Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
T1 GK Superannuation
Tier 1 Generic Knowledge Superannuation (Australia)
| Question | Answer |
|---|---|
| The four key financial markets are debt, equity, foreign exchange and...? | Derivatives market |
| The four key financial markets are debt, equity, derivatives and...? | Foreign exchange market |
| The short-term debt market is often referred to as the...? | Money market |
| Money market securities typically have a term to maturity of less than...? | 1 year |
| Short-term debt securities include NCDs, bank accepted/endorsed bills, short-term commonwealth government securities (issued through the RBA) and...? | Treasury notes |
| The long-term debt market is also referred to as the...? | ‘Fixed interest’ or ‘bond’ market |
| Fixed interest securities or bonds typically have a term to maturity of more than...? | 1 year |
| Long-term debt securities include Treasury bonds, semi-government bonds and...? | Corporate bonds |
| Long-term debt securities include Treasury bonds, semi-government bonds and...? | Corporate bonds |
| A system of producing, distributing and consuming goods and services can be called...? | An economy |
| What are the four phases of the business cycle? | Boom/peak Contraction Recession Recovery/upswing |
| Name four common economic indicators | Interest rates Economic growth Unemployment rate Inflation rate |
| What are the three ways the ABS calculates gross domestic product (GDP)? | Expenditure approach; production approach; income approach |
| Which regulator works to promote confident and informed participation by investors and consumers in the financial system? | ASIC |
| Which regulator works to maintain, facilitate and improve the performance of the financial system and entities in it? | ASIC |
| Who does ASIC regulate? | Financial planners Investment and deposit-taking institutions Stockmarkets Managed investments Companies Company auditors and liquidators |
| Who supervises trading on Australia’s domestic licensed equity, derivatives and futures markets? | ASIC |
| Who ensures that licensees meet the standards – including their responsibilities to consumers – that are set out in the National Consumer Credit Protection Act 2009? | ASIC |
| What three broad category of powers does ASIC have that allow it to effectively regulate the activities under it's purview? | Power to enforce; power to register and licence; power to make regulations (including banning defective products) |
| Name four classes of financial products/services for which an AFS licence can be issued | Superannuation Life insurance General insurance Shares |
| What register does ASIC use to identify authorised representatives of AFS holders? | Financial advisers register (FAR) |
| Can an authorised representative authorise a person to act as their representative? | No, an authorised representative can only appoint another person as an authorised representative of the licensee (provided the licensee consents) |
| Can a company be an authorised representative of an AFS licensee? | Yes, though the employees of the company also need to be directly authorised by the licensee |
| Do employees of the licensee need to be specifically authorised? | No, given they are directly managed and supervised by their employer |
| What document sets out the minimum training and competency standards required of any licensee or represntative of a licensee who providers financial product advice to retail clients? | RG146 |
| What are the underlying principles of RG 146? | Set out minimum training standards for financial product advisers Ensure consumers are protected and receive advice from those who have the required knowledge and skills to provide it Assist licensees to comply with legislation and adviser licensing |
| Who must meet the training standards in RG 146? | All natural persons who give financial product advice to retail clients, unless they fall within certain limited exceptions |
| Who is exempt from the requirements of RG 146? | Certain persons whose activities are of a limited nature and because someone who does comply with the training standards plays a material role in the provision of financial product advice to retail clients by these persons (e.g, paraplanners) |
| What are the licensee's obligations in relation to the implementation of RG 146? | Licensees are responsible for ensuring that their advisers (and they themselves, if they are natural persons) meet training standards, and provide licensed financial services efficiently, honestly and fairly. Ensure those not qualified do not give advice |
| What three types of generic knowledge must providers of financial advice possess? | Knowledge on the economic environment, operation of financial markets and financial products |
| What are the five activities that require an AFS licence to provide financial services? | Provide advice about a financial product Deal in a financial product Make a market for a financial product Operate a registered MIS Provide custodial or depository services |
| A financial product is a facility through which a person carries out one of more of what three tasks? | Makes a financial investment Manages a financial risk Makes a non-cash payment |
| Is a cryptocurrency (e.g. Bitcoin) considered a financial product for the purposes of the Corporations Act? | Most probably, as it can be used to make a non-cash payment, which is one of the three tasks performed through facilities under the definition of financial product |
| Home and contents insurance, motor vehicle insurance and business insurance are examples of a _______ insurance contract? | General insurance contract |
| Futures, forwards, swaps and options are examples of...? | Derivative contracts (or simply "derivatives") |
| A retirement savings account is...? | A form of superannuation fund offered by an ADI |
| Is private health insurance a financial product? | No, as it does not directly mitigate a financial risk |
| Are facilities such as personal loans, mortgages or credit cards financial products? | No, they are credit products and are regulated under the consumer credit provisions |
| A statement that is intended to influence a person(s) in making a decision about a particular financial products(s) is defined as...? | Advice |
| Can an adviser unintentionally provide advice? | Yes, if the statement(s) could reasonably be regarded as being intended to have such an influence ("if it looks like advice, it is advice") |
| What must an adviser do when giving general advice? | Issue a warning that the advice is not personal advice, and does not take into account the client's objectives, financial situation or needs |
| Given that there are concerns most clients do not understand the distinction between personal and general advice, it has been proposed to change the term 'general advice' to...? | 'Product sales information' |
| Is class of product advice personal or general advice? | It can be both, and refers to when an adviser is giving financial product advice about a group of products of similar type, rather than a particular product in that category (e.g. shares rather than Woodside) |
| Personal advice which addresses only some of the client's objectives or needs is called...? | Scaled advice |
| Telling a client the term and interest rate on a term deposit is classed as advice or information? | Information, as it is an irrefutable statement of fact. |
| Does the provision of financial product information, or execution-only services, require an AFS licence? | No, as neither activity involves giving advice to retail clients |
| Is an electronic newsletter sent to a client data base personal advice? | No, this is general advice, as the newsletter does not consider the specific needs of each recipient |
| If a planner explains the difference in investing in the stockmarket versus real estate, is this information, personal advice or general advice? | General advice, as it provides opinions about the characteristics of both product classes but does not account for the client's personal circumstances |
| A letter comparing recent changes in investment rates between major banks | General advice |
| What is the cooling-off period for group life cover taken out by superannuation funds? | There is no cooling-off period for group life cover taken out by superannuation funds, or for replacement policies. |
| What are the four fundamental doctrines under the Insurance Contracts Act 1984 (Cth)? | Utmost good faith Cooling off period Duty of disclosure Relevant misstatement |
| If a relevant material misstatement is made and a claim arises within ___________ of the issuing of a policy, the insurer is entitled to reduce the benefit to that which would have applied had the full facts been known. | Three years |
| When effecting a new insurance contract, the insured has a ______ day cooling-off period in which they have the absolute right to cancel the contract. | 14 day |
| Financial advisers are called ‘item 54 providers’ in the context of the anti-money laundering regulatory framework. Item 54 providers are required to: | Identify the client and agents of the client Assess the risk of the client Report any suspicious matters Train staff on AML/CTF obligations Review the AML/CTF program periodically |
| Under the Australian Privacy Principles, do religious affilitations meet the definition of sensitive information? | Yes, religious affilitations meet the definition of sensitive information |
| A small business with a turnover of less than $__ million is generally exempt from the provisions of the Privacy Act? | Turnover of less than $3m |
| Is a small financial planning practice with a turnover of less than $3 million exempt from the provisions of the Privacy Act? | No, as this exemption does not apply to AML/CTF Act reporting entities (which includes financial planners) and a credit reporting entity |
| A mortgage broker sources the most suitable loan for a client. They must hold an...? | Australian credit licence (ACL) and comply with the requirements of the National Consumer Credit Protection Act 2009 (Cth) |
| Is a stockbroker a financial product adviser? | Yes, and must hold an AFS licence and comply with the requirements of the Corporations Act |
| Do real estate agents require an AFS license? | No, as real estate is not a financial product |
| True or false: solicitors can give advice in the areas of mortgage lending and estate planning without holding an AFS license | False, since 11 March 2004 solicitors must hold an AFS license or be an authorised representative of a licensee in order to give financial product advice |
| Providers of personal insurance such as life, disability, trauma and income protection insurance are referred to as...? | Life insurers |
| True or false: anyone providing advice on reverse mortgages or equity release products must hold an AFS licence | False, they must hold an Australian Credit License (ACL) |
| Who are the four key groups that comprise the financial system? | Individuals Households Businesses Governments |
| What are the 5 key roles that actors in the financial sytem play at different times, often acting through financial intermediaries? | Spender Saver Borrower Investor Lender |
| The three primary functions of a financial system are: | Enable exchange without barter Transfer funds between borrowers and savers Assists investors to balance risk, liquidity and returns |
| The main three factors that influence the level of consumer spending are: | Level of household income Cost of consumer goods and services Attractiveness of alternatives |
| What is an example of compulsory insurance? | Compulsory third party (CTP) motor vehicle insurance |
| The five types of categories of household financial needs are: | Transaction or spending Borrowing or credit Insurance Saving Investment |
| Households can maintain a less volatile consumption pattern by: | Saving when funds are available, and borrowing when funds are short |
| The three types of insurance cover are: | Personal insurance cover (e.g. life insurance, income protection) General insurance cover (e.g. car insurance, house insurance), or Commercial insurances (e.g. product liability insurance) |
| Medium-term insurance is where the contract has a fixed term, normally... | 1 year, and is renewed if the risk continues |
| A term deposit guarantees the interest rate received so long as... | The deposit is not withdrawn before the maturity date |
| Long-term savings usually focuses on accumulating funds for retirement and largely addresses two main issues: | How much capital will be required to fund retirement What savings rate is required now and in the future to reach the level of capital required to fund retirement |
| A rough rule of thumb for the required level of retirement savings is to multipy your annual living costs (ACL) by... | 25 (the reciprocal of 4%, which is regarded as s sustainable level of annual withdrawals for an average length retirement. |
| In these notes investing is differentiated from saving how? | Investing is expected to earn a higher return than saving in a deposit account, in particular because the capital value of an investment is expected to grow, along with income being earned |
| By investing, the investor hopes that the return they receive will compensate them for: | Forgoing consumption now The impact of inflation Taking the risk that the investment may not be profitable |
| Asset classes are broadly divided into five groups: | 1. cash 2. fixed interest 3. property 4. equities (i.e. shares) 5. alternatives (e.g. commodities) |
| Products available to meet the needs of short-term investors and/or are: | Deposit accounts Cash management trusts Term deposits Short term government/semi-government securities Corporate securities (debentures and short-term notes) |
| Insurance bonds and friendly society bond are life insurance policies backed by investments that offer tax benefits if held for: | 10 years |
| How does an accumulation index differ from a price index? | The accumulation index includes the value of reinvested dividends over time |
| The Reserve Bank aims to meet what three objectives through its banking and monetary policies? | Maintain the stability of Australia’s currency Maintain full or very high employment Ensure the economic prosperity of the Australian people |
| Banks do four things to mitigate their risk of collapse: | Put depositors interests ahead of shareholders Spread risk of loan defaults across depositors and shareholders Pool and utilise depositors’ funds Are supervised by APRA |
| Deeming accounts provide recipients of government pensions with...? | The same interest rate as the government social security deeming rates |
| What type of account allows deposited funds to be held against a client’s home loan for the purpose of calculating loan interest? | An offset account |
| True or false: APRA supervises all superannuation funds | False, self-managed superannuation funds (SMSFs) are regulate by the Australian Tax Office |
| The Australian financial system includes a range of non-bank financial institutions such as: | Building societies Credit unions Investment banks Finance companies Superannuation funds Fund managers Stockbrokers Mortgage lenders |
| Provide credit for retail sales, personal loans, finance for housing, wholesale financing, lease financing and other commercial loans. Most loans to consumers are for the purchase of consumer durables over relatively short terms. We are... | Finance companies |
| Involved mainly in the provision of mortgage finance for owner-occupied housing. Due to economies of services and networks, there has been a trend towards converting to bank status. We are: | Building societies |
| Cooperative organisations owned by their members and run on a non-profit basis. Lending to members is for more general purposes. Membership was traditionally limited to those with some common bond. We are: | Credit unions |
| Insurance companies are required to hold policyholder funds in...? | Statutory funds |
| What are statutory funds with regard to insurance companies? | Statutory funds are similar to trust funds, with separate and distinct assets held to provide benefits to the policyholders in the particular funds |
| As per the notes what is the difference between lending/borrowintg activities and investment activities? | Lending/borrowing relate to the provision of debt finance, while investing refers to financing via the equity market |
| An investment’s class can depend on whether it is primarily... | Income-producing or held for capital growth |
| The net return to an investor for income received or capital returns will depend on the: | Income earned by the investment Capital gain or loss on the investment Costs (e.g. fees) associated with the investment Marginal tax rate The extent to which the income is tax effective Ability to offset any losses against realised capital gains |
| The major asset classes are: | Cash Fixed interest Shares Property |
| Each asset class has different characteristics including: | Flexibility Volatility Risk Return Products Cost Tax effectiveness |
| What are some of the various kinds of fixed interest products? | Bonds Debentures Mortgages Certificates of deposit Fixed interest funds |
| Rate the tax effectiveness of fixed interest securities. | Low/limited tax effectiveness: income is included in assessable income and there are no tax credits available |
| Property and shares are regarded as "eqiuty" products - why? | Because they are no-one's liability (as distinct from cash and fixed interest securities) |
| Rate the tax effectiveness of equity securities | Australian shares may offer franking credits, and gains on shares held longer than 12 months are subject to the CGT discount |
| Rank the four major asset classes in terms of risk and return (highest is riskiest): | 1. Equity 2. Property 3. Fixed Interest 4. Cash |
| The putative "risk-free asset" in Australia is: | The 90-day Commonwealth government treasury bill |
| Name some types of "alternative" assets: | Infrastructure Commodities Agribusiness Hedge funds Private equity Venture capital Collectibles Film |
| Infrastructure can be defined as: | Investments made in substantial capital assets required to fulfil major economic and social needs |
| Typical mortgages are offered at ____% of the value of the property | 80-90% |
| The LVR is simply calculated as the: | Value of the loan over the total value of the property |
| If a homeowner purchases a $500,000 house with a $200,000 loan, they then have $300,000 in equity, or an LVR of: | 40% |
| Mortgage repayments are usually calculated over... | The life of the loan |
| The main characteristics that distinguish individual mortgages are: | Interest rate Term Repayment type (interest only or principal and interest) Fixed or variable Allowed timing of interest payments |
| What are the key advantages of placing any additional funds a mortgagee may receive into an offset or redraw account? | It reduces the principal value of the loan on which interest is being calculated; that interest benefit is also tax free as it is inside a residential mortgage |
| How does an offset account differ from a redraw facility? | An offset account is totally separate from the home loan, and is not subject to any minimum contributions or withdrawls. An offset account is usually ATM-accessible, whereas a redraw normally needs money to be transferred to another account |
| What is the typical interest rate on an offset account? | 0%, as instead of earning interest the amount in the offset account is used to reduce interest calculated on the mortgage |
| Operating a line of credit account as a home loan facility requires discipline because... | There is no minimum repayment and there is no schedule of repayments provided with the loan |
| One tax benefit of a line of credit account is... | If all the borrowers income is being credited to the account there is no assessable income accruing on any of their savings |
| Cash and fixed-interest investments are generally regarded to be low-risk investments where the capital invested is relatively secure. They return regular and predictable income but... | Do not combat the effects of inflation |
| The main categories of pure risk are: | Property risk Personal risk Liability risk |
| Is general insurance usually considered part of a financial planner’s advice? | No, but financial planners should ensure clients have their insurances in order, as the risk of loss from adverse events can be equally as severe as from financial investments |
| True or false; general insurance includes products such as term life insurance, trauma, total and permanent disability insurance or income protection insurance | False, these are examples of life insurance products |
| Types of general insurance that clients would consider include: | Motor vehicle Home and contents Liability Business and commerial Travel Health |
| The general insurance industry in Australia consists of companies that can be categorised as: | Domestic insurers Composite insurers Corporate insurers Niche insurers |
| Composite insurers typically offer: | Both domestic and corporate insurance, and typically operate through intermediaries (to whom they pay a commission) for commercial or corporate business |
| Some examples of composite insurers in the Australian market are: | Allianz, IAG, GIO and QBE |
| Motor vehicle insurance may attract a commission of... | 7.5% of the base premium |
| The placement of domestic home insurance may attract a commission of up to... | 20% of the base premium |
| Insurers who largely confine their activities to providing insurance to large organisation are called | Corporate insurers |
| Corporate insurers typically compensate the intermediaries they use to place insurance in which two ways? | Payment of a commission to the intermediary, or charging the client a fee which is paid to the intermediary |
| Niche insurers are often also known as... | Underwriting agencies |
| What does an underwriting agency do? | Places certain hard-to-place risks, typically with multiple insurers |
| The contract that binds the syndicate of insurers convened by an underwriting agency is typically known as a... | "Binder" |
| Logans offers which type of insurance only? | Livestock insurance |
| A general insurance contract is usually referred to as a | Policy |
| A general insurance policy includes what three points? | Conditions Exclusions Schedule (insured's name and details of what is covered) |
| A general insurance policy may state the following conditions: | Insured must notify loss immediately & provide full details in 30 days Insured must take steps to prevent further loss Theft must be notified to the police Fault not admitted without permission Damaged property made available for inspection |
| There are two main types of general insurance policies: | Indemnity value policy Replacement value policy |
| Indemnity policies take into account: | The age and condition of the item being insured |
| A replacement value policy entitles the insured to have... | The damaged property replaced with new property equal in value. |
| True or false: an insurer must compensate in money for lost or damaged property | False, under a replacement value policy the insurer may compensate by replacing property "in kind" (i.e. replacing the item rather than paying the monetary value) |
| Replacement value policies can also provide the insured with some cover for ancillary costs following a loss. These can include: | Alternative accommodation Removal of debris Architects and engineering fees for reconstruction |
| Are premiums typically higher under an indemnity or a replacement value policy? | Replacement value, as there is more uncertainty about the ultimate cost to the insurer in the event of a claim |
| If the insured is deemed to be retaining or self-insuring the risk for the underinsurance this is often called: | Co-insurance |
| If the sum insured is less than __% of the value of the property insured, the co-insurance provisions apply | 80% |
| How would the co-insurance clause operate in the case of a partial loss? | The ratio of the insured amount to 80% of the total value of the property will be applied to the value of the partial loss |
| "Standard cover" is described in what legislation? | Insurance Contracts Act 1984 (Cth) |
| True or false, insurers offering domestic insurance must offer standard cover as described in the Insurance Contracts Act 1984 (Cth)? | False, insurers may vary the offering so long as they draw prominent attention to how their coverage differs from standard cover. Many insurers do this to differentiate themselves from their competitors |
| Domestic homeowners’ policies usually cover? | Buildings Contents Valuables Liability to third parties |
| Are carpets typically covered under building insurance policies? | No |
| Name three typical exclusions under domestic building insurance: | Properties left unoccupied for 60 days Landscaping and gardens Any property used for commercial or business purposes |
| On 14 June 2012, the Insurance Contracts Amendment Regulation 2012 (No. 1) was registered to... | Standardise the definition of ‘flood’ in general insurance contracts. |
| What are some additional items that should be considered when taking out a building insurance contract? | Cost of removal of debris Accommodation Rent recovery Legal liability from ownership or occupation of the premises |
| Some typical exclusions from contents policies are: | Software, records or other data stored on a computer Animals Plants Landscaping |
| True or false; carpets and curtains are generally insurable under a building policy as they are affixed to the property | False, items that may appear to be ‘fixed’ to the building, such as carpets and curtains, are generally insurable under a contents insurance policy and not a building policy. Important consideration for a rental property |
| There are two types of cover available for building and contents insurance: | Defined event policies Accidental loss or damage policies |
| Premiums for building and contents insurance can vary, depending on a number of factors apart from the sum insured. Some include: | Location Security devices Construction Excess level selecterd |
| Resource 1: Household insurance This article discusses some of the important considerations around household insurance policies. Note: You can access this resource at KapLearn. | Review |
| Legal liability insurance. Legal liability refers to the insured’s responsibility to pay compensation for causing: | Injury, illness or death to another person Loss or damage to property owned or controlled by another person. |
| Motor vehicle insurance comes in two forms: | Compulsory third party insurance cover Damage to property cover |
| There are four different types of motor vehicle insurance cover available: | Compulsory third-party insurance Third-party property damage insurance Third-party property damage and fire and theft insurance Comprehensive insurance |
| CTP insurance is required before a motor vehicle can be registered in which Australian states and territories? | All Australian states and territories - CTP insurance is mandatory nationally |
| TPPD insurance covers damage caused to other people’s property by the insured’s car if it is involved in an accident. Why would a consumer take out this kind of coverage? | Of their own car is of low value and not worth insuring under full comprehensive cover. |
| True or false: comprehensive insurance covers the cost of replacing parts that have a fault or have degraded due to age | False |
| The longer without a claim, the higher the no-claim bonus. There is usually a maximum no-claim bonus of... | 60% of the full premium |
| Under a comprehensive policy, a vehicle will either be insured for: | Agreed value Market value |
| Options, accessories and modifications may be covered under a comprehensive policy - what are some common examples? | Bull bars Roof racks |
| What are two more examples of optional additional cover under a comprehensive motor vehicle policy? | Hire of a replacement vehicle Protection of no-claim bonus |
| What kind of cover covers the insured if their vehicle causes damage to property and where the insured or nominated driver was at fault? What is the typical maximum cover value? | Liability cover $20 million |
| Typically, there are three main types of excess: | Basic excess (can be varied) Insurance/driving record (fixed) excess Age/inexperienced driver excess. |
| The contents of the car are... | ..typically not insured |
| Is motor vehicle cover included or excluded in instances where the car is driven in a race, contest, trail, test or similar activity? | Excluded |
| Are hearing aids covered by Medicare? | No |
| Is cosmetic surgery covererd by Medicare? | No |
| When was Medicare established? | 1984 |
| Will an income protection policy provide coverage for medical expenses where the illness causes the insured to be unable to work for a certain period? | No, health insurance would be needed to cover the actual medical costs. Income protection insurance covers loss of income when unable to work |
| Name some items that can be covered by a private health insurance policy | Private hospital expenses Medical costs not covered by Medicare Dental treatment Ambulance Chiropractic, physiotherapy and osteopathic treatment Psychiatry and psychology Complementary and natural therapies Podiatry |
| Lifetime health cover means people taking out hospital cover early in their lives will pay... | ...lower premiums over the rest of their lives than those taking it out later in life |
| The principle of community rating prevents private health Funds from... | ...discriminating between people on the basis of their personal characteristics |
| The private health insurance rebate can be received by an individual in two ways: | Reduced premium up-front Claimed through their tax return |
| Name four events that are typically covered by travel insurance | Cancellation Cost of repatriation Loss of luggage Overseas medical expenses |
| Name some typical options in a business policy | Fire and other risks such as water damage, explosions Riots or civil commotion Business interruption Accidental damage Failure of electronic equipment Machinery breakdown Glass Burglary and vandalism Money Fraud and embezzlement |
| Business interruption cover normally covers what two types of loss: | Loss of profit Loss of gross rental |
| Product liability insurance is: | Legal liability to pay compensation for personal injury to another person, or damage to their property, as a result of defective product produced or sold by the business. |
| A business interruption policy generally covers a business for loss of gross profit or loss of gross rentals resulting from interruption to, or interference with, the business by damage, including: | Damage to property (e.g. broken air ventilation) Damage to property in the immediate vicinity (e.g. a fire in the business next door) Damage to a public utility (e.g. a burst water main) Damage to property of a supplier/customer |
| If one of the four scenarios under a business interruption policy occurs, the insurer may make payment for what three kinds of expense? | Loss of gross profit/rentals Cost of temporary business premises, or Accounts receivable |
| A loss of gross profit payment under business interruption cover may come in which two forms? | Reduction in turnover (multiply gross profit percentage by reduction in turnover) Increased costs of working |
| If electronic equipment is stolen or damaged, then the insurer will: | Choose to pay depreciated value to repair or replace parts, with a part of a similar standard as the part when it was new Pay for removal of debris Pay an amount towards freight charges Pay charges for overtime needed to return the item to normal |
| If machinery or electronic equipment suddenly and accidentally breaks down at the business premises the insurer will generally not pay for: | Anything covered by a maintenance contract The breakdown of computer equipment with a replacement value above a set limit, or A breakdown that happens away from the business premises unless it is away from for a business-related purpose |
| Will an insurer pay for loss of data that does not result from theft or physical damage? | No |
| Glass breakage cover may be... | ...a mandatory requirement of a business lease |
| Crime policies fall into three broad categories | Burglary Money Embezzlement |
| Burglary would generally include what three scenarios? | Forced entry Hiding on the premises Use of violence to obtain goods |
| Burglary insurance invokes the principle of the... | "First loss" policy. Under this principle, the insured can select the amount of cover they wish and can claim up to this amount even when more than one loss occurs |
| An embezzlement policy policy covers loss of money and goods from an act of fraud or dishonesty (including theft, embezzlement or misappropriation of funds) by any employees. Who does it generally exclude? | Contractors Directors, trustees or partners (unless they are also employees) |
| True or false, all licensed insurers may offer workers compensation insurance if they choose to | False, workers compensation insurers must be specifically licensed |
| In which three states are sole traders not considered employees and cannot take out workers compensation insurance for themselves? | New South Wales, Western Australia and Victoria |
| True or false, normal home building policies will cover losses incurred during an owner-builder constructing their own home | False, this would need to be covered under a separate construction policy |
| Legal liability refers to the insured’s responsibility to pay compensation for causing: | Injury, illness or death to another person, or Loss or damage to property owned or controlled by another person |
| Legal liability can arise in three different types of law: | Statute Common law Contract law |
| True or false, liability requires negligence being present | False, liability can exist without negligence being present. |
| A cooling-off period is also referred to as a | Free-look period |
| A‘free-look’ period, is a requirement under the | Insurance Council of Australia’s General Insurance Code of Practice Corporations Act 2001 (Cth) |
| The right to return the policy can only be exercised during a __-day period starting on the earlier of | When the issuer confirms the client has acquired a product, or The end of the fifth day after the day on which the policy was issued or sold to the client |
| What is termed a ‘lump sum preclusion period?" | A period during which the client is not entitled to most government pensions, benefits and allowances |
| Why is underinsurance such a common problem with household insurance specifically? | Most people don't know how to value their home, or to anticipate what the cost of a loss might be |
| Examples of the types of services on which accountants can provide advice under a limited AFS licence are: | Personal insurance cover Simple managed investment schemes that would be appropriate Securities, i.e. if shares are an appropriate investment option Basic deposit products that would be appropriate |
| What do clients expect from a provider of advice? | Reliability Responsiveness Quality of service and product Positive, friendly working relationship Credibility Achievement |
| True or false, superannuation funds can choose whether or not to offer life insurance cover | False, superannuation funds must offer standard levels of life insurance cover |
| Life insurers provide personal insurance such as: | Life Disability Trauma Income protection |
| The four piece of legislation that underpin the ATO’s work is: | Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Superannuation Guarantee (Administration) Act 1992 Superannuation Industry (Supervision) Act 1993 |
| Key Acts and codes affecting the day-to-day operations of financial organisations include: | Corporations Act 2001 Insurance Contracts Act 1984 AntiMoney Laundering & Counter-Terrorism Financing Act 2006 Privacy Act 1988 Competition and Consumer Act 2010 National Consumer Credit Protection Act 2009 |
| Chapter 7 of the Corporations Act: | Defines financial services and products Sets licensing requirements for providers of financial services Sets standards for conduct and disclosure to retail clients |
| The Privacy Act regulates how private and public entitie: | Collect Store Use, and Disclose... Personal information |
| Personal information collected by financial institutions includes what other items apart from the ones below? • name • address • financial details | • ethnic origins • political opinions • religious beliefs • membership of professional organisations • sexual preferences • criminal records • health information |
| What are the first 7 of the 13 APPs that relate to the collection, handling and accuracy of information as well as the protection of privacy? | Open and transparent management Anonymity and pseudonymity Collection of solicited Dealing with unsolicited Notification of collection Use or disclosure Direct marketing |
| What are the last 6 of the 13 APPs that relate to the collection, handling and accuracy of information as well as the protection of privacy? | Cross-border disclosure Adoption/use or disclosure of government-related IDs Quality of personal information Security of personal information Access to personal information Correction of personal information |
| Special requirements apply to the handling of sensitive information. Examples of sensitive information include: | Health incl. predictive genetic info Ethnicity Politics Membership of a political/professional/trade association or union Religious beliefs/affiliations Philosophy Sexuality Criminal record Biometric info for certain purposes Biometric templates |
| The objectives of the Competition and Consumer Act 2010 (CCA) are: | Ensure goods and services are safe and fit for purpose Prevent unfair practices Meet needs of vulnerable consumers Provide redress where consumer loss occurs Enforcement ensuring consumers are sufficiently informed to stimulate competition |
| The National Consumer Credit Protection Act 2009 (NCCP) brings the regulation of consumer credit within one federal Act. It replaces state legislation and the Uniform Consumer Credit Code (UCCC). The key elements of the NCCP are: | National licensing regime for providers of credit and broking Makes ASIC national regulator of credit framework Requiring licensees observe responsible lending conduct et al Requiring membership of an EDR body by all providers of credit and broking |
| According to ASIC, an approved code of practice should meet a number of criteria, including: | Comprehensive body of rules developed in consultation with stakeholders Enforceable against subscribers Adequate provisions for dispute resolution, remedies and sanctions Effective and independent admin — incl. compliance monitoring |
| Financial institutions’ codes of practice currently include: | ePayments Code Code of Banking Practice Customer Owned Banking Code of Practice General Insurance Code of Practice Insurance Brokers Code of Practice FPA Code of Professional Practice |
| AFS licences are issued for the provision of one or more specific classes of financial products or services (e.g. life insurance, general insurance, shares or superannuation). Licensees are required to have appropriate: | Responsibility for the actions of their reps Ensure training and supervision of reps Internal compliance procedures and controls Internal and EDR mechanisms for retail clients Compliance with conditions set down under their licence, Corps Act & regs |
| Triple bottom-line reporting assesses and reports on the operations of a business from nthe perspective of three spheres of sustainability: | Economic Social Environmental |
| Sustainability within a workplace can improve the business by: | Building reputation and brand Establishing a ‘social licence to operate’ Acquiring preferred supplier status Managing the workplace risk profile |
| What is ASIC’s regulatory role with regard to investment and deposit-taking institutions? | Sets standards re customer disclosure Monitors their sales practices Monitors compliance with codes of practice Checks customer complaints systems Polices misconduct |
| What is ASIC’s regulatory role with regard to financial planners? | Sets standards for operations, training & education Licenses them before they start Registers their details & the names of their authorised representatives Monitors advice, sales practices & compliance with codes Investigates and punishes misconduct |
| What is ASIC’s regulatory role with regard to stockmarkets? | Advises Minister on ASX Ltd rule changes Monitors ASX Ltd as a company Investigates & punishes misconduct of listed coys Supervises & enforces misconduct (IT or MM) Advise Minister to approve new markets Advise Minister on changes to market rules |
| What is ASIC’s regulatory role with regard to managed investment schemes? | Sets standards for operations Licenses them before they start Registers their details and the names Registers prospectuses before money is raised Monitors their sales practices and operations Investigates and takes action against misconduct |
| What is ASIC’s regulatory role with regard to companies? | Registers each with a unique number Registers number, name, directors and other info Grants or refuses requests for relief from the law Registers prospectuses before money is raised Monitors directors Inspects financials Enforce misconduct rules |
| What is ASIC’s regulatory role with regard to company auditors and liquidators? | Registers them before they start operating Monitors their work Investigates and takes action against misconduct. |
| For triple bottom-line reporting to be of real value to an organisation, it must be: | Integrated with daily business operations Appropriately resourced |
| Organisations that have successfully driven change because of triple bottom-line reporting have identified the following benefits: | Embeds sound corporate governance through the organisation Improves risk management Formalises and enhances communication with key stakeholders Attracts and retains staff Provides ability to benchmark |
| The Australian Federal Government Department of the Environment and Energy deals with a number of areas including | Environment protection and conservation of biodiversity Air quality Land contamination Environmental research Water policy and resources Coordination of sustainable communities policy Population policy Urban environment |
| Why is it important for advisors to be aware of the risks that may affect their clients, even if the advisor is not licensed to provide advice on general insurance? | The home is often the client's most valuable asset |
| If a policyholder takes out only building or contents insurance (rather than the more typical both for owner-occupiers of free-standing premises) what additional matters do they need to be aware of? | It is important to buy a policy that covers liability exposure that would normally be covered whichever of the typical twin policies is not taken out |
| Explain a "defined events" building or contents policy briefly: | If an item is not listed in the policy, it is not covered |
| Accidental damage cover (as compared to defined events cover) is generally more expensive because: | It is offering cover under a wider range of events |
| Under a property insurance policy there is an oblitgation to maintain the property in... | "Reasonable condition" |
| True or false, standard building insurance cover will not cover losses relating to renovations | False, renovation work will be covered up to a specified limit, with exclusions for damage caused while the house has missing walls or roofs |
| Why is it a good idea to approach your existing building insurer when obtaining additional cover for renovations? | The insurer can ensure that the additionla cover is efficient (it doesn't overlap with their existing policy) and effective (there are no gaps between the two policies) |
| What are some possible inclusions in landlord insurance? | Building Legal liability Some contents that are typically provided (e.g. blinds) Rent default Theft by the tenant of insured items Malicious damage by the tenant |
| True or false, a domestic worker is covered by the legal liability insurance included with a typical home insurance policy | False, as they are an employee they would not typically be covered |
| True or false, CGT is payable on unrealised capital gains | Falst, capital gains tax is only payable on realised capital gains |
| Deposits in Australian authorised deposit-taking institutions (ADIs) up to $XXX per depositor are guaranteed? | $250,000 |
| The lower the certainty of repayment, the higher the interest rate the security offers, why? | To compensate the lender for the additional risk |
| True or false, all investors can benefit from the CGT discount when selling shares held for longer than 12 months | False, companies are not eligible for the CGT discount |
| Franking credits represent... | ...the underlying tax paid by a company on pre-tax profits from which any dividends were paid |
| According to the notes the risk ranking of the four key asset classes is as follows (high risk first): | 1. Shares 2. Property 3. Fixed interest 4. Cash |
| Some examples of infrastructure include; | Transportation links Power Telecommunication Educational facilities Health facilities |
| Five characteristics of infrastructure are: | Features of monopoly/oligopoly re govt involvement (present and historical) High initial capital cost or ongoing costs Time-consuming to build Long lived Support other economic/social activities |
| Ideally a financial system will be efficient and fair. It should... | Provide effective payments mechanism Ensure savings used for productive purposes Operate transparently w/ strong regulations to protect investors Offer diversity of instruments & intermediaries Operate at minimum cost |
| The types of financial needs that exist in most households fall into five financial categories: | Transaction or spending Borrowing or credit Insurance Saving Investment |
Created by:
frankhall
Popular Finance sets