In a pamphlet that would be suitable to provide to clients, explain the risk issues that relate to each of the following:
Explain each of the following complex features of a client situation and needs:
Identify and categorise at least 4 of the key products that are available in the broking industry.
This task must be completed within 30 minutes.
Identify and discuss the various legislative requirements, regulations and codes of practice that affect the broking industry.
written/oral Questions and research task (4 -5 line response)
We can demonstrate high level of verbal communication by speaking clearly and staying calm.
FNSfmb503 present broking options to client with complex needs
The risk issues that relate to each of the following:
4 key products available in the broking industry are :
4. Legislation, Regulations and Codes of Practice
There are various legislative requirements, regulations and codes of practice that govern the different products and services provided by the brokers. The insurance industry is governed by the Insurance Brokerage industry rules, while the mortgage brokerage industry is guided by Mortgage & Finance Association of Australia (MFAA). ASIC provides regulatory guidance for compliance of financial service providers/brokers.
The Corporations Act 2001 specifies that there should be:
In accordance with above the broker in order to provide financial product advice must be authorized under the Australian Financial services (AFS) license. The FSG guidelines lay down the disclosure of capacity by the finance broker to the clients.
written/oral Questions and research task (4 -5 line response)
While providing broking services the service provider gathers information from various sources. The information is in varying formats and may use core technical terms and terminologies. The clients on the other hand have different levels of financial understanding. Some might have basic knowledge about the financial terms while other might be completely new. Thus it is the duty of the service provider to understand the level of knowledge of each client and provide them information in the manner which is easy for them to understand.
The brokers can ensure that the objectives and requirements of the clients are met by indulging in high level of communication with the clients. The brokers should be good at interpersonal communication. They should be able to communicate effectively with the clients. They should be to initiate the discussion with simple terms. The broker should not only listen to the client carefully but also ask various open ended and closed ended questions to understand their particular needs. This will enable them to understand the needs of the clients clearly and address them completely.
The broking service provider can demonstrate high level of verbal and no verbal communication by being an active listener. The brokers should be able to make the customers feels comfortable with eye contact and friendly attitude. The broker should seem interested in knowing about the needs of the client. They should reply in a clear, calm and focused to the queries and concerns of the client. The brokers should pay attention to the non-verbal messages conveyed by the customers like the facial expressions and tone of voice etc.
The broking service providers often need to introduce services, strategies and provide recommendations to the client. This can be done using verbal communication followed by written information. The broker can explain his ideas to the customer with the help of interactive discussion and provide written information on the matter in the form of power point presentation or paper presentation folder. The broker can use various visual aids like tables, graphs, charts and statistics as they are more helpful in understanding a topic.
It is important to use clear and unambiguous language to ensure that the client clearly understands the information communicated to him. The client should not be left confused and unsure after listening or reading the information. The use of jargons may result in ignoring the important points by the client. This will make the client indecisive and incapable to taking correct decisions on products and services required by him. The client satisfaction will thus get reduced.
In order to ensure that the disclosure capacity is as per the industry requirements and organizational guidelines, the Australian Government lays down the FSG guidelines. The guidelines require that the financial provider should disclose to the client in the financial services guide the following regarding his capacity:
As the client is guided through the broking options it is important to consider the needs of the clients and provide them options that suit their needs. The broker should explain each option to the client and discuss the benefits and impact of each product on the client. The broker should explain the advantages and disadvantages of each option and the risk to which the client s exposed upon accepting a product or services. The broker should also discuss the underlying assumptions and possibilities associated with an option with the client.
The financial broker should clearly disclose to the customer the way in which he/she is compensated for the services provided to the client. The financial brokers are usually paid in three forms. In the form of commission paid by the bank for the services provided as a mortgage broker. This is normally the upfront payment calculated at a percentage of the loan amount or could be ongoing trailing commission. Secondly, the loan origination fee or loan processing fee paid by the borrower. This is again the percentage of the loan amount. The percentage can vary though. Third form is as compensation from the lender for introducing the clients to them. The financial broker should disclose to the client the source of his earnings and the percentage or compensation amount whatever applicable.
It is important to discuss the commercial relationship of the representative and their organization to the products or services in order to maintain honesty and transparency with the client. The client has the right to know if the organization is working closely with any lender or bank and are commercially associated with each other. The relationship of the broker/organization and the product or service might affect the recommendations of the broker for them and hence is important for the client to know. The client should be informed so as to reject the offer if he finds that the recommendation is biased.
In case the financial service provider is unable to identify a correct product to suit the needs of the customer or is unsure depending upon the unique requirements of the customer, the service provider should use his professional judgment and consider other issues that may be needed before giving any advice to the client. The service provider should not hesitate to consider information available with other service providers, institutions whenever needed. If the broker is not able to address the issues of the customer they should refer the client to other service providers rather than providing clients with misleading information.
In order to ensure that the client has understood the broking options presented the service provider must provide the customer a wide range of options that suits the needs of the customer. The broker must explain the benefits and risk of all the products and explain how they are matching the needs of the customer. The customer should be allowed to ask various questions and raise queries to ensure that their doubts are cleared. The broker should respond to all the queries and questions and confirm from the customer of he is satisfied with the responses and have understood the options provided.
In order to respond to the concerns of the client appropriately the broker should follow the following steps:
If the client requests alternatives, the financial service provider should assess and evaluate different option on the basis of the requirements of the client and present a range of suitable solutions to the client. The service provider must ensure that the alternatives suggested suits the expectations of the client. He should present to the client the benefits and risk of all the alternatives clearly and accurately.
The financial service providers should adhere to the limits imposed by the regulatory requirements or organizational guidelines, while proving the products and services to the customers. The financial advisers allowed to offer limited services and products to the clients based upon their experience, training, knowledge, expertise and the organizational requirements. The training and qualifications of the service providers define the level of services that they can provide to the customers accurately and confidently. The service providers should adhere to the limits.
The complaint handling procedure should be such that satisfies the client by resolving his problem and also helps the organization to improve the services that lead to complaint by the customer. The basic procedure for compliant resolution is :
Agreement to proceed from the client should be obtained in written form and not just verbally. In case the client is with special needs, it is advisable to have some other person with them for assistance. The service provider should discus all the steps that need to be taken once the client agrees to proceed. The process should be provided to the client in writing. The steps should be outlined in detail.
The financial service provider should ensure that all the interactions with the client are properly documented. The documentation includes:
All these documents and advice should be kept in electronic form as well as a hard copy file of all the original papers. Once all the applications are made, the confirmation of the applications made for the client should be given in hard copy followed by an email if required.
The instruction to purchase should be given by the client in writing and duly signed. All the applications of the clients and purchasing documents by the clients should be in writing and signed by them. The signature is necessary to ensure that the client is agreeing and giving permission to the service provider to act in a particular manner on their behalf. Thus the client shares the responsibility of the act of the broker on their behalf.
The post broking services include the services to the client once the agreement is signed. The broker should communicate to the client in writing the post broking service so that the client understands the role of the brokers in future. The Post broking services include:
The organisational guidelines to follow when dealing with clients with the following special needs: