The recent Federal Court decision in Australian Securities and Investments Commission v Lanterne Fund Services Pty Limited [2024] FCA 353 provides the elements that an effective monitoring & supervision program should contain.
I have expanded these elements based on my experience in working with clients in the insurance industry.
𝙄𝙢𝙥𝙡𝙚𝙢𝙚𝙣𝙩𝙞𝙣𝙜 𝙖𝙣 𝙚𝙛𝙛𝙚𝙘𝙩𝙞𝙫𝙚 𝙈𝙤𝙣𝙞𝙩𝙤𝙧𝙞𝙣𝙜 & 𝙎𝙪𝙥𝙚𝙧𝙫𝙞𝙨𝙞𝙤𝙣 𝙥𝙧𝙤𝙜𝙧𝙖𝙢
- A robust due diligence process of all representatives pre-appointment
- Agreements with new CARs (& employees) containing requirements & obligations
- Supervisory arrangements – comprising monthly attestations, self-audits & risk-based audits by the licensee, formal & informal meetings with comprehensive note-taking, robust reporting of incidents, breaches & complaints
- Risk management & compliance systems – must be formal, systematic & documented & cover the risks faced by the firm. Risk & Compliance manuals must be tailored & current. The licensee should provide clear guidance & instructions to its CARs & ARs about their obligations regarding compliance with the financial services laws
- Training – must be provided & cover financial services laws including AR obligations & the relevant industry Codes. Conducted during induction & annually thereafter
- Human resources – the licensee must have enough people to conduct the monitoring & supervision activities. This includes regular performance reviews of the representatives & consequence management
- Technological resources – an adequate IT infrastructure to keep abreast of issues such as IT security or cyber security
- The Licensee must have enough responsible managers who are qualified, skilled & experienced in general insurance with sufficient time to conduct their role effectively
- Governance should include a risk & compliance committee meeting quarterly & receiving data, information & insights to oversight the licensee & their representatives
- The Monitoring & Supervision program must include self-checking mechanisms so that your compliance arrangements continue to evolve with regulatory changes & business growth.
I can work with you to:
1. Conduct a compliance review of your current compliance arrangements identifying gaps and adopting a risk-based approach. My reviews adopt a top-down approach not a file-by-file audit approach;
2. Design a fit-for-purpose, tailored AR program for your business;
3. Provide training for your representatives.
2. Design a fit-for-purpose, tailored AR program for your business;
3. Provide training for your representatives.