University : Deakin University UniLearnO is not sponsored or endorsed by this college or university.
Subject Code : MLC714
Country : Australia
Assignment Task:

 

Learning Outcome Details

Unit Learning Outcome (ULO)

ULO 1: Interpret and apply Chapter 7 of the Corporations Act, and elements of other relevant acts, to financial services scenarios and identify providers’ obligations and breaches of those obligations.
ULO 2: Describe and critically analyse the role of regulators and evaluate possible enforcement actions
ULO 3: Justify actions in relation to the obligations of financial professionals under Chapter 7 of the Corporations Act, and other relevant acts and regulations

Graduate Learning Outcome (GLO)
GLO1: Discipline-specific knowledge and capabilities
GLO2: Critical thinking

Questions One:
Paul is a financial adviser and an authorized representative of Planforit Financial Solution (A financial services licensee). Paul met with John and Marsha to review their life insurance policy, which currently sets a death benefit of $300,000. Paul advised John and Marsha that they require an additional coverage of $100,000. Without asking them about their current financial position, Paul recommended that the client obtain a new policy for $400,000 and then cancel the existing policy, rather than apply for additional cover within the existing policy. The terms of the life insurance policies and the annual premiums are the same. The advice entitles Paul
to a commission of 60% of the annual premium of the whole insured amount (i.e. $400,000), rather than just the increased amount (i.e. $100,000). Although John and Marsha did not provide Paul with complete information about their financial situation, they followed Paul’s advice. As a result, they needed to have medical checks, which cost them $600 each.
a. Do you think Paul satisfied his best interest duties? Compare his actions against best interest provisions in the Corporation Act 2001 and in any other applicable regulations or cases and justify you answer by using relevant legal authorities.
b. Do you think ss 961K, 961Q and s961M can be applied in this situation? Justify your answer by using relevant legal authorities.
c. Do you think a civil penalty can be imposed on Planforit Financial Solution in accordance with withs 961L? Explain your answer and refer to relevant legal authorities.
d. Analyze s 961B(2), and list and explain what provisions did Paul comply with and which ones he did not comply with?

Questions Two:
The final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended 76 recommendations. Recommendation 2.3 says “In three years’ time, there should be a review by Government in consultation with ASIC of the effectiveness of measures that have been implemented by the
Government, regulators and financial services entities to improve the quality of financial advice. The review should preferably be completed by 30 June 2022, but no later than 31 December 2022. Among other things, that review should consider whether it is necessary to retain the ‘safe harbour’ provision in section 961B(2) of the Corporations Act. Unless there is a clear justification for retaining that provision, it should be repealed.” The government agreed to the recommendation

Question Three: 
The commission has reservations about the "tick-a-box" approach which the existing Safe Harbour provision (s 961B(2)) promotes. Some practitioners argue that safe harbour provision is in line with the broad best interest duty that advisers owe their clients. Critique and legally analyze whether or not repealing s 961B(B) will improve the quality of advice provided by financial advisors?
 

 

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