FSC522 Legal Obligations Assessment 1: Case Study 2026 | OP

FSC522 Assessment 1

Learning Outcome

2 Apply legal obligations in a financial advice situation.

Instructions

Complete and submit your assessment according to the Open Polytechnic’s Assessments webpage. This includes information on academic integrity, formatting, word limits and referencing.

• Include your name, student number and the assessment number.
• Number your pages.

Submission

• Submit your assessment in one file.
• Submit your work through your iQualify course.
• Emailed assessments will not be accepted.
• You will receive an automated notice advising you of your successful submission.

By submitting your assessment, you confirm that it is your own, original work.

Case Study 1: Charlie Brown Mortgages Limited

You are a financial adviser employed by Charlie Brown Mortgages Limited (CBML) to provide advice on home loans.

Key Information About You:

• You have worked for CBML for five years and hold the New Zealand Certificate in Financial Services (Level 5) with the residential property lending strand.
• You have not been subject to a reliability event.

Key Information About CBML:

• CBML holds a licence issued by the Financial Markets Authority to provide financial advice.
• CBML offers mortgage advisory services. It works with five lending providers:
• Aotearoa Bank
• Bank of the North Island
• Bank of the South Island
• Aotearoa Home loans
• EasyHomeLoans.
• CBML has not been subject to a reliability event.
• CBML does not charge fees or expenses for any financial advice provided to its clients.
• CBML receives commissions from the providers with whom it places business. The commissions range between 0.55% and 0.85% of the value of the mortgage and depend on which lender and what type of mortgage is chosen. They are paid when the mortgage settles.
• CBML’s public disclosure information is available on its website.
• Manaia, a new client, phones you for help in finding the most suitable residential home loan. You explain this will require two meetings – the first is to establish the nature and scope of the relationship. The second is to discuss your advice.

You also mention Manaia will need to bring documentation to the first meeting to help you conduct customer due diligence (CDD). He asks you to drop him an email explaining what is required and why.

Task 1

a. Write an email to Manaia, in which you:

• outline why CDD is required
• explain what information you require from Manaia.

For each piece of information required, give two examples of documentation he should bring to the meeting that will be acceptable for you to verify that information.
(Word count guideline: 200 words)
(15 marks)

b. First meeting:

1.At the start of the meeting, you give Manaia a copy of your disclosure statement.

• Identify the five pieces of information you must disclose at the first meeting to meet your obligations under the Financial Markets Conduct Regulations 2014. Use these as five headings.
• Under each heading, write the statement that will appear in your disclosure statement.

2. After completing CDD, you start collecting further personal and financial information from Manaia to help you and the lender with Manaia’s home loan.

• Identify the specific Information Privacy Principles (IPPs) that are relevant to this meeting. For each relevant IPP, give an example of how you will ensure compliance with it.

(Word count guideline: 350 words)
(25 marks)

c. Second meeting

Prior to discussing your advice, you present the next set of disclosure information to Manaia. He reads through it and asks:
‘OK, I understand you have a Code to follow, but what are these other duties you must comply with – can you explain these to me please?’

1. Answer Manaia’s question by giving him an example of how you will comply with each of these duties in your dealings with him:

• 431I
• 431K
• 431L

2. Identify when you will need to comply with duty 431J in your dealings with Manaia. Give an example of how you will ensure compliance with it.

(Word count guideline: 150 words)
(10 marks)

Case Study 2: Aotearoa Advice Limited

You are a financial adviser employed by Aotearoa Advice Limited (AAL), a large financial advice organisation. Its traditional business has been lending and insurance, but it has just had its licence extended to include KiwiSaver.

AAL belongs to the Insurance and Financial Services Ombudsman dispute resolution scheme.

As part of AAL’s training policy, you have been seconded to the compliance team.

Task 2

The compliance manager gives you a complaint from Katie Woo to review. Katie’s complaint says:

‘I recently had to make a claim following an accident in my car. When I rang your claims team, they told me I was not covered for hiring a car – that hiring a car is an optional extra and I didn’t select it. But when I took out the policy, I specifically said I need a car to get to work, as I live rurally. The adviser didn’t say anything about hiring a car being an optional extra.
‘What makes it worse is that I already pay higher premiums than my partner, just because I’m under 25. That isn’t fair; I don’t know how you get away with it, you shouldn’t be discriminating like that.
‘My partner reckons you have breached the Consumer Guarantees Act and the Human Rights Act, so I’m seeking redress from you.’

You listen to a transcript of the conversation Katie had with the adviser and confirm she is correct. The adviser did not follow AAL’s checklist of questions all advisers should follow, which includes checking if the client wants any optional extras added to their policy.

You confirm that the premium Katie was charged is correct and that AAL charges higher premiums for drivers under 25.

a. Write an initial response to Katie providing an overview of AAL’s internal complaints process and information about your dispute resolution process.

b. Draft a reply to Katie (for checking and sign-off by the compliance manager), in which, for both the Consumer Guarantees Act and the Human Rights Act, you:

• state whether the Act has been breached
• give reasons for your decision, including reference to the relevant sections of the Act.
• If the Act has been breached, recommend a way to remedy the situation, as directed by the Act.
  (Word count guideline: 400 words)
  (25 marks)

Task 3

The KiwiSaver team leader wants to advertise this new service on local radio and in the community weekly newspaper. She emails you:

‘Not sure why, but I’ve been told to contact you for some tips before drafting the ad.’

Write an email response in which you:

1. summarise, in your own words, AAL’s responsibilities under each of sections 20–23 of the Financial Markets Conduct Act (Part 2)
2. for each of sections 20–23, give one example of a statement that the team leader should avoid making in her advertisement, and explain why
3. identify and explain the potential penalties for AAL if it breaches any of sections 20–23 of the Financial Markets Conduct Act (Part 2).
   (Word count guideline: 700 words)
   (25 marks)