31855 Assessment 

Introduction

This assessment contains the information you need to determine competency for Core Knowledge for:

Unit Standard 31855 – Demonstrate and apply knowledge of financial services legislation, good conduct, professionalism, and the Six-Step Process.

This document contains:

• Assessment Guidance
• Assessment Tasks 1-6
• Student Declaration Form
• Assessment Decision and Schedule For

Assessment Guidance

The Assessment Process

To achieve the unit standard, you must complete and return to Professional IQ the following documents:

• Assessment answers for all questions or tasks
• Student declaration form completed and signed

The assessment is competency based and focuses on the application of learning in your future role as a financial advisor. The study guide provided for this unit standard contains the information necessary to develop your knowledge and understanding of the Core Knowledge module.

The qualified assessor will use their professional judgement and subject-matter expertise to evaluate your assessment ensuring that it is:

• Valid: Meets the outcomes and evidence requirements of the unit standard being assessed
• Fair: A fair representation of what you can do/and or know against the outcomes of the unit standard
• Authentic: It must be your own work and must not be copied from any course materials or other sources
• Sufficient: Answers must be full and complete enough for the assessor to judge competency
• Consistent: Answers are consistent with the assessor guidelines and national consistency requirements.

The evidence you submit must comply with any policies and procedures of your organisation, codes of practice of relevant professional bodies or any relevant legislative and regulatory requirements.

Students with Specific Needs

If you have specific learning needs, you should have informed Professional IQ of these at the time of enrolment. This enables the Academic Manager to discuss with you what appropriate support is required to complete your study and assessments.

The Assessor Role

The assessor will consider all written evidence provided by you and decide if it is competent or not yet competent.

The assessor may require you to provide more evidence on one or more questions or tasks, if in their judgement they feel the answer is insufficient or incorrect.

Where there is not enough evidence to make a decision on competency, your assessor will send you a Further Evidence Required request (FER) which means you will need to supply further information. They may contact you to have a professional conversation or to clarify a point in your answer.

The assessor will complete the Assessment Decision Form, including any feedback and return the result to you within 10 working days of receipt.

Please retain a copy of your assessment and assessment result.

The Appeals Process

An explanation of the appeals process can be found in the Student Handbook located on Professional IQ under Student Resources.

If you disagree with an assessment decision, please follow the guide and complete an Assessment Appeal Form and send it to Student Support at Professional IQ. An independent assessor will be asked to investigate the appeal.

Resources

A copy of the unit standard can be downloaded from NZQA.

It is important you fully understand the outcomes and evidence requirements of the unit standard including any special notes, references and definitions applicable. The study guide is your main resource for this assessment.

You should read the study guide for this unit standard (as part of your course work) to enable you to answer the tasks listed in this assessment document.

References

This list is provided as a guide for students who are seeking further sources of information on this module:

• Code of Banking Practice
• Code of Professional Conduct for Financial Advice Services;
• Consumer Guarantees Act 1993;
• Fair Trading Act 1986;
• Financial Advisers Act 2008 (repealed);
• Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020
• Financial Markets Conduct Act 2013;
• Financial Service Providers (Registration and Dispute Resolution) Act 2008;
• Financial Services Legislation Amendment Act 2019;
• ISO 22222:2005 Personal Financial Planning – Requirements for personal financial planners, available from ISO;
• Privacy Act 2020;
• Trustee Act 1956;

and all subsequent amendments and replacements.

Student Declaration Form

Complete and attach to your assessment answers before submitting for assessment

The Tasks you submit for assessment must be your own work and cannot be completed by another person.  Initial each item on the list below to show you have read and understood the requirements of the assessment and that the submitted work is your own work, then sign the declaration.

‘Your own work’ means it cannot be copied from course materials or other text. Your answers must be in your own words.

Assessment Tasks

Answer all the following questions in the blue shaded cells and save your assessment document with a new name with the unit standard number, your name and the date e.g. 31855 John Smith 17 August.

Task 1 (US 31855 PC 1.1)

In this task, you are required to demonstrate your understanding of the background to the current regulatory environment for financial services in New Zealand.

In approximately 500 words in the Answer Box below, describe the background that has led to the New Zealand regulatory environment. In your answer, you will need to include reference to at least:

• one local agency
• one international agency
• one local event
• one international event.

The current regulatory environment includes the following legislation:

• Financial Advisers Act 2008*
• Financial Advisers (Disclosure) Regulations 2010
• Financial Markets Authority Act 2011
• Financial Markets Conduct Act 2013
• Financial Service Providers (Registration and Dispute Resolution) Act 2008
• Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

* While the Financial Advisers Act has been replaced by the Financial Services legislation Amendment Act, the Act still remains relevant as a consequence of the events leading to the overhaul of the financial services regulatory framework.

Task 2 (US 31855 PC 1.2)

In approximately 100 words, explain the hierarchy of the financial services framework. Your answer needs to include:

• legislation
• regulations
• principles of professionalism
• good conduct.

Task 3 (US 31855 PC 2.1, 2.2, 2.3 and 2.4)

In this task you are required to demonstrate your knowledge of the applicability and impact of New Zealand financial services legislation relevant to the daily operation of financial services providers, financial advisers and nominated representatives.

Please complete your answers in the Answer Box below. Each response should have 2-3 examples or bullet points. You need to provide sufficient information to demonstrate the impact of the legislation and what you do or could do to demonstrate complying with your obligations.

Task 4 (US 31855 PC 3.1)

PLEASE READ THE GUIDANCE NOTES IN THE BOX BELOW BEFORE ANSWERING THIS TASK

The purpose of this assessment task is to demonstrate how you apply best practice and professionalism when providing services to clients.

Read the scenario below and then:

1. Comment on each of the 8 ethical considerations in (a)-(h) below (e.g. explain the ethical consideration) and explain where you believe this adviser has met or not met the ethical obligation. You will need to reference relevant Code Standards and legislation/regulations in your answer.
2. Describe the good and ethical practice you would apply if you were giving advice to this client.
   a. Adopting best practice processes
   b. Maintaining confidentiality
   c. Meeting duty of care
   d. Adopting non-discriminatory practices
   e. Making full disclosure of remuneration and fees and other conflicts of interest that may influence any recommendation where required
   f. Acting in good faith
   g. Remaining within your field of competence
   h. Managing client information to meet appropriate standards.

Your answers to both questions must be divided into 8 parts (ethical considerations) using the Answer Box below with approximately 200 words for each ethical consideration.

Guidance Notes

The scenario outlined in this task is complex. You need to demonstrate that you have a high degree of understanding of one of the most important tasks described in the Core Knowledge module. Acting ethically and maintaining good conduct underpins every action you, as a financial adviser, will undertake every day.

Before starting this task, students are strongly advised as follows:

1. Ensure that you have a thorough understanding of the study guide covering Financial Services Best Practices and Professionalism, which gives direction on what should be covered in each of the 8 ethical considerations in (a)-(h) above.
2. Have open the Code of Professional Conduct for Financial Advice Services for reference while answering these questions.
3. We suggest you make notes of where the financial adviser has and has not complied with the code standards before starting to answer the questions.
4. You must identify the code standard(s) breached in each part of your answer e.g. code standards 1, 2 & 3, or code standard 5. Do not use a “scatter gun” approach but think carefully about the code standards you select.
5. In question 2, ensure that you describe the good and ethical practice you would apply under each of the 8 ethical considerations in (a)-(h) above, if you were giving advice to this client.

Scenario

You are a Financial Adviser, giving advice under another entity’s license. You sell personal (life and health) and general insurances. You are studying the investment strand but have not yet completed all of the requirements. It is your intention to add KiwiSaver investments to your list of products and services in six months once you have completed all your assessments and can demonstrate meeting your obligations under Code Standards 6-8.

Huia and Joey are referred to you by an accountant. You have a good relationship with the accountant and have received many very good referrals from him in the past. Joey works for the accountant as a manager. In the first meeting, Huia and Joey explain that they would like to discuss a comprehensive financial plan including saving, debt repayment, personal insurance, general insurance and KiwiSaver. They own a home with a mortgage and 2 cars. They have two young children. They want to make sure they have all the protection they need for the future.

Huia and Joey meet up with you in your office. All your work in progress files are on your desk. You hurriedly put them into a drawer, as you don’t want them to see any other client information. Your computer screen is not locked, as you thought you had a recent data breach, and were checking your malware at the time Huia and Joey came into the office.

You complete the correct disclosures and data collection procedures for Huia and Joey and explain your fees in general, saying you receive commissions. You tell them that you are currently qualified to advise them on personal and fire and general insurances only.

You mention that you mostly sell ABC product for personal insurances and XYZ product for fire and general because they both have excellent claims payout and very good financial strength ratings. You say that, even though you prefer those insurers, you are able to look at a wide range of insurances and so, you are really an independent adviser. 

During the discussion, Joey mentions he has had mild depression but has never seen any specialists nor been on medication. He says he just gets unhappy sometimes and takes the odd day off work to de-stress.

While doing your analysis later, you find that your preferred product suppliers are very good on price, a key consideration for Huia and Joey, and excellent in terms of policy wordings. The only issue you have is that the personal insurance company has strong exclusions for mental health. You want to get a better idea on how bad the depression is, so you ring the accountant and talk about how many days Joey has had off and how this has affected his work. He states that it is fine; he works very hard and so deserves flexibility at times when he feels overwhelmed. You decide to recommend your preferred product suppliers in your Statement of Advice.

You meet again with Huia and Joey. The presentation goes well and they accept all your recommendations. They sign up all of the documentation. When Joey asks about the ‘depression thing’, you ask them if it is recorded on their doctor’s records. They say no, so you say: ‘don’t worry about it’.

When completing the forms for the fire and general insurance, you note that they don’t have an alarm system or any garaging for the cars right now but Huia and Joey say they intend to put up a double garage and install alarms in the next 12 months. So you tell them to put down that they have both the garage and an alarm system as long as they promise to do it as soon as they can.

Everything goes through the insurers OK. The personal insurer accepts the personal insurance applications as ‘clean skin’ risks. The fire and general insurance applications are accepted as ‘good’ risks.

You receive your commission from both companies and a free trip to Fiji for hitting your sales targets with one of the providers.

After 6 months Joey calls and says they are very happy and can you please now talk to them about KiwiSaver. You have started but have not completed the investment strand of the qualification, but you say ‘yes’ and help them implement a KiwiSaver scheme investment. You think that as you are going to complete the strand in 2-3 months anyway it will be fine.

Task 5 (US 31855 PC 3.2)

In the Answer Box below, identify at least two methods for providing information to clients.

AND

Describe what type of information could appropriately be provided to clients using each method.

AND

Reference the following considerations in your answer:

• Client’s cultural background
• Client’s level of financial understanding
• Nature and scope of advice to be provided.

Task 6 (US 31855 PC 4.1 and 4.2)

In this task you are required to demonstrate your understanding of the six-step process by:

• Describing the activities that would usually take place within each step
• Why each activity is important; and
• The contribution each activity makes to providing fit-for-purpose client solutions.

Please complete this task in the Answer Box below.

31855 Outcomes

31855 Unit standard title: Demonstrate and apply knowledge of financial services good conduct, professionalism, and recognised advice process

Outcome 1: Demonstrate knowledge of the background to the financial services regulatory environment and its framework.

1.1 Describe the background to the existence of the regulatory environment for financial services in New Zealand.

Range: Includes the influence of both local and international events and agencies.

1.2 Contrast the authority of provisions of legislation, regulations, principles of professionalism, and good conduct in relation to the hierarchy of laws.

Outcome 2: Demonstrate and apply knowledge of legislation and regulations and their impact in general financial services context.

2.1 Explain provisions of legislation and regulations that impact the daily operations of financial services providers.

2.2 Apply provisions of legislation and regulations that impact the daily operations of financial services providers.

2.3 Describe compliance requirements of relevant legislation and regulations and apply the provisions in a general financial services context.

2.4 Evaluate legislation and regulations common to financial services in terms of consequences of non-compliance.

Range: Consequences may be both formal and informal.

Outcome 3: Apply good conduct and the principles of professionalism in a general financial services context.

3.1 Apply good conduct and principles of professionalism when providing services to clients.

Range: May include but is not limited to – adopting best practice processes, maintaining confidentiality, meeting duty of care, adopting non-discriminatory practices, making full disclosure of remuneration/fees and other conflicts of interest that may influence any recommendation where required, acting in good faith, remaining within one’s field of competence, managing client information to meet appropriate standards.

3.2 Present financial advice that is suitable for the client, in a format appropriate for the audience and the nature of the information.

Range: Appropriate formats may include but are not limited to considerations relating to – client’s cultural background, client’s level of financial understanding, nature and scope of advice to be provided.

Outcome 4: Demonstrate knowledge of the financial advice Six Step Process.

4.1 Describe the activities that take place in each step of the Six Step Process.

4.2 Explain the importance and contribution of each step in providing fit-for-purpose client solutions.