FOFA Update

1. FOFA Update Pas Bueti

2. Agenda • This is a Question and Answer session, aimed at providing the latest information on: • FDS • Best Interests Duty • Conflicted Remunerations View > Header and Footer to update Tagline

3. The elephant in the room • Removal of the opt in legislation • Fee Disclosure Statements not to apply retrospectively • FDS statements can be more general rather than specific • Step 7 of BID to be removed • Risk commissions allowable in super where advice is given • Ban on risk commissions in super only to apply to automatic cover arrangements View > Header and Footer to update Tagline

4. Fee disclosure statements • Where we are now? • What do we need to do from here? View > Header and Footer to update Tagline

5. Best interests duty • The tools you should be using to embed BID in your businesses • BID Checklist • BID Working Papers • BID QAF • BID Guide to what’s changed View > Header and Footer to update Tagline

6. FOFA update Benchmarking • Your licensee is obligated to ensure the APSL is constructed in an appropriate manner for your licensee’s client base and has been benchmarked. This will be provided to you shortly. • You can rely on the benchmarked APSL and there is no need to go off it (even where you know or suspect there may be a cheaper or more suitable off APSL product) provided that: • You understand the benchmarking process • You understand the features of the products on the APSL (know your product) • You make a genuine assessment of the APSL product in light of your client’s needs • The client does not have an existing product not on APSL • APSL not limited to a single class of products (not the case for AMP licensees) • The client hasn’t specifically requested you look at a product not on the APSL Obligations on review • Best interests duty applies • Scope driven by contractual relationship between you and your client • If scope is not clear, reset with your client’s consent • Duty of care still applies

7. FOFA update Alternative products and strategies • The need to consider alternative strategies is based on the complexity of the strategies and products under consideration: • Non-complex strategies / products • Superannuation rollover and consolidation • Insurance recommendations • Retirement income streams • Complex strategies / products • Gearing strategies • SMSFs • North guarantee options • Structured products / derivatives • Existing product viable but strategy is complex • Existing product not viable and strategy is complex Scoping • Driven by what you agree with your client • Risks associated with proximate or adjacent areas to be considered

8. FOFA update Better position statement • There is no requirement to consolidate this into one paragraph • The SoA / RoA needs to clearly articulate why the client is in a better position, taking into account the client’s goals, but this need not be in a single place. Recording client instructions • There is no requirement to record this in the client’s own words • The instruction should state the client’s goal, not the strategy to get to the goal • Fact find, file notes and the SoA must tell the story, linking the recommended strategy to the client’s goals Fee disclosure statement data • We had some data issues. Impact was either contract data completely missingor immaterial misstatement (eg RITC errors) • The one remaining known issue was resolved over the weekend • If you identify a data concern please report it with the specific details

9. Best interests duty – a summary of the additional requirements and where to find more information

10. BID – Whats next? • Case Studies • Guidance on Ongoing Reviews • Revised QAF and FAQ’s • Resource centre on Portal • Upcoming PD Days View > Header and Footer to update Tagline