The Regulatory Framework Learning Outcomes

FSC522/AS1
Ver: A1.2
1
Assessment
FSC522 The Regulatory
Framework
Learning Outcomes
This assessment assesses the following learning outcomes:
• LO2: Apply legal obligations in a financial advice situation.
Instructions
• Submit all your answers in one document.
• Write the number of each part of the question you are answering.
• Create a header with your name, student number and assessment number,
and number your pages.
• You must make a reasonable attempt to complete your assessment before
you submit.
Submission
• Submit your work through your iQualify course. Emailed assessments will
not be accepted.
• You will receive an automated notice following submission.
• By submitting, you confirm that the work presented is your own original
work.
Referencing and Plagiarism
Refer to Referencing and plagiarism for information on APA referencing and avoiding
plagiarism.
© The Open Polytechnic of New Zealand Ltd 22
Task Instructions:
• Read the case study provided in the separate document Appendix 1 Aotearoa
Mortgages and respond to the tasks below.
• Complete all tasks.
• Accurate citation is important; note how we have cited sections (including sub
sections of legislation throughout Modules 1 and 2).
Task 1: Applying Regulatory Acts
a. Regulated financial advice
Do Nikau and Mia give regulated financial advice in this situation? Give reasons for
your answer.
You are required to:

i.	Explain whether Nikau gives financial advice and regulated financial advice in this situation? Explain whether Mia gives financial advice and regulated financial advice in this situation? Cite and explain the relevant section(s), including sub-section(s), of the Financial Markets Conduct Act 2013 that support your view.
ii.
iii.

(150 words)
b. Disclosure
In the case study, Nikau works through a client interview and provides disclosure at
two different stages (Transcript 1 and Transcript 3).
I. Transcript 1: What information will Nikau disclose at this stage?
You are required to:
• Identify and explain four pieces of information Nikau’s disclosure
statement will include about him and Aotearoa Mortgages Limited, to
meet obligations under the Financial Markets Conduct Regulations
2014.

•	Ensure you use relevant information from the case study when explaining the information Nikau will disclose.
II.	Transcript 3: What information will Nikau disclose at this stage? You are required to:

© The Open Polytechnic of New Zealand Ltd 33
• Identify and explain three pieces of information Nikau’s disclosure
statement will include about him and Aotearoa Mortgages Limited, to
meet obligations under the Financial Markets Conduct Regulations
2014.
• Ensure you use relevant information from the case study when
explaining the information Nikau will disclose.
[300 words]
c. Privacy Act
From each of the following categories, select two information privacy principles
(IPPs) that are complied with in the case study:

I.
II.
III.

Collecting personal information
Holding and accessing personal information
Using and sharing of personal information

For each IPP provide one example from the case study to show how Nikau complies
with that IPP. Clearly identify which IPP relates to each example.
(200 words)
d. Duties
For each of the following duties, provide one example from the case study to show
how Nikau complies with that duty:
• 431J
• 431K
• 431L
(75 words)
e. AML/ CFT Act
In Transcript 2, Mia carries out customer due diligence (CDD on Ari). You are
required to:
I. Summarise the differences between the three levels of CDD and determine
which level applies in this situation. Cite the section of the Act that applies to
your response.
© The Open Polytechnic of New Zealand Ltd 44
II. Cite the section of the AML/CFT Act that covers the identity requirements for
the level of CDD you identified in i. Explain which identity requirements apply
in this situation.
III. Cite the section of the AML/CFT Act that covers the verification of identity
requirements for the level of CDD you identified in i. Explain which verification
of identify requirements apply in this situation.
IV. Verification of identify requirements:
• Name the document that provides suggested best practice for verifying
customer name and date of birth in this situation.
• Explain whether Mia complies with best practice for verifying customer
name and date of birth in this situation.
• Assuming Ari does not have any other primary photographic identification,
recommend an alternative combination of identification requirements Mia
could have requested to comply with best practice requirements in this
situation.
V. Enforcement:
• Explain four possible sanctions that may apply to Aotearoa Mortgages for a
breach of AML/CFT Act requirements.
• Name the supervising entity responsible for monitoring and enforcing
Aotearoa Mortgages compliance with the AML/CFT Act.
(300 words)
f. Fair Trading Act
In the email from Ari to Nikau: Issue 1. What argument could Ari make that Aotearoa
Mortgages has breached the Fair-Trading Act?
You are required to:
i. Cite the section of the Fair-Trading Act that could have been breached.
ii. Explain why this section could have been breached.
(50 words)
g. Consumer Guarantees Act (CGA)
Email from Ari to Nikau: Issue 2. What argument could Ari make that Aotearoa
Mortgages has breached the Consumer Guarantees Act?
© The Open Polytechnic of New Zealand Ltd 55
You are required to:

i.	Cite the two sections of the Consumer Guarantees Act that could have been breached. Explain why these two sections could have been breached.
ii.

(100 words)
Task 2: Licensing
After many years of experience giving financial advice under Aotearoa Mortgages,
Nikau has decided to set up a financial adviser business with a small group of other
existing advisers. They will operate as financial advisers engaged by the new
financial adviser business. The business will be called Tohutohu Mokete Limited
(TML).
There will be no Nominated Representatives in the business.
TML will recruit additional new-to-industry advisers once the new business becomes
operational.
You are required to:
a. For TML:

I.	Identity the six steps in the pathway to become operational and outline the key requirement(s) at each step. Identify the financial advice service license class required and outline what this class of license will permit TML to do. Once operational, explain four consequences for TML breaching its licensed obligations.
II.
III.

b. For the new-to-industry financial advisers that will be working for TML in the
future:

I.	Identity the three steps in the pathway each must take to become operational and outline the key requirement(s) at each step. Once operational, explain the five consequences for one of these financial advisers if they breach a FMCA duty.
II.

c. For complaints:
One of the standard conditions imposed on TML will be that they must have
an internal process for resolving client complaints.

I.
II.

Identify at least five key elements of an effective complaints process.
For each element, give one example of a policy or process that
supports that element.

Task	Competent
Task 1: Applying Regulatory Acts
a: Regulated financial advice	To be competent for this task you must  Recognise whether Nikau gives financial advice and regulated financial advice in this situation.  Recognise whether Mia gives financial advice and regulated financial advice in this situation  Accurately cite the relevant sections and subsections of the Financial Market Conduct Act 2013
b: Disclosure	To be competent for this task you must: Correctly identify and explain four pieces of information to be disclosed during transcript 1  Correctly identify and explain three pieces of information to be disclosed during transcript 3  Use relevant information from the case study
c: Privacy Act	To be competent for this task you must: Correctly identify two IPPs from each of the listed categories  Provide one relevant example of compliance from the case study for each IPP identified.
d: Duties	To be competent for this task you must  Explain one relevant example from the case study for each of the following duties: 431J 431K 431L
e. AML-CFT	To be competent for this task you must:

 Accurately summarise the differences between the three levels of CDD, correctly determine which level applies in this situation and cite the relevant section of the Act.  Accurately explain which identity requirements apply in this situation and cite the relevant section of the AML/CFT Act  Accurately explain which verification of identify requirements apply in this situation and cite the relevant section of the AML/CFT Act.  Correctly name the document that provides suggested best practice for verifying customer name and date of birth in this situation.  Accurately explain whether Mia complies with best practice for verifying customer name and date of birth in this situation.  Correctly identify an alternative combination of identification requirements Mia could have requested to comply with best practice requirements in this situation.  Accurately explain four possible sanctions that may apply to Aotearoa Mortgages for a breach of AML/CFT Act requirements.  Correctly name the supervising entity responsible for monitoring and enforcing Aotearoa Mortgages compliance with the AML/CFT Act.
f. Fair Trading Act	To be competent for this task you must:  Accurately cite the correct section of FTA  Accurately explain why this section could have been breached.
g. Consumer Guarantees Act	To be competent for this task you must:  Accurately cite the correct sections of CGA

 Accurately explain why this section could have been breached.
Task 2: Licensing
a. TML	To be competent for this task you must: Correctly identify the six steps to become operational Accurately outline the key requirements at each step Correctly identify the class of license required Accurately outline what the class of license permits TML to do  Accurately explain four consequences for breaching licensed obligations.
b. New-to-industry financial advisers	To be competent for this task you must: Correctly identify the three steps to become operational Accurately outline the key requirements at each step. Accurately explain five consequences for breaching a FMCA duty.
c. Complaints	To be competent for this task you must: Correctly identify five key elements of an effective complaints process. Accurately describe one relevant policy or process for each element.