Assessor Resource

FNSASICL503
Provide advice in the regulated emissions market

Assessment tool

Version 1.0
Issue Date: May 2024


This unit describes the skills and knowledge required to analyse client needs and provide advice ethically and professionally on regulated emissions products and services, in compliance with industry regulations and codes of practice. It addresses the training requirements of current Australian Securities and Investments Commission (ASIC) and Australian financial services (AFS) licensing at Tier 1 level.

It applies to individuals who analyse client needs and provide advice about carbon markets products and services using well-developed interpersonal skills and proficient communication and self-management skills.

Work functions in the occupational areas where this unit may be used are subject to regulatory requirements. Refer to the FNS Implementation Guide Companion Volume or ASIC for specific guidance on requirements.

You may want to include more information here about the target group and the purpose of the assessments (eg formative, summative, recognition)


Evidence Required

List the assessment methods to be used and the context and resources required for assessment. Copy and paste the relevant sections from the evidence guide below and then re-write these in plain English.

ELEMENT

PERFORMANCE CRITERIA

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Establish relationship with client

1.1 Establish relationship with client by communicating directly and openly

1.2 Inform client of role and capacity of adviser and licensee responsible for adviser's conduct

1.3 Establish client’s understanding of regulated emissions market to determine range of services to be offered.

1.4 Explain scope and limitation of advice and services, including fee and charging methodology, procedures for complaints handling and circumstances in which they should be engaged

1.5 Respond to enquiries in relation to services and products to be provided in professional manner

2. Identify and analyse client’s objectives, needs, financial situation and risk profile

2.1 Establish client's motivation for investing in regulated emissions market

2.2 Identify and document all relevant liabilities and assets for client, expectations of cash flow and any relevant taxation obligations

2.3 Identify client needs by encouraging expression of goals and objectives (short-term, medium-term and long-term) relevant to product

2.4 Assess client's risk profile and agree on rating with client

2.5 Explain investment implications for client for achieving objectives and needs based on client’s risk profile, cash flow and taxation implications

2.6 Consult with client throughout analysis for further clarification where necessary

2.7 Analyse whether there is need for specialist advice and refer to appropriate adviser if required

3. Develop strategy for client

3.1 Assess broad strategies available to client

3.2 Discuss strategies identified with client to determine and agree on most suitable approach for client needs, objectives and risk profile

3.3 Select appropriate emissions products and undertake research, analysis and financial modelling to establish which product mix best meets client's needs, objectives and risk profile

3.4 Prepare statutory and organisational strategy and transaction documentation

3.5 Identify and discuss with client any conflicts of interest arising from selected strategy

4. Present and negotiate strategies and solutions with client

4.1 Explain to client proposed transaction and strategic methodology used, in clear and unambiguous way

4.2 Check that client understands relevant details, risks, terms and conditions, advantages and disadvantages of transaction recommended

4.3 Negotiate and resolve any concerns or issues that client has regarding proposed transaction

4.4 Explain fee and cost structures for transaction and timeframes for execution

5. Implement and document agreed plan, policy or transaction

5.1 Prepare and provide client with written documentation where required by law or codes of practice that incorporate basis on which advice is given

5.2 Explain supporting documentation, and confirm content and advice against established investment requirements, risk profile and objectives

5.3 Seek confirmation that client understands proposed transaction and its fee implications, and gain formal agreement to proceed in line with regulatory guidelines, accepted industry practice and organisational policy

5.4 Exchange signed copies of appropriate documentation and signed agreement with client

6. Determine and agree on any ongoing services required

6.1 Agree with client on type and form of ongoing service to be provided, including reporting on performance of this transaction and other associated services

6.2 Explain fees and costs for ongoing and specifically defined service and obtain confirmation of understanding from client

Evidence of the ability to:

establish and define the nature and scope of the client and adviser relationship

collect qualitative and quantitative information to perform strategic analysis within the regulated emissions markets

develop a strategic plan in emissions products that is appropriate for the client profile

evaluate the financial strategy with respect to local and international financial markets and factors influencing the regulated emissions market

develop advice that adheres to relevant regulatory, ethical, industry and organisational requirements

demonstrate application of ethical principles in decision making during the advising process

communicate the details of a financial advice document and establish client understanding of the proposal.

Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.

To complete the unit requirements safely and effectively, the individual must satisfy generic and specialist knowledge requirements relevant to the products and activities in which advice is given.

Generic knowledge

analyse and provide an overview of the economic environment including:

characteristics and impact of economic and business cycles

interest rates and exchange rates

inflation

government monetary and fiscal policy

analyse and provide a detailed explanation of the operation of financial markets including:

roles played by intermediaries and issuers

structure and interrelationships within the financial markets

interrelationship between industry sectors

outline financial products including:

concept of a financial product: general definition, and specific inclusions and exclusions

types of financial investment products

types of financial risk products.

Specialist knowledge

describe types of regulated emissions units, and their characteristics (encompassing carbon units, Australian carbon credit units (ACCU) and eligible international emissions units), including their status as personal property, and how they are typically derived from inception to the point of acquiring status as a financial product

analyse risks associated with each type of regulated emission unit, including restrictions on their use, transfer and bankability for future use

describe risk characteristics and mitigating strategies relative to regulated emissions including:

regulatory risk

documentation risk

market and pricing risk

fraud

emerging market risk

counterparty risk

explain processes for acquiring, transferring and surrendering regulated emissions units, including compliance with the requirements of the Australian National Registry of Emissions Units

analyse and summarise key features of the operation of carbon markets including:

geopolitical context of carbon markets

main participants in carbon markets, and their key objectives and participation behaviours as factors influencing market activity

emissions unit supply and demand factors and regulated price factors influencing market activity and prices

issue of carbon units via auction, and auction types

types of transactions in carbon markets, including transactions relating to the carbon pricing mechanism and in voluntary markets, and the function of financial markets facilitating such trading including internationally

potential trading strategies and their implementation in carbon markets including hedging and investment strategies

risks associated with carbon markets including liquidity, pricing, credit, operational and regulatory risks

carbon market transaction documentation including documentation used for different types of counterparties and transactions, their key terms and conditions, and advantages and disadvantages

discuss the legal environment including disclosure and compliance covering:

domestic regulatory framework for the carbon pricing mechanism, including the role of the Clean Energy Regulator and the Australian National Registry of Emissions Units

domestic regulatory framework for the Carbon Farming Initiative, including the role of the Clean Energy Regulator and the Australian National Registry of Emissions Units

international regulatory framework for carbon trading, including the Clean Development Mechanism

relevant legal principles including Corporations Act, Australian Securities and Investments Commission (ASIC) Act and Privacy Amendment (Private Sector) Act

relationship between ethics and regulatory requirements (good faith, utmost good faith, full disclosure of remuneration and/or fees and any other conflicts of interest that may influence the adviser’s recommendation), and application of these requirements in professional practice

elements of the Registered Representatives Examination (where relevant)

Chi-X Australia or Australian Securities Exchange (ASX) Operating Rules (where relevant)

outline taxation issues in relation to carbon emissions products and markets in which they operate, and deductibility of costs associated with regulated emissions units

outline strategy development in an emissions marketplace including:

evaluation of client objectives against risks

concept development and evaluation

explain theories of investment, portfolio management and management of investment and risk:

investment concepts and strategies

identification of types of risk

client risk profile.

Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the financial services and products advice field of work and include access to:

office equipment, technology, software and consumables

carbon and regulated emissions market product information

Assessors must satisfy NVR/AQTF assessor requirements.

Submission Requirements

List each assessment task's title, type (eg project, observation/demonstration, essay, assingnment, checklist) and due date here

Assessment task 1: [title]      Due date:

(add new lines for each of the assessment tasks)

Assessment Tasks

Copy and paste from the following data to produce each assessment task. Write these in plain English and spell out how, when and where the task is to be carried out, under what conditions, and what resources are needed. Include guidelines about how well the candidate has to perform a task for it to be judged satisfactory.

ELEMENT

PERFORMANCE CRITERIA

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Establish relationship with client

1.1 Establish relationship with client by communicating directly and openly

1.2 Inform client of role and capacity of adviser and licensee responsible for adviser's conduct

1.3 Establish client’s understanding of regulated emissions market to determine range of services to be offered.

1.4 Explain scope and limitation of advice and services, including fee and charging methodology, procedures for complaints handling and circumstances in which they should be engaged

1.5 Respond to enquiries in relation to services and products to be provided in professional manner

2. Identify and analyse client’s objectives, needs, financial situation and risk profile

2.1 Establish client's motivation for investing in regulated emissions market

2.2 Identify and document all relevant liabilities and assets for client, expectations of cash flow and any relevant taxation obligations

2.3 Identify client needs by encouraging expression of goals and objectives (short-term, medium-term and long-term) relevant to product

2.4 Assess client's risk profile and agree on rating with client

2.5 Explain investment implications for client for achieving objectives and needs based on client’s risk profile, cash flow and taxation implications

2.6 Consult with client throughout analysis for further clarification where necessary

2.7 Analyse whether there is need for specialist advice and refer to appropriate adviser if required

3. Develop strategy for client

3.1 Assess broad strategies available to client

3.2 Discuss strategies identified with client to determine and agree on most suitable approach for client needs, objectives and risk profile

3.3 Select appropriate emissions products and undertake research, analysis and financial modelling to establish which product mix best meets client's needs, objectives and risk profile

3.4 Prepare statutory and organisational strategy and transaction documentation

3.5 Identify and discuss with client any conflicts of interest arising from selected strategy

4. Present and negotiate strategies and solutions with client

4.1 Explain to client proposed transaction and strategic methodology used, in clear and unambiguous way

4.2 Check that client understands relevant details, risks, terms and conditions, advantages and disadvantages of transaction recommended

4.3 Negotiate and resolve any concerns or issues that client has regarding proposed transaction

4.4 Explain fee and cost structures for transaction and timeframes for execution

5. Implement and document agreed plan, policy or transaction

5.1 Prepare and provide client with written documentation where required by law or codes of practice that incorporate basis on which advice is given

5.2 Explain supporting documentation, and confirm content and advice against established investment requirements, risk profile and objectives

5.3 Seek confirmation that client understands proposed transaction and its fee implications, and gain formal agreement to proceed in line with regulatory guidelines, accepted industry practice and organisational policy

5.4 Exchange signed copies of appropriate documentation and signed agreement with client

6. Determine and agree on any ongoing services required

6.1 Agree with client on type and form of ongoing service to be provided, including reporting on performance of this transaction and other associated services

6.2 Explain fees and costs for ongoing and specifically defined service and obtain confirmation of understanding from client

Evidence of the ability to:

establish and define the nature and scope of the client and adviser relationship

collect qualitative and quantitative information to perform strategic analysis within the regulated emissions markets

develop a strategic plan in emissions products that is appropriate for the client profile

evaluate the financial strategy with respect to local and international financial markets and factors influencing the regulated emissions market

develop advice that adheres to relevant regulatory, ethical, industry and organisational requirements

demonstrate application of ethical principles in decision making during the advising process

communicate the details of a financial advice document and establish client understanding of the proposal.

Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.

To complete the unit requirements safely and effectively, the individual must satisfy generic and specialist knowledge requirements relevant to the products and activities in which advice is given.

Generic knowledge

analyse and provide an overview of the economic environment including:

characteristics and impact of economic and business cycles

interest rates and exchange rates

inflation

government monetary and fiscal policy

analyse and provide a detailed explanation of the operation of financial markets including:

roles played by intermediaries and issuers

structure and interrelationships within the financial markets

interrelationship between industry sectors

outline financial products including:

concept of a financial product: general definition, and specific inclusions and exclusions

types of financial investment products

types of financial risk products.

Specialist knowledge

describe types of regulated emissions units, and their characteristics (encompassing carbon units, Australian carbon credit units (ACCU) and eligible international emissions units), including their status as personal property, and how they are typically derived from inception to the point of acquiring status as a financial product

analyse risks associated with each type of regulated emission unit, including restrictions on their use, transfer and bankability for future use

describe risk characteristics and mitigating strategies relative to regulated emissions including:

regulatory risk

documentation risk

market and pricing risk

fraud

emerging market risk

counterparty risk

explain processes for acquiring, transferring and surrendering regulated emissions units, including compliance with the requirements of the Australian National Registry of Emissions Units

analyse and summarise key features of the operation of carbon markets including:

geopolitical context of carbon markets

main participants in carbon markets, and their key objectives and participation behaviours as factors influencing market activity

emissions unit supply and demand factors and regulated price factors influencing market activity and prices

issue of carbon units via auction, and auction types

types of transactions in carbon markets, including transactions relating to the carbon pricing mechanism and in voluntary markets, and the function of financial markets facilitating such trading including internationally

potential trading strategies and their implementation in carbon markets including hedging and investment strategies

risks associated with carbon markets including liquidity, pricing, credit, operational and regulatory risks

carbon market transaction documentation including documentation used for different types of counterparties and transactions, their key terms and conditions, and advantages and disadvantages

discuss the legal environment including disclosure and compliance covering:

domestic regulatory framework for the carbon pricing mechanism, including the role of the Clean Energy Regulator and the Australian National Registry of Emissions Units

domestic regulatory framework for the Carbon Farming Initiative, including the role of the Clean Energy Regulator and the Australian National Registry of Emissions Units

international regulatory framework for carbon trading, including the Clean Development Mechanism

relevant legal principles including Corporations Act, Australian Securities and Investments Commission (ASIC) Act and Privacy Amendment (Private Sector) Act

relationship between ethics and regulatory requirements (good faith, utmost good faith, full disclosure of remuneration and/or fees and any other conflicts of interest that may influence the adviser’s recommendation), and application of these requirements in professional practice

elements of the Registered Representatives Examination (where relevant)

Chi-X Australia or Australian Securities Exchange (ASX) Operating Rules (where relevant)

outline taxation issues in relation to carbon emissions products and markets in which they operate, and deductibility of costs associated with regulated emissions units

outline strategy development in an emissions marketplace including:

evaluation of client objectives against risks

concept development and evaluation

explain theories of investment, portfolio management and management of investment and risk:

investment concepts and strategies

identification of types of risk

client risk profile.

Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the financial services and products advice field of work and include access to:

office equipment, technology, software and consumables

carbon and regulated emissions market product information

Assessors must satisfy NVR/AQTF assessor requirements.

Copy and paste from the following performance criteria to create an observation checklist for each task. When you have finished writing your assessment tool every one of these must have been addressed, preferably several times in a variety of contexts. To ensure this occurs download the assessment matrix for the unit; enter each assessment task as a column header and place check marks against each performance criteria that task addresses.

Observation Checklist

Tasks to be observed according to workplace/college/TAFE policy and procedures, relevant legislation and Codes of Practice Yes No Comments/feedback
Establish relationship with client by communicating directly and openly 
1.2 Inform client of role and capacity of adviser and licensee responsible for adviser's conduct 
Establish client’s understanding of regulated emissions market to determine range of services to be offered. 
Explain scope and limitation of advice and services, including fee and charging methodology, procedures for complaints handling and circumstances in which they should be engaged 
Respond to enquiries in relation to services and products to be provided in professional manner 
2.1 Establish client's motivation for investing in regulated emissions market 
Identify and document all relevant liabilities and assets for client, expectations of cash flow and any relevant taxation obligations 
Identify client needs by encouraging expression of goals and objectives (short-term, medium-term and long-term) relevant to product 
2.4 Assess client's risk profile and agree on rating with client 
Explain investment implications for client for achieving objectives and needs based on client’s risk profile, cash flow and taxation implications 
Consult with client throughout analysis for further clarification where necessary 
Analyse whether there is need for specialist advice and refer to appropriate adviser if required 
Assess broad strategies available to client 
Discuss strategies identified with client to determine and agree on most suitable approach for client needs, objectives and risk profile 
3.3 Select appropriate emissions products and undertake research, analysis and financial modelling to establish which product mix best meets client's needs, objectives and risk profile 
Prepare statutory and organisational strategy and transaction documentation 
Identify and discuss with client any conflicts of interest arising from selected strategy 
Explain to client proposed transaction and strategic methodology used, in clear and unambiguous way 
Check that client understands relevant details, risks, terms and conditions, advantages and disadvantages of transaction recommended 
Negotiate and resolve any concerns or issues that client has regarding proposed transaction 
Explain fee and cost structures for transaction and timeframes for execution 
Prepare and provide client with written documentation where required by law or codes of practice that incorporate basis on which advice is given 
Explain supporting documentation, and confirm content and advice against established investment requirements, risk profile and objectives 
Seek confirmation that client understands proposed transaction and its fee implications, and gain formal agreement to proceed in line with regulatory guidelines, accepted industry practice and organisational policy 
Exchange signed copies of appropriate documentation and signed agreement with client 
Agree with client on type and form of ongoing service to be provided, including reporting on performance of this transaction and other associated services 
Explain fees and costs for ongoing and specifically defined service and obtain confirmation of understanding from client 
Establish client's motivation for investing in regulated emissions market 
Identify and document all relevant liabilities and assets for client, expectations of cash flow and any relevant taxation obligations 
Identify client needs by encouraging expression of goals and objectives (short-term, medium-term and long-term) relevant to product 
Assess client's risk profile and agree on rating with client 
Explain investment implications for client for achieving objectives and needs based on client’s risk profile, cash flow and taxation implications 
Consult with client throughout analysis for further clarification where necessary 
Analyse whether there is need for specialist advice and refer to appropriate adviser if required 

Forms

Assessment Cover Sheet

FNSASICL503 - Provide advice in the regulated emissions market
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Assessment Record Sheet

FNSASICL503 - Provide advice in the regulated emissions market

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