FPC001B Economic and Legal Context for Financial Planning

Section B (30 marks) Question 1 Regulatory requirements (30 marks | Word limit: 1,500 words)

LO5: Explore the main sources of law and the regulatory structure of financial services law in Australia.
LO6: Explain the various obligations imposed on participants by financial services legislation.
Bettina and Gordon are both senior traders at a major stockbroking firm, Avalanche Stockbroking. Bettina has worked in Australian equities for 10 years and Gordon has 15 years’ experience in international equities. Bettina has a commerce degree, whereas Gordon demonstrated an aptitude for finance at a young age and was first employed by Avalanche in a junior position after high school. Bettina and Gordon have maintained their skills in their specific areas through internal and external seminars as well as training throughout their careers.
Bettina and Gordon decided to leave Avalanche in October 2020 and set up their own boutique asset management business, Winsome Financial (Winsome), providing full service broking of Australian and international equities.
Explain the following to Bettina and Gordon:
(a) What authorisations is Winsome likely to need in its Australian financial services licence (AFSL) and why? (5 marks)
(b) (i) What training and competencies will Winsome need to demonstrate collectively in order to obtain an AFSL? (5 marks)
(ii) Is Winsome likely to have the expertise and experience required to obtain an AFSL? If you do not have sufficient information to advise them, what additional information do you need to make a decision? (4 marks)
(c) Assuming Winsome decides to expand their market to include retail clients before 31 December 2020, what will Winsome be required to do? (5 marks)
(d) Outline three significant disclosure obligations that Winsome will have to meet as part of its disclosure regime once it provides services to a retail clientele. (6 marks)
(e) If Winsome fails to meet its disclosure obligations to its new clients, what are two possible outcomes ASIC might seek against Winsome? Refer to relevant legislative provisions in your answer. (5 marks)