Assessor Resource

FNSASICR503
Provide advice in margin lending

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 in margin lending, 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 financial 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 and identify client’s objectives, needs and financial situation

1.1 Establish client’s knowledge about financial products and services

1.2 Respond to enquiries about margin lending products and services by explaining range of products and services available and their relevant fee and charging methodology

1.3 Inform client about role of adviser and licensee or principal responsible for adviser's conduct, including procedures for complaints handling and circumstances in which they should be engaged

1.4 Ask client about objectives and goals and obtain personal, financial and business details to identify client needs

1.5 Establish product risk profile of client, including expectations of cash flow and relevant taxation obligations

2. Analyse client’s objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions

2.1 Undertake assessment of client needs using all information gathered, taking into account client’s product expectations and specific needs

2.2 Consult with client throughout analysis for further clarification where necessary

2.3 Analyse need for specialist advice and ensure client is referred to appropriate adviser for higher level or specialist advice if required

2.4 Assess and confirm product risk profile of client, demonstrating ASIC identified generic and specialist knowledge relevant to products being offered

2.5 Determine appropriate strategy to provide for identified needs and outcomes based on analysis of products, client risk profile and assessment of client needs

2.6 Conduct relevant research, analysis and product modelling, and draft appropriate solution, plan, policy or transaction for presentation to client

3. Present appropriate strategies and solutions to client and negotiate financial plan, policy or transaction

3.1 Apply appropriate knowledge for service or product offered when presenting product

3.2 Clearly and unambiguously explain proposed transaction to client

3.3 Reinforce all relevant details, terms and conditions of product and/or service

3.4 Disclose impacts and possible risks of solution in clear and concise manner

3.5 Provide supporting written documentation and guide client through key aspects of documentation

3.6 Discuss and clarify any concerns or issues client has regarding proposed plan, policy or transaction

3.7 Confirm that client understands proposed plan, policy or transaction

4. Agree to plan, policy or transaction and complete documentation

4.1 Obtain client’s formal agreement to proposed plan, policy or transaction

4.2 Clearly explain and confirm that client understands all associated fees, cost structures and timeframes for execution and processing

4.3 Ensure that proposal and all other statutory and transactional documents are completed and signed off by client

4.4 Exchange copies of signed agreement and other appropriate documentation

5. Provide ongoing service where requested by client

5.1 Ensure that type and form of ongoing service, including reporting on performance and review of plan, policy or transaction, is agreed with client

5.2 Clearly explain all fees and costs for ongoing and specifically defined services, and check that client understands these details

5.3 Provide ongoing service as required

Evidence of the ability to:

interpret and comply with industry regulations and codes of practice

analyse client needs, financial situation and risk profile, and prepare appropriate strategies or solutions relating to margin lending

provide accurate and ethical advice on margin lending products and services

implement the plan, policy or transaction once agreed by the client and complete documentation accurately.

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

discuss types of margin lending facility products (encompassing standard margin lending facilities and non-standard margin lending facilities),associated risks and alternative products (derivatives where relevant)

outline characteristics of margin lending products including:

how the various types of margin lending facility products operate

providers' and clients' rights and responsibilities

effect of provider taking security over clients' assets

effect of provider receiving a transfer of the clients' assets

calculating loan-to-value ratios of both individual products and the overall portfolio

consequences of issuers altering the loan-to-value ratio of individual products

margin calls – ways of making a margin call, consequences of margin calls and how they may be resolved, and strategies by which the borrower may avoid margin calls

approved product list – consequences of removing a product from the approved products list

outline taxation issues in relation to margin lending facilities including:

deductibility of costs associated with margin lending, including interest payments

liability for capital gains tax (CGT)

discuss the legal environment including disclosure and compliance covering:

role of the representative or adviser

relevant legal principles relating to the Corporations Act, Australian Securities and Investments Commission (ASIC) Act, Privacy Amendment (Private Sector) Act, Financial Services Reform Act (FSRA) and Competition and Consumer Act

relationship between ethics and regulatory requirements including good faith, faith, utmost good faith, full disclosure of remuneration and fees, and any other conflicts of interest which may influence the adviser's recommendation

relevant industry standards and codes of conduct

regulators’ guidelines including ASIC Regulatory Guide (RG)146 requirements

complaints resolution procedures (external and internal)

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

investment concepts

investment strategies for margin lending, including the role of cash flow and alternative investment strategies

investment options using a margin lending facility

identification of types of risk, including an awareness of the sensitivity of margin lending strategies to changes in interest rates and investment returns

client risk profile, including an awareness of the source and stability of clients’ income source, the source of funding for the investment and risk profiles unsuited to margin lending facility products

stress testing of proposed client portfolio

understanding of risks associated with gearing – the relationship between levels of gearing and risks, and risks associated with double gearing

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

margin lending 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 and identify client’s objectives, needs and financial situation

1.1 Establish client’s knowledge about financial products and services

1.2 Respond to enquiries about margin lending products and services by explaining range of products and services available and their relevant fee and charging methodology

1.3 Inform client about role of adviser and licensee or principal responsible for adviser's conduct, including procedures for complaints handling and circumstances in which they should be engaged

1.4 Ask client about objectives and goals and obtain personal, financial and business details to identify client needs

1.5 Establish product risk profile of client, including expectations of cash flow and relevant taxation obligations

2. Analyse client’s objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions

2.1 Undertake assessment of client needs using all information gathered, taking into account client’s product expectations and specific needs

2.2 Consult with client throughout analysis for further clarification where necessary

2.3 Analyse need for specialist advice and ensure client is referred to appropriate adviser for higher level or specialist advice if required

2.4 Assess and confirm product risk profile of client, demonstrating ASIC identified generic and specialist knowledge relevant to products being offered

2.5 Determine appropriate strategy to provide for identified needs and outcomes based on analysis of products, client risk profile and assessment of client needs

2.6 Conduct relevant research, analysis and product modelling, and draft appropriate solution, plan, policy or transaction for presentation to client

3. Present appropriate strategies and solutions to client and negotiate financial plan, policy or transaction

3.1 Apply appropriate knowledge for service or product offered when presenting product

3.2 Clearly and unambiguously explain proposed transaction to client

3.3 Reinforce all relevant details, terms and conditions of product and/or service

3.4 Disclose impacts and possible risks of solution in clear and concise manner

3.5 Provide supporting written documentation and guide client through key aspects of documentation

3.6 Discuss and clarify any concerns or issues client has regarding proposed plan, policy or transaction

3.7 Confirm that client understands proposed plan, policy or transaction

4. Agree to plan, policy or transaction and complete documentation

4.1 Obtain client’s formal agreement to proposed plan, policy or transaction

4.2 Clearly explain and confirm that client understands all associated fees, cost structures and timeframes for execution and processing

4.3 Ensure that proposal and all other statutory and transactional documents are completed and signed off by client

4.4 Exchange copies of signed agreement and other appropriate documentation

5. Provide ongoing service where requested by client

5.1 Ensure that type and form of ongoing service, including reporting on performance and review of plan, policy or transaction, is agreed with client

5.2 Clearly explain all fees and costs for ongoing and specifically defined services, and check that client understands these details

5.3 Provide ongoing service as required

Evidence of the ability to:

interpret and comply with industry regulations and codes of practice

analyse client needs, financial situation and risk profile, and prepare appropriate strategies or solutions relating to margin lending

provide accurate and ethical advice on margin lending products and services

implement the plan, policy or transaction once agreed by the client and complete documentation accurately.

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

discuss types of margin lending facility products (encompassing standard margin lending facilities and non-standard margin lending facilities),associated risks and alternative products (derivatives where relevant)

outline characteristics of margin lending products including:

how the various types of margin lending facility products operate

providers' and clients' rights and responsibilities

effect of provider taking security over clients' assets

effect of provider receiving a transfer of the clients' assets

calculating loan-to-value ratios of both individual products and the overall portfolio

consequences of issuers altering the loan-to-value ratio of individual products

margin calls – ways of making a margin call, consequences of margin calls and how they may be resolved, and strategies by which the borrower may avoid margin calls

approved product list – consequences of removing a product from the approved products list

outline taxation issues in relation to margin lending facilities including:

deductibility of costs associated with margin lending, including interest payments

liability for capital gains tax (CGT)

discuss the legal environment including disclosure and compliance covering:

role of the representative or adviser

relevant legal principles relating to the Corporations Act, Australian Securities and Investments Commission (ASIC) Act, Privacy Amendment (Private Sector) Act, Financial Services Reform Act (FSRA) and Competition and Consumer Act

relationship between ethics and regulatory requirements including good faith, faith, utmost good faith, full disclosure of remuneration and fees, and any other conflicts of interest which may influence the adviser's recommendation

relevant industry standards and codes of conduct

regulators’ guidelines including ASIC Regulatory Guide (RG)146 requirements

complaints resolution procedures (external and internal)

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

investment concepts

investment strategies for margin lending, including the role of cash flow and alternative investment strategies

investment options using a margin lending facility

identification of types of risk, including an awareness of the sensitivity of margin lending strategies to changes in interest rates and investment returns

client risk profile, including an awareness of the source and stability of clients’ income source, the source of funding for the investment and risk profiles unsuited to margin lending facility products

stress testing of proposed client portfolio

understanding of risks associated with gearing – the relationship between levels of gearing and risks, and risks associated with double gearing

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

margin lending 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 client’s knowledge about financial products and services 
Respond to enquiries about margin lending products and services by explaining range of products and services available and their relevant fee and charging methodology 
1.3 Inform client about role of adviser and licensee or principal responsible for adviser's conduct, including procedures for complaints handling and circumstances in which they should be engaged 
Ask client about objectives and goals and obtain personal, financial and business details to identify client needs 
Establish product risk profile of client, including expectations of cash flow and relevant taxation obligations 
Undertake assessment of client needs using all information gathered, taking into account client’s product expectations and specific needs 
Consult with client throughout analysis for further clarification where necessary 
Analyse need for specialist advice and ensure client is referred to appropriate adviser for higher level or specialist advice if required 
Assess and confirm product risk profile of client, demonstrating ASIC identified generic and specialist knowledge relevant to products being offered 
Determine appropriate strategy to provide for identified needs and outcomes based on analysis of products, client risk profile and assessment of client needs 
Conduct relevant research, analysis and product modelling, and draft appropriate solution, plan, policy or transaction for presentation to client 
Apply appropriate knowledge for service or product offered when presenting product 
Clearly and unambiguously explain proposed transaction to client 
Reinforce all relevant details, terms and conditions of product and/or service 
Disclose impacts and possible risks of solution in clear and concise manner 
Provide supporting written documentation and guide client through key aspects of documentation 
Discuss and clarify any concerns or issues client has regarding proposed plan, policy or transaction 
Confirm that client understands proposed plan, policy or transaction 
Obtain client’s formal agreement to proposed plan, policy or transaction 
Clearly explain and confirm that client understands all associated fees, cost structures and timeframes for execution and processing 
Ensure that proposal and all other statutory and transactional documents are completed and signed off by client 
Exchange copies of signed agreement and other appropriate documentation 
Ensure that type and form of ongoing service, including reporting on performance and review of plan, policy or transaction, is agreed with client 
Clearly explain all fees and costs for ongoing and specifically defined services, and check that client understands these details 
Provide ongoing service as required 
Establish client’s knowledge about financial products and services 
Respond to enquiries about margin lending products and services by explaining range of products and services available and their relevant fee and charging methodology 
Inform client about role of adviser and licensee or principal responsible for adviser's conduct, including procedures for complaints handling and circumstances in which they should be engaged 
Ask client about objectives and goals and obtain personal, financial and business details to identify client needs 
Establish product risk profile of client, including expectations of cash flow and relevant taxation obligations 
Undertake assessment of client needs using all information gathered, taking into account client’s product expectations and specific needs 
Consult with client throughout analysis for further clarification where necessary 
Analyse need for specialist advice and ensure client is referred to appropriate adviser for higher level or specialist advice if required 
Assess and confirm product risk profile of client, demonstrating ASIC identified generic and specialist knowledge relevant to products being offered 
Determine appropriate strategy to provide for identified needs and outcomes based on analysis of products, client risk profile and assessment of client needs 
Conduct relevant research, analysis and product modelling, and draft appropriate solution, plan, policy or transaction for presentation to client 

Forms

Assessment Cover Sheet

FNSASICR503 - Provide advice in margin lending
Assessment task 1: [title]

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I declare that the assessment tasks submitted for this unit are my own work.

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Assessment Record Sheet

FNSASICR503 - Provide advice in margin lending

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Assessment task 1: [title] Result: Competent Not yet competent

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Overall assessment result: Competent Not yet competent

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