FINANCIAL SERVICES GUIDE

This is a guide to the financial services of GILLON SECURITIES LTD. is authorised by its Australian Financial Services Licence (AFSL) to provide and the range of financial products to which our services relate. 

A.      Who will be providing the services to you?

Your Advisor will be acting on behalf of Gillon Securities Ltd, which is responsible to you for any advisory, dealing or other financial services your Advisor provides.

Gillon Securities Ltd is licensed as an Australian Financial Services Licensee (No. 246525) under the Corporations Act. Through our relationship with E*Trade Australia Securities Ltd. we have direct access to all ASX markets and its settlement and clearing infrastructure.

Usually, when providing services to you (eg buying or selling your shares), we will be acting on your behalf as your agent.  We may act as agent for both parties to the one transaction.  From time to time we may act in a transaction with you as principal, in which case we will disclose that we a doing so prior to executing the transaction with you.

B.      What financial services does Gillon Securities Ltd provide?

Gillon Securities Ltd is authorised by its AFSL to underwrite issues of securities and interests in managed investment schemes; and to provide advice on, and to deal in:

·         Basic and non-basic deposit products;

·         Securities and certain derivatives, Australian or Foreign;

·         Debentures, stocks or bonds issued or proposed to be issued by Government;

·         Foreign exchange contracts;

·         Managed investment scheme, including WRAP Accounts;

·         Retirement savings account (‘RSA’) products; and

·         Superannuation products.

We provide custodial or depository services but they are usually incidental to dealing services.  We may provide portfolio management services, discretionary account services or access to short-selling facilities.  We can also assist you in relation to products offered by financial institutions (eg Cash Management Account facilities, margin lending facilities).

Although we do provide other financial services our core focus is on providing stockbroking. When you first contact us we will generally presume that you have already decided to invest a particular part of your investment assets in market traded asset rather than some other asset class (e.g. real estate). If you have not made this decision or you require assistance with it you should let your Advisor know so that he or she can advise you appropriately.

We use E*Trade Australia Securities Ltd (E*Trade) to execute transactions on your behalf on ASX markets.  Our arrangements are subject to our Terms & Conditions for doing business. Funds (i.e. cheques, direct deposits but not cash), documents (e.g. share certificates, statutory declarations) or sponsored holdings must be available to E*TRADE Australia Securities Ltd (‘E*TRADE’), our execution and settlement agent, by the time and date required by the Terms & Conditions.

In relation to foreign securities generally, we have arrangements in place with Participating Organisations of major overseas Stock Exchanges to enable clients to transact or receive advice on those foreign markets.

Gillon Securities Ltd also provides advisory and dealing services in relation to other unquoted financial products such as bank bills, bonds, other money market instruments, debentures, endowment warrants, and superannuation and unit trust products (e.g. managed funds such as property and equities trusts).

1.       More about our Dealing Services…

You must instruct us in certain ways

You may specify how you would like to give us instructions. For example, by telephone, fax or other means. As time is of the essence in ‘live’ markets, the telephone is the preferred means.  Please note that order instructions should be given in terms of volume (i.e. number of shares to be purchased or sold), not value (i.e. $ amount).

Market transactions may be cancelled by ASX

Please note that the ASX has the power, in certain circumstances, to cancel market transactions that have been executed. Cancellation of a transaction executed on your behalf would mean that you lose the benefit of the market price and other entitlements that would have flowed from the transaction.

2.       More about our Advisory Services…

Product Advice  (i.e. Advice, which is also known as General Advice based on the attributes of the financial product alone without any consideration of the question of appropriateness to your financial circumstances)

You should not assume that all advice or recommendations are appropriate for you personally.  The process of profiling your financial circumstances is not relevant in relation to General Advice (e.g. research reports or newsletters, but it may also be verbal), which is based solely on the investment or trading merits of the securities or other particular financial products in question, prepared without consideration of the investment needs and financial circumstances of any particular investor. General Advice will be accompanied by the warning that the advice is not a recommendation that a particular transaction in those financial products is personally appropriate for any particular person.  In these circumstances, you will need to assess whether acting on the advice is appropriate in light of your financial circumstances.  Personal Advice is the opposite of General Advice.

What are the limitations of research, newsletters and other information Gillon Securities Ltd provide about financial products?

The research undertaken by stockbrokers, such as Gillon Securities Ltd, is basically the opinion of specialist analysts or Advisors about particular financial products. Research advice and forecasts can never be guaranteed. History is an unreliable indicator of future performance. It may only be valid for a limited time and is often subject to market movements. For example, a "buy" recommendation for a short-term investor could turn into a "sell" recommendation where the market price appreciated by a small amount. For a longer-term investor, this market movement may not be significant, although a larger movement might be.

A research report recommendation does not necessarily mean that particular recommendation is appropriate for you specifically and you should consult your Advisor before acting on any research report or newsletter.

Personalised Advice (i.e. Advice which recommends certain financial products as appropriate for you based on consideration of your relevant personal financial circumstances)

If you ask your Advisor for advice about whether a particular financial product or investment is suitable for you, he or she is obliged to have a reasonable basis for such a personalised recommendation. To ensure this is the case, your Advisor needs to consider your investment objectives, financial situation and particular needs (i.e. your financial circumstances).

We will therefore request that you provide us with this information and that you update your Advisor regarding any changes to your circumstances that may be relevant when recommendations are given in future. This information will be kept strictly confidential. You have the right not to divulge some or all of this information to us if you do not wish to do so, but your Advisor will be limited in his or her ability to make recommendations specific to your requirements. It may mean that recommendations made to you are not entirely appropriate to your needs and objectives. If you decline to provide sufficient information we are required to warn you about the possible consequences of not doing so.

Unless the Personal Advice is FMRA (see below), it will be presented or confirmed in a Statement of Advice (SoA). If you expressly instruct us that the services you need as a consequence of our Personal Advice are time-critical, we may then execute the relevant transaction(s) and confirm the advice by sending you the SoA within five days.

Further Market-Related Advice (FMRA)

FMRA is a certain type of Personal Advice, which:

·         is given by telephone, email, fax or any other permissible means but not face-to-face; and

·         relates to financial products able to be traded or of the same type which are traded, on a licensed market (e.g. ASX’s SEATS and CLICKS markets); and

·         can not include any other kind of financial product advice; and

·         you require, or it is in your interest for, the FMRA be provided promptly.

When we first provide Market-Related Advice to you, we may be required to issue you a SoA including detail of your financial circumstances on which that type of advice will be based. Thereafter, for further episodes of Market-Related Advice (i.e. FMRA), we are not required to provide an SoA to you unless your personal circumstances relevant to the advice, or the nature of the advice, change significantly.

However, you may request a record of any particular FMRA from us but a request must be made within 90 days of the FMRA being provided.

3.       How to address Investment Risk

What should I know about risks associated with the investments or investment strategies you recommend to me?

We will explain to you any significant risks of investment and strategies that we recommend to you. If we do not do so, you should ask us to explain those risks to you.  By risk we mean the possibility that you will suffer some financial harm or that your financial position may be affected negatively at some future point.

There are many types of risk and while steps can be taken to minimise risk, it cannot be avoided entirely. Below we have listed a broad range of risks associated with investing in traded financial products.

·         Overall Market Risk - This is the risk of loss by reason of movements in a stock market(s) [e.g. ASX operated markets] generally. These can be caused by any number of factors including political, economic, taxation or legislative factors.  Specific examples are changes in interest rates, changes of government, changes in taxation or superannuation laws, international crises or natural disasters.

·         Domestic versus International Risk Factors - The vulnerability of the listed company to international events or other factors affecting the markets for its products or services, influences the value of its securities. These would include movements in exchange rates, changes in trade or tariff policies and changes in other stock or bond markets.

·         Sector Specific Risk Factors - These would include falling demand for the product the listed company produces, weakening commodity prices, the economic cycle of industry, changes in consumer behaviour, lifestyle changes and changes in technology.

·         Stock Specific (i.e. particular to the financial product being considered) Risk Factors - These would include the ‘quality’ of the listed company's directors, the strength of the company's management and the significance of any key personnel, the company's profit history, the company's tangible asset base, debt level and fixed cost structure, litigation, profits or losses on particular contracts, drill results, competition from within the sector, and whether the company already has a profitable business or whether it is exploring for recoverable resources or is developing a new product.

Time Horizon

The period of time over which an investor seeks returns on their investment is referred to as the ‘time horizon’.  Investors with short time horizons (three months or less) are usually known as traders (i.e. they buy and sell securities with a view to benefit from short-term price movements).  Short time horizons generally involve a high level of risk and uncertainty.  Investors with long time horizons (over one year) generally face a lower level of risk and greater likelihood of reaching their investment goals.  In very general terms, the longer an investment is held the less volatile the returns will usually be over the particular time horizon.

In broad terms, what are the alternative investment strategies available to me?

·         Income - You need an income stream, perhaps to meet your living expenses. You may also tend to avoid securities or other financial products that do not pay franked dividends or other forms of tax-effective distribution.

·         Growth - A secure income stream is not necessary, as your income needs are met from other sources. However, you wish to achieve capital growth to provide a hedge against inflation, to accumulate wealth and/or to defer taxation. Securities, which are likely to provide capital growth can also result in capital losses and in fact the securities with the greatest potential for growth, may also have the greatest potential for loss in value.

·         Mix of Growth and Income - Your needs may include both a secure income stream and some measure of capital growth.

·         Short Term Trading - You wish to trade in shares or related derivatives with a view to profiting from short-term movements in market price.

·         Mixture of the Above – Financial products are to be acquired for each of the above purposes.

C.      If I use Gillon Securities services, what fees, commission or any other benefits will be payable to Gillon Securities Ltd

You will be charged brokerage on each transaction executed on your behalf.  Research, newsletters and market information are usually provided free of charge. A fee may be charged half yearly/yearly for portfolio management. We may charge to review your portfolio.

Please note that GST is payable in relation to all service fees and charges.

Brokerage on market transactions

Brokerage will be charged at a minimum of $70 per transaction and at 2% on transaction values up to $10,000. For transaction values above that level, brokerage is negotiable and will be agreed with you prior to accepting your order instructions. The negotiation of brokerage will be influenced by the size of the transaction(s), the types of shares or other financial products likely to be dealt in and whether you are Broker Sponsored by E*Trade Australia Securities Ltd.

How is brokerage calculated and charged?

Brokerage for each purchase or sale on ASX markets is calculated as a percentage of the dollar value of the transaction. For a purchase, the brokerage, together with any applicable duty or tax, is added to the transaction value and the total is the overall consideration due to Gillon Securities Ltd.

Fees & Commissions from Issuers of financial products

If your application for securities or other financial products in a new issue, privatisation or float is stamped by us and is successful, Gillon Securities Ltd receives a lodgement fee from the company, government or relevant issuer. This similarly applies in relation to applications for units in managed funds (e.g. Cash Management Trusts). If we act as an underwriter or sub-underwriter, we will receive fees for acting in that capacity. All lodgement and other fees would be disclosed in the Disclosure Document (e.g. prospectus) or Product Disclosure Statement for the financial product being issued.

Financial Planning Fees

The fee for a financial plan will vary depending on the complexity of the advice and strategy provided (based on hours to prepare the advice). Your Advisor will agree the fee with you prior to the preparation of the financial plan.

Foreign Transaction Fees

For transactions in foreign securities or products, the brokerage charged to you will include the charges of the foreign stockbroker assisting us in the offshore market.

Portfolio Management Service Fees

Gillon Securities Ltd provides an advanced portfolio management service.  We will charge an annual fee for this service of $400.00 and may charge an additional advisory fee of up to 0.5% on the ongoing value of the portfolio.

Discretionary Account Fees

This service will attract brokerage and portfolio management fees in line with the information provided above.

What proportion of brokerage, commissions or fees does my Advisor receive?

Your Advisor receives a proportion of the brokerage, commission, or lodgement fee paid to Gillon Securities Ltd.  That proportion may range from 40% to 50% of what is paid to us.

Further information regarding Fees & Benefits

Where we provide you with Personal Advice, the actual amount of the fees, commissions or other benefits that would be earned by us and your Advisor if you follow the advice will be contained in the SoA or noted in the record of the FMRA.

Interests in Financial Products that your Advisor or we may have

We are obliged to inform you of any interest(s) the Advisor, Gillon Securities Ltd or any associate has that may reasonably be expected to be capable of influencing Personal Advice provided to you. Such interests will be disclosed to you at the time that recommendation is made to you.

Trailing Commissions

We may receive ongoing commission from Financial Institutions where we place your funds or other investments with them. Those commissions may range from 0.00% to 0.5%.

Referral Fees or Other Rebates/Benefits due to third parties who referred you to us

Where you have been referred to us by someone else, if we pay them a fee or commission in relation to that referral, we will make a separate disclosure to you.

D.      Do Gillon Securities Ltd have complaint resolution procedures?

Yes.  GSL is committed to providing a high standard of client service and to maintaining our reputation for professionalism and integrity. If you have a concern, or are dissatisfied with the service provided to you, please lodge a complaint either verbally or in writing and be assured it will be dealt with in a prompt and fair manner and in strict confidence.

If you have a complaint, you should take the following steps:

1.         Contact your Advisor and tell your Advisor about your complaint.

2.         If your complaint is not satisfactorily resolved within 3 days, please contact our Complaints Manager or put your complaint in writing, together with relevant documentation, and send it to us addressed to:

     Complaints Manager

     GILLON SECURITIES LTD.

     PO Box 25

     Collins Street West VIC 8007

   When the complaint is received, the Complaints Manager will usually contact you  within 48 hours in relation to resolving your complaint or to advise you of the steps that will be taken to address it.  We will try and resolve your complaint quickly and fairly.

3.         If you are not satisfied with our handling of your complaint please direct your concerns to Financial Services Complaints Service Ltd.  Gillon Securities Ltd is a Member of this Service.  The contact details for the Service are as follows:

     Financial Industry Complaints Service Ltd

     GPO Box 579, Collins Street West

     Melbourne Victoria 8007

     Toll Free:  1300 780 808     Fax:  03 9621 2291

     Website:     www.fics.asn.au

E.      Is the Personal Information I provide to Gillon Securities Ltd private and confidential?

Gillon Securities Ltd is committed to protecting and maintaining the privacy, accuracy and security of personal information you provide to us.  Your personal information will be handled in accordance with our Privacy Policy and used for establishing and maintaining you as an account holder and user of various client services.  Without all of the information requested, we may be unable to provide you with some or all of our services (e.g. personalised advice).  Unless required or authorised by law or other regulation, your personal information will not be passed on to any third-party without your consent.  Your personal information is available for you to review or correct.

If you wish to receive a copy of our Privacy Policy, or to review personal information we hold about you, or to check the range of organisations to whom we may provide information about you, or if you have a complaint in relation to the privacy of your personal information, or if you do not wish to receive further information about other services or products, please contact our Privacy Officer.