AFS Licensee’s have several general obligations, these are set out in s912A(1) Corporations Act.
Licensee’s must:
1. Provide their financial services (includes advice, dealing in general insurance products & claims handling) efficiently, honestly & fairly. Such as
– acting without delay, responding to queries & claims
– assessing claims & insurance applications in the least intrusive & onerous way
– informing insured’s of processes & including fairness in those processes (eg procedural fairness for claim declines)
– services tailored to customers experiencing vulnerability &
– Code membership
2. adequately manage conflicts of interest. Disclosing conflicts, controlling conflicts & avoiding those conflicts that can’t be adequately managed (see RG 181)
3. comply with licence conditions. This may include a key persons requirement or the ability to use restricted broking terms.
4. comply with financial services laws. These include Corps Act Chap 7, ASIC Act Part 2 Div 2, Insurance contracts Act, Insurance Act & Privacy Act among others
5. Ensure representatives comply with financial service laws. This requires a monitoring program for employees, Authorised reps, claim servcie suppliers & material service providers.
6. Other than APRA regulated insurers, have adequate financial, people & IT resources to provide the financial services. Also refer RG 104 & RG 166. APRA insurers must comply with Prudential Standards
7. maintain the competence to provide the financial services. This entails having responsible managers with the requisite knowledge, skills & experience providing complete coverage of your financial services across the business (refer table 1 RG 105)
8. ensure that your representatives (see 5 above) are competent & adequately trained, including RG 146 when providing advice
9. Have a dispute resolution system complying with the enforceable paragraphs of RG 271, provide IDR data to ASIC & be a member of AFCA
10. other than APRA insurers have adequate risk management systems. APRA insurers must comply with CPS 220 & from July 2025 CPS 230
11. comply with Reg 7.6.04 which includes obligations to:
– advise ASIC of material changes to financial position
– adding/deleting Authorised reps
– maintaining a training register
– due diligence prior to appointing AR’s & including their AR number in documents
– provdie a copy of AFSL/AR authorisations upon request
– advise ASIC of change of control of licensee
𝑴𝒂𝒏𝒂𝒈𝒊𝒏𝒈 𝒐𝒃𝒍𝒊𝒈𝒂𝒕𝒊𝒐𝒏𝒔
An obligations register or table (contained within a risk & compliance manual) should be used to manage these & other regulatory (& Code) obligations
Accountability & key controls are aligned to the obligations, enabling management within risk appetite. Control testing, monitoring, data validation & reporting complete the picture.
Speak to me to explore obligations management further.