FINSIA Professional Banking Fundamentals cheat sheet
FINSIA Professional Banking Fundamentals · Keep the key ideas within reach.
Professional Banking Practice
Fiduciary duty requires a bank employee to place the client's interest above personal or bank revenue interest when giving personal advice; conflicts must be disclosed, managed or avoided.
Best-interests duty (applied to personal advice under Australian financial services law) requires the adviser to act in the client's best interests and, where a conflict exists, to prioritise the client's interest.
Know Your Customer (KYC) rule: verify identity from an original or certified primary document (e.g., passport, driver licence) plus a secondary document confirming residential address before opening an account.
Customer Due Diligence (CDD) triggers include new account opening, suspicious transactions, changes in beneficial ownership, and politically exposed person (PEP) status.
Confidentiality rule: client information may be disclosed only with consent, where legally compelled (e.g., court order, AUSTRAC notice), or where a public-interest exception applies.
Conflict-of-interest hierarchy: avoid first, then control (e.g., Chinese walls, disclosure), then disclose; remuneration structures that reward product sales create conflicts requiring management.
Complaint handling: internal dispute resolution must be attempted first within prescribed timeframes; unresolved complaints may escalate to an external ombudsman scheme (e.g., AFCA).
Breach reporting: significant breaches of financial services law must be reported to the regulator (ASIC) within 30 days of becoming aware, after assessing and containing the breach.
Professional standards: continuing professional development, adherence to a code of conduct, and escalation of unethical instructions to compliance or a whistleblower channel.
Banking and Financial Services Environment
Reserve Bank of Australia (RBA) sets the cash rate; changes flow through to funding costs, lending rates and the exchange rate.
Australian Prudential Regulation Authority (APRA) prudentially supervises ADIs; key ratios include CET1 capital ratio, liquidity coverage ratio (LCR) and net stable funding ratio (NSFR).
Australian Securities and Investments Commission (ASIC) regulates market conduct, disclosure, licensing and consumer protection for financial products.
AUSTRAC administers anti-money laundering and counter-terrorism financing obligations, including reporting suspicious matter reports (SMRs) and threshold transaction reports (TTRs).
Three-pillar Basel framework: Pillar 1 minimum capital requirements, Pillar 2 supervisory review, Pillar 3 market discipline via public disclosure.
Credit risk capital formula: risk-weighted assets = exposure × risk weight; capital adequacy ratio = eligible capital ÷ risk-weighted assets.
Liquidity coverage ratio (LCR) = high-quality liquid assets ÷ net cash outflows over 30 days; minimum requirement is 100%.
Monetary policy transmission: cash rate changes affect short-term money market rates, then variable mortgage rates, then consumption and investment, with a lag of several quarters.
Financial system participants: ADIs (banks, credit unions, building societies), non-bank lenders, insurers, superannuation funds, payment system operators, and capital market intermediaries.