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Q1

Vertical integration is one the method to get new customers. The large financial institutes own a lot of small independent financial companies. They have different name to the parent company so the customers may not be aware. It will make the customers confuse that they are getting some independent advices. But in fact, all of the financial planners, who working in small company, are actually hired from the same parent company. So their advices are biased. They will advices their customers to buy the parent company’s product.

Q2

In general, there are four things that the CFP financial planners did wrong.

1. The advisers provided some inappropriate advice to customers. The auditors found out that risk profile questionnaires and other part of the client fact were identical various files to the extent of being. It means that the customers were not getting some advices that fit to their financial needs.

2. In Commonwealth bank there is a financial planner, named Don Nguyen, who caught by acting Manager in Chatswood Branch. He pays cash to the staff to give Nguyen over $400k client details direct rather than enter them into the system (CommSee). So the customers were improper measured investment risk and charged fees arbitrarily.

3. Don also had been caught red handed by the team’s compliance manger defrauding a group company CommInsure by tendering multiple $5,000 invoice for financial advice that was never provided.

4. Client complaints were pouring in as this was at the height of the GFC when Lehman’s was melting down and Nguyen’s standardized aggressive portfolios

Q3

1. Not only ensuring the requirements for entry into the industry and becoming licensed to provide financial advice is appropriate. But also keeping training and holding a regular test to our employees, make sure they are well training and fully understand what product the are providing to their clients.

2. Ensuring that ASIC has the information, resources...