ADI and AFSL holder) deploys financial planners for providing financial advice at UNO's

Revision Questions

Your Planning, a wholly owned subsidiary of UNO bank (an ADI and AFSL holder) deploys financial planners for providing financial advice at UNO's main branches in metro areas. Ms. Anne who is approaching her retirement from ABC Pvt Ltd as a receptionist and earning $90,000 per annum, visits UNO's metro branch in Melbourne to close her existing housing loan. Ms. Jane works in the UNO branch as a financial planner and the branch's teller refers customers with sufficient account balance/steady income to her. The teller refers Ms.Anne to Ms. Jane and she had a quick chat with Ms. Anne, collecting her details on financial situation and needs. Ms. Jane provides the following advices the next day:

Not to close the housing loan and to draw the available equity for investing in shares.

Cancelling the existing "Your Income" income protection and applying for a new "Your Income" policy with higher premium that Ms. Jane can qualify for a marketing campaign and earning substantial commissions.

Cancelling the existing life insurance policies (with total and permanent disability coverage) from NorthBank and to replace them with "Ypac Insurance" for a higher premium without total and permanent disability coverage.

Switching her superannuation allocation to risky investments.

Following an unprecedented global pandemic, the share prices dropped resulting in Ms. Anne losing her superannuation savings (due to the risky allocation of funds) and investments in shares. Ms. Anne lost the superannuation savings, share investments and end up with an unpaid housing loan. Advice Ms. Anne on her consumer protection rightswith regard to financial products under Chapter.7 of Corporations Act, 2001(Cth).

(15 marks)

Bpac Banking Corporation (Bpac) engaged in a financial services business which included the provision of advice to individuals about financial products, including insurance and superannuation products. In furtherance to the advice given by Mr. Jolly, as a representative of Bpac, Mr. & Mrs Raigon altered his existing superannuation or insurance arrangements and acquired interests in or took out superannuation or insurance products or policies with companies or entities associated with Bpac. Both Bpac or its associated companies and, indirectly, Mr Jolly earned not insubstantial fees and commissions from the implementation of Mr Jolly's recommendations. Unfortunately, for Mr. Raigon, it was subsequently discovered that the recommendations that Mr Jolly made, and the circumstances in which he made them, were deficient and defective, both as a matter of process and in substance. Further details on the conduct is provided below:

  • Bpac conduct internal compliance audits diligently and it is noted that several advises provided by Mr. Jolly during his tenure from 2004-2010 are non-compliant with the regulations/applications remain incomplete without client details, financial situation and objectives. Despite the revelations in audits, Mr. Jolly has been provided a performance appraisal rating of "high achievement".
  • At the time Mrs. Raigon met Mr Jolly, Mrs R was 46 years old and worked as a shopkeeper. Her proposed retirement age was 65. Her annual salary was approximately $30,000. She held relatively small amounts in three superannuation funds: AXA Tailored Super roll over ($13,000); BT Business Super 1 fund ($8,000) and BT Business Super 2 fund ($4,000). She had coverage and paid premiums under three life insurance policies: $420,000 term life coverage under Bpac Term Life with annual premiums of $700; $145,000 term life coverage and $145,000 total and permanent disability coverage under BT Super Term Life with annual premiums of $515; and $16,200 life coverage and $16,200 total and permanent disability under BT Business Super Term Life with annual premiums of $68.
  • Mr Raigon was 42 years old and worked as a plant operator. His proposed retirement age was 65. His annual salary was approximately $150,000. He had superannuation funds of $165,000 in a BT Portfolio SuperWrap superannuation fund and had the benefit of term life coverage of $463,000 under BT Term Life with annual premiums of $900.
  • The advice that Mr Jolly gave to Mr and Mrs R included three recommendations.

- The first recommendation was that Mrs R consolidate her superannuation by rolling over the funds in her existing accounts into a Bpac Foundation Portfolio SuperWrap superannuation fund, whereby Bpac earned implementation fees, product fees and other charges.

-The second recommendation was that Mrs R cancel her existing life insurance policies and take out, within the new superannuation fund, term life cover of $750,000 under a BT Term Life Protection Plan whereby Mr. Jolly earned an initial commission of $4300 and $400 per annum as ongoing commissions.

- The third recommendation was that Mr R take out income protection insurance, with a monthly benefit of $9,380 and a five-year benefit period, under a Bpac income protection plan to be held within his existing superannuation account.

Analyse Mr. Jolly's conduct and decide if he breached any provisions of law. Advice Mr & Mrs. R on their legal remedies

(15 marks)

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