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๐—ง๐—ผ๐—ฝ ๐Ÿฑ ๐—ถ๐—ป๐—ณ๐—น๐˜‚๐—ฒ๐—ป๐—ฐ๐—ฒ๐˜€ ๐—ผ๐—ป ๐—ฐ๐—ผ๐—บ๐—ฝ๐—น๐—ถ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐—ถ๐—ป ๐Ÿฎ๐Ÿฌ๐Ÿฎ๐Ÿฏ ๐—ณ๐—ผ๐—ฟ ๐˜๐—ต๐—ฒ ๐—ถ๐—ป๐˜€๐˜‚๐—ฟ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐—ถ๐—ป๐—ฑ๐˜‚๐˜€๐˜๐—ฟ๐˜†

Today’s list covers the top 5 groups that influenced complianceย for the insurance industryย during 2023. ๐—ก๐—ผ. ๐Ÿฑ ๐—œ๐—ป๐˜€๐˜‚๐—ฟ๐—ฒ๐—ฟ๐˜€ APRA-regulated insurers make it onto my list due to a number of factors. With substantial resources (particularly the larger insurers), insurers have the internal numbers to implement complex & robust compliance arrangements, this sets expectations & a benchmark for best practice; Given insurers dominate the insurance landscape, especially retail insurance, the focus of regulators & industry bodies is always on Suncorp, IAG, QBE, Allianz, Hollard et al Insurers in turn drive the compliance measures at MGAs & TPAs. Due to FAR & CPS 230, this will continue into 2024/25 extending to insurance brokers. ๐—ก๐—ผ ๐Ÿฐ. ๐—œ๐—ป๐—ฑ๐˜‚๐˜€๐˜๐—ฟ๐˜† ๐—ฏ๐—ผ๐—ฑ๐—ถ๐—ฒ๐˜€ The Insurance Council of Australia, CGC, National Insurance Brokers Association (NIBA) & IBCCC continue to heavily influence & drive compliance positions across the industry. In addition, Insurtech Australia & Underwriting Agencies Council (UAC) have also been leading the way in respect of technology & the emergence of underwriting agencies. ๐—ก๐—ผ ๐Ÿฏ. ๐—œ๐—ป๐—ฑ๐˜‚๐˜€๐˜๐—ฟ๐˜† ๐—–๐—ผ๐—ฑ๐—ฒ๐˜€ The GI Code of Practice has always been a heavy influence on the compliance programs for insurers (& MGAs & TPA’s) however the Insurance Brokers Code of Practice has been remarkable in driving the compliance focus for insurance brokers. This has been particularly evident for brokers with large Authorised Representative networks. ๐—ก๐—ผ ๐Ÿฎ. ๐—ฅ๐—ฒ๐—ด๐˜‚๐—น๐—ฎ๐˜๐—ผ๐—ฟ๐˜€ ASIC, Australian Prudential Regulation Authority &, while technically not a regulator, Australian Financial Complaints Authority have continued to have a strong influence on compliance across the insurance industry. From taking Federal Court action on pricing promises to shutting down an insurer & its underwriting agency partners for 24 hours due to a defective TMD to CPS 230 & AFCA determinations, the regulators continue to set the direction & focus on compliance for the insurance industry. ๐—ก๐—ผ ๐Ÿญ ๐—–๐—ผ๐—บ๐—ฝ๐—น๐—ถ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐—ฃ๐—ฒ๐—ผ๐—ฝ๐—น๐—ฒ ๐Ÿ† ๐Ÿฅ‡ The Gold Medal for 2023 in successfully driving compliance are the unsung heroes – people, specifically the person(s) within each organisation who drives & champions compliance. The better compliance people manage to find the right balance between compliance & business & focus their efforts on raising internal awareness, training & education. The Compliance Champions forย 2023 and the top influencers on Compliance within the Insurance industry for 2023 are our wonderful compliance people.
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๐—”๐—ฆ๐—œ๐—– ๐—น๐—ฒ๐˜๐˜๐—ฒ๐—ฟ ๐—ฐ๐—ฎ๐—น๐—น๐˜€ ๐—ผ๐—ป ๐—ถ๐—ป๐˜€๐˜‚๐—ฟ๐—ฒ๐—ฟ๐˜€ ๐˜๐—ผ ๐—ถ๐—บ๐—ฝ๐—ฟ๐—ผ๐˜ƒ๐—ฒ ๐—ฐ๐—น๐—ฎ๐—ถ๐—บ๐˜€ ๐—ต๐—ฎ๐—ป๐—ฑ๐—น๐—ถ๐—ป๐—ด ๐—ฝ๐—ฟ๐—ฎ๐—ฐ๐˜๐—ถ๐—ฐ๐—ฒ๐˜€

ASIC has issued a letter reminding general insurers of their obligations as Australian financial services (AFS) licensees when handling insurance claims, especially in response to severe weather events. (ASIC’s letter was published on 6th March 2024). The letter sets out the obligations general insurers have as AFS licensees under the Corporations Act 2001 (Cth). General insurers are required to act efficiently, honestly, & fairly when providing claims handling services: see section 912A. This includes resolving claims in a timely manner, especially when responding to claims relating to severe weather events. Insurers are required to: – communicate transparently, clearly & in a timely way with consumers regarding their claims – effectively project manage third parties, including assessors & tradespeople – identify complaints and expressions of dissatisfaction at the earliest opportunity – recognise consumers experiencing vulnerability & tailor their claims handling service accordingly, & sufficiently resource claims handling & dispute resolution functions, & ensure staff are adequately trained. Insurance claims handling is an enforcement priority for ASIC in 2024. ASIC is monitoring claims handling through reports of misconduct made directly to ASIC, any systemic issues reported by AFCA, and regular contact with consumer groups assisting people with claims & related disputes. ASIC’s message is they are watching how insurers support their customers very closely. Evidence of significant misconduct identified through these channels may result in enforcement action. ๐˜พ๐™ค๐™ข๐™ฅ๐™ก๐™ž๐™–๐™ฃ๐™˜๐™š ๐™ง๐™š๐™ซ๐™ž๐™š๐™ฌ ๐™ค๐™› ๐™˜๐™ก๐™–๐™ž๐™ข๐™จ ๐™๐™–๐™ฃ๐™™๐™ก๐™ž๐™ฃ๐™œ ๐™ฅ๐™ง๐™–๐™˜๐™ฉ๐™ž๐™˜๐™š๐™จ It may be prudent to conduct a compliance review of your claims handling & settling practices including service suppliers. The review should also cover GI Code of Practice obligations. A compliance review assesses the adequacy of your compliance arrangements to manage AFSL & Code obligations & provides solutions adopting a risk-based approach. Underwriting Agencies with AFSL claims authorisation & Insurance Claims Managers (TPA) should also consider a compliance review. Contact me to explore how I can assist.
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๐€๐๐ฏ๐ž๐ซ๐ญ๐ข๐ฌ๐ข๐ง๐  ๐†๐ž๐ง๐ž๐ซ๐š๐ฅ ๐ˆ๐ง๐ฌ๐ฎ๐ซ๐š๐ง๐œ๐ž ๐ฉ๐ซ๐จ๐๐ฎ๐œ๐ญ๐ฌ & ๐ฌ๐ž๐ซ๐ฏ๐ข๐œ๐ž๐ฌ

As a compliance specialist, I always read adverts from insurers, underwriting agencies, insurance brokers etc I analyse the inherent compliance risk arising from the advertisement. ๐™ˆ๐™ž๐™จ๐™ก๐™š๐™–๐™™๐™ž๐™ฃ๐™œ ๐™ค๐™ง ๐™™๐™š๐™˜๐™š๐™ฅ๐™ฉ๐™ž๐™ซ๐™š ๐™˜๐™ค๐™ฃ๐™™๐™ช๐™˜๐™ฉ Advertising gives rise to the risk of engaging in misleading or deceptive conduct. Generally speaking, misleading or deceptive conduct leads a person into error. Engaging in Misleading or deceptive conduct is a reportable situation to ASIC. ASIC’s regulatory guide RG 234, helps licensees & promoters comply with their legal obligations to not make false or misleading statements or engage in misleading or deceptive conduct. ๐™‚๐™ค๐™ค๐™™ ๐™‹๐™ง๐™–๐™˜๐™ฉ๐™ž๐™˜๐™š ๐™‚๐™ช๐™ž๐™™๐™–๐™ฃ๐™˜๐™š RG 234.16 contains an overview of ASIC’s good practice guidance for advertising in all media: Returns, features, benefits & risks – a balanced message between benefits & risks should be provided. Benefits should not be given undue prominence compared with risks; Warnings, disclaimers, fine print & qualifications should not be inconsistent with other content in an advertisement, including any headline claims; Where a fee or cost is referred to in an advertisement, it should give a realistic impression of the overall level of fees & costs a consumer is likely to pay, including any indirect fees or costs; Comparisons should only be made between products that have sufficiently similar features or, where an advertisement compares different products, the differences should be made clear in the advertisement; Past performance information should be accompanied by a warning that past performance is not indicative of future performance; Terms and phrases should not be used in a particular way by industry where these are not consistent with the ordinary meaning commonly recognised by consumers (e.g. โ€˜freeโ€™, โ€˜secureโ€™ & โ€˜guaranteedโ€™); Advertisements should be capable of being clearly understood by the audience that might reasonably be expected to see the advertisements; Where an advertisement draws attention to specific product features, the advertisement should be consistent with information contained in any disclosure document (such as a PDS); Photographs & images should not contradict, detract from or reduce the prominence of any warnings, disclaimers or qualifications; & Advertisements for a financial advice service should not create unrealistic expectations about what the service can achieve. In certain media, adverts must refer to the PDS & TMD ๐™Š๐™ซ๐™š๐™ง๐™–๐™ก๐™ก ๐™ž๐™ข๐™ฅ๐™ง๐™š๐™จ๐™จ๐™ž๐™ค๐™ฃ ๐™ค๐™› ๐™ฉ๐™๐™š ๐˜ผ๐™™๐™ซ๐™š๐™ง๐™ฉ Assessing the overall impression is important. ASIC considers the following factors: a) the subject; b) the content; c) the format; d) the audience; e) the media used; & f) the likely effect of the advertisement
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๐—”๐—น๐—ถ๐—ด๐—ป๐—บ๐—ฒ๐—ป๐˜ ๐—ผ๐—ณ ๐—ฐ๐—ผ๐—บ๐—ฝ๐—น๐—ถ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐—ผ๐—ฏ๐—น๐—ถ๐—ด๐—ฎ๐˜๐—ถ๐—ผ๐—ป๐˜€ ๐˜๐—ผ ๐˜๐—ต๐—ฒ ๐—–๐˜‚๐˜€๐˜๐—ผ๐—บ๐—ฒ๐—ฟ ๐—ถ๐—ป๐˜€๐˜‚๐—ฟ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐˜€๐—ฎ๐—น๐—ฒ๐˜€ ๐—ฒ๐˜…๐—ฝ๐—ฒ๐—ฟ๐—ถ๐—ฒ๐—ป๐—ฐ๐—ฒ

When speaking to clients who are concerned about the complexity of compliance, I advise aligning compliance obligations with the customer experience. This enables us to think about compliance in a logical, systematic manner. The risk of non-compliance, regulatory enforcement action & customer detriment is managed. ๐™๐™๐™š ๐™ž๐™ฃ๐™จ๐™ช๐™ง๐™–๐™ฃ๐™˜๐™š ๐™จ๐™–๐™ก๐™š๐™จ ๐™ฅ๐™ง๐™ค๐™˜๐™š๐™จ๐™จ – 3 ๐™ฅ๐™ง๐™š๐™ก๐™ž๐™ข๐™ž๐™ฃ๐™–๐™ง๐™ฎ ๐™ฆ๐™ช๐™š๐™จ๐™ฉ๐™ž๐™ค๐™ฃ๐™จ Answering 3 simple questions sets the signage for the customer sales pathway. 1. Is the client retail or wholesale? It is important to understand the disclosure documents & warnings that must be provided. This is a 2 step process. a) is the customer an individual or small business (as defined)? If yes, keep going, no = wholesale client b) does the product fall within s761G(5)(b) Corps Act as defined in Regs 7.1.11 – 7.117A? if yes = retail, if no = wholesale. 2. Is this a consumer insurance contract? This is important to determine whether the duty to take reasonable care not to make a misrepresentation or the Duty of disclosure applies. Either: a) falls within the definition of s11AB Insurance Contracts Act; or b) is deemed to be a consumer insurance contract by the insurer giving a written notice to that effect 3. Are you a Distributor (GI Code) or a [NIBA member] Insurance broker or AR of a broker (Brokers Code). This determines whether the standards & obligations of the relevant industry Codes apply to you during the sales process ๐™๐™๐™š ๐™˜๐™ช๐™จ๐™ฉ๐™ค๐™ข๐™š๐™ง ๐™ž๐™ฃ๐™จ๐™ช๐™ง๐™–๐™ฃ๐™˜๐™š ๐™จ๐™–๐™ก๐™š๐™จ ๐™ฅ๐™ง๐™ค๐™˜๐™š๐™จ๐™จ Once you have the information, it is relatively easy to map compliance obligations to each stage of the customer insurance sales process As an example – a retail client for a consumer insurance contract & you are an insurance broker acting for an insured or in plain language, a new client asks about insurance for their home. ๐˜ผ๐™ฉ ๐™š๐™ฃ๐™œ๐™–๐™œ๐™š๐™ข๐™š๐™ฃ๐™ฉ provide the client with: 1. Terms of engagement (Brokers Code) 2. FSG (AFSL requirement) ๐™‰๐™š๐™š๐™™๐™จ ๐™–๐™ฃ๐™–๐™ก๐™ฎ๐™จ๐™ž๐™จ 1. provide a warning – general or personal advice [AFSL] 2. understand the insurers or underwriting agency’s underwriting questions to respond to the insured’s duty to take reasonable care not to make a misrepresentation [Insurance Contracts Act] 3. Disclose $$ remuneration (or an estimate & the actual amount as soon as reasonably practicable) [Code] 4. ensure the client falls within the relevant TMD [AFSL] ๐™Œ๐™ช๐™ค๐™ฉ๐™ž๐™ฃ๐™œ ๐™จ๐™ฉ๐™–๐™œ๐™š 1. Provide the PDS [AFSL] ๐™ˆ๐™–๐™ฅ๐™ฅ๐™ž๐™ฃ๐™œ ๐™ฉ๐™๐™š ๐™จ๐™–๐™ก๐™š๐™จ ๐™ฅ๐™ง๐™ค๐™˜๐™š๐™จ๐™จ There may be other obligations that arise during the sales process such as misleading or deceptive conduct, hawking etc however you can see that this is merely a case of mapping out the sales process & assigning the compliance obligation at each stage
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๐—ช๐—ต๐—ฒ๐—ป ๐—ฑ๐—ผ ๐—œ ๐—ฝ๐—ฟ๐—ผ๐˜ƒ๐—ถ๐—ฑ๐—ฒ ๐—ฎ ๐—™๐—ฆ๐—š, ๐—ฃ๐——๐—ฆ….

A common question I’m asked is the timing to provide disclosure documents & other notices. The source of the obligation – Act, Regs or Code includes the timing & content requirements for each document & by whom & to whom provided. The requirements depend on the type of client (retail or wholesale), what you do & who you represent (broker representing an insured or MGA/TPA representing an insurer, or an insurer). ๐—ฆ๐˜‚๐—บ๐—บ๐—ฎ๐—ฟ๐˜† ๐‘ญ๐‘บ๐‘ฎ An AFS Licensee or their AR must give a FSG to a retail client as soon as practicable after it becomes apparent that a financial service will be provided to that client & before a financial service is provided. It is industry best practice to provide an FSG to wholesale clients. Insurance brokers should be aware that an FSG may be given after the services have been provided in ‘time critical’ cases such as an impending policy due date (4pm). Brokers can also provide the ‘Terms of engagement’ (part 4.2 Brokers Code) at the same time as providing an FSG. Insurance Claims Managers do not need to provide an FSG (as they act for insureds) but Claimant Intermediaries must. ๐—ฆ๐—ข๐—” A Statement of Advice must be provided where personal advice is provided to a retail client for sickness & accident & CCI insurance products. The SOA must be provided when or as soon as practicable after providing the advice. ๐—š๐—ฒ๐—ป๐—ฒ๐—ฟ๐—ฎ๐—น ๐—ฎ๐—ฑ๐˜ƒ๐—ถ๐—ฐ๐—ฒ ๐˜„๐—ฎ๐—ฟ๐—ป๐—ถ๐—ป๐—ด A GAW must be provided at the same time & in the same format as when general advice is provided to retail clients. If the GA is provided on a website or in a document the GAW must be included. ๐‘ท๐‘ซ๐‘บ Generally, a product issuer (insurer or MGA) must provide a PDS to a retail client when making an offer (quote) or sale. A broker should ensure a PDS is provided when making a recommendation to a retail client to buy an insurance product. ๐‘ป๐‘ด๐‘ซ A TMD must be made publicly available before any person distributes a financial product that is subject to the design & distribution obligations ie ‘retail product distribution’. Generally the TMD is available on issuers websites with links provided in relevant documents. ๐‘ช๐’‚๐’”๐’‰ ๐‘บ๐’†๐’•๐’•๐’๐’†๐’Ž๐’†๐’๐’• ๐‘ญ๐’‚๐’„๐’• ๐‘บ๐’‰๐’†๐’†๐’• & ๐‘ช๐’๐’๐’‡๐’Š๐’“๐’Ž๐’‚๐’•๐’Š๐’๐’ ๐’๐’‡ ๐‘ป๐’“๐’‚๐’๐’”๐’‚๐’„๐’•๐’Š๐’๐’๐’” A CSFS must be provided by insurers (or TPA) to retail clients before a cash payment is made where there are other legally available options to settle the claim. A CoT must be provided as is reasonably practicable after the transaction with the retail client occurs & includes acceptance & settlement of an insurance claim. A CSFS may be provided up to 5 days after the payment in cases of ‘immediate need’. A CSFS or CoT is not required in family violence situations. ๐‘ผ๐‘ญ๐‘ฐ Brokers must provide a written notice to a client when placing business with an Unauthorised Foreign Insurer when relying upon 1 of the 4 exceptions. Contact me to understand all your disclosure & notices obligations.
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๐— ๐—ฎ๐—ป๐—ฎ๐—ด๐—ถ๐—ป๐—ด ๐˜๐—ต๐—ฒ ๐—ฐ๐—ผ๐—บ๐—ฝ๐—น๐—ฒ๐˜…๐—ถ๐˜๐˜† ๐—ผ๐—ณ ๐—ฐ๐—ผ๐—บ๐—ฝ๐—น๐—ถ๐—ฎ๐—ป๐—ฐ๐—ฒ

The regulatory regime for providing insurance products & services in Australia is complex. Financial services laws, ASIC Reg Guides, APRA Prudential Standards, GI & Brokers Code of Practice, and Agreements (binder, agency, distribution & claims) create a plethora of obligations with severe consequences for non-compliance. The primary purpose of compliance is to protect. Protect the business, its people, customers & other key stakeholders. How do you ensure that you achieve this purpose & not get pulled down the ‘tick-a-box checklist’ pathway that creates a multitude of rules, instructions & documents? Here are some tips to effectively & efficiently manage the complexities of compliance: ๐™Ž๐™ฎ๐™จ๐™ฉ๐™š๐™ข๐™–๐™ฉ๐™ž๐™˜ ๐™–๐™ฅ๐™ฅ๐™ง๐™ค๐™–๐™˜๐™ Compliance management requires an operating rhythm. Adopting a systematic approach to compliance ensures that your compliance measures provide optimum protection to the business, its people & customers. ๐˜พ๐™ก๐™š๐™–๐™ง ๐™ง๐™ค๐™ก๐™š๐™จ & ๐™ง๐™š๐™จ๐™ฅ๐™ค๐™ฃ๐™จ๐™ž๐™—๐™ž๐™ก๐™ž๐™ฉ๐™ž๐™š๐™จ Clarity around roles & responsibilities creates accountability. It also drives efficiencies & avoids gaps or duplication. Typically, the business performs the compliance task & activities while risk & compliance functions (or a risk & compliance committee) provide monitoring & oversight. ๐™€๐™™๐™ช๐™˜๐™–๐™ฉ๐™ž๐™ค๐™ฃ & ๐™–๐™ฌ๐™–๐™ง๐™š๐™ฃ๐™š๐™จ๐™จ Compliance is complex, and training is essential. The training for employees & Authorised Reps must be practical, business-focused & lead people to understand why they should care. Caring results in doing. ๐™๐™๐™š ๐™™๐™ค๐™ž๐™ฃ๐™œ A well-crafted document doesn’t provide protection. The protection comes from people reporting incidents, breaches & complaints; from undertaking compliance training in a timely fashion; from following systems & procedures & with a genuine desire to play their part in protecting the business, colleagues & customers. ๐™ˆ๐™ค๐™ฃ๐™ž๐™ฉ๐™ค๐™ง๐™ž๐™ฃ๐™œ & ๐™จ๐™ช๐™ฅ๐™š๐™ง๐™ซ๐™ž๐™จ๐™ž๐™ค๐™ฃ ‘You can’t see the forest for the trees’. Successful compliance arrangements include those who are doing with an added layer of protection provided by monitoring & supervision. There needs to be a degree of independence between doing & oversight. ๐˜ฟ๐™–๐™ฉ๐™– & ๐™ง๐™š๐™ฅ๐™ค๐™ง๐™ฉ๐™ž๐™ฃ๐™œ A systematic approach to compliance produces data, lots of data. To be meaningful, this data must be analysed. To be valuable, this data must be reported. A systematic approach to compliance includes the use of data to validate the health of the compliance arrangements. ๐™€๐™ซ๐™ž๐™™๐™š๐™ฃ๐™˜๐™š ๐™—๐™–๐™จ๐™š๐™™ Effective documentation helps to educate, raise awareness & demonstrate whether or not you are complying with your obligations. Documentation also provides a transparent benchmark for accountability. ๐™๐™ž๐™จ๐™  & ๐˜พ๐™ค๐™ข๐™ฅ๐™ก๐™ž๐™–๐™ฃ๐™˜๐™š ๐™‚๐™ค๐™ซ๐™š๐™ง๐™ฃ๐™–๐™ฃ๐™˜๐™š The combination of the above elements provides good Governance ensuring that compliance is protected. Contact me should you need assistance with your Compliance measures.
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๐— ๐—ฎ๐—ป๐—ฎ๐—ด๐—ถ๐—ป๐—ด ๐—ฐ๐—ผ๐—ป๐—ณ๐—น๐—ถ๐—ฐ๐˜๐˜€ ๐—ผ๐—ณ ๐—ถ๐—ป๐˜๐—ฒ๐—ฟ๐—ฒ๐˜€๐˜ ๐—ถ๐—ป ๐˜๐—ต๐—ฒ ๐—œ๐—ป๐˜€๐˜‚๐—ฟ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐—ถ๐—ป๐—ฑ๐˜‚๐˜€๐˜๐—ฟ๐˜†

๐‘ป๐’‰๐’† ๐’๐’ƒ๐’๐’Š๐’ˆ๐’‚๐’•๐’Š๐’๐’ AFS Licensees must have in place adequate arrangements for the management of conflict of interest (s912A(1)(aa) Corps Act). Conflicts of interest are circumstances where some or all of the interests of people (clients) to whom a licensee (or its representative) provides financial services are inconsistent with, or diverge from, some or all of the interests of the licensee or its representatives. This includes actual, apparent & potential conflicts of interest. (RG 181.15) ๐™๐™ฎ๐™ฅ๐™ž๐™˜๐™–๐™ก ๐™˜๐™ค๐™ฃ๐™›๐™ก๐™ž๐™˜๐™ฉ๐™จ ๐™ค๐™› ๐™ž๐™ฃ๐™ฉ๐™š๐™ง๐™š๐™จ๐™ฉ ๐™ฉ๐™๐™–๐™ฉ ๐™ข๐™–๐™ฎ ๐™–๐™ง๐™ž๐™จ๐™š ๐™ฌ๐™ž๐™ฉ๐™๐™ž๐™ฃ ๐™ฉ๐™๐™š ๐™ž๐™ฃ๐™จ๐™ช๐™ง๐™–๐™ฃ๐™˜๐™š ๐™ž๐™ฃ๐™™๐™ช๐™จ๐™ฉ๐™ง๐™ฎ Some of the typical conflicts that may arise include: – commissions & non-monetary remuneration paid by the issuer of the products (insurers/MGAs) to insurance brokers. Insurance Brokers act on behalf of the insured (refer s11 Insurance Contracts Act & Part 6.0 Insurance Brokers Code of Practice) – having equity or common directors in a brokerage & underwriting agency; – a claims handler or underwriter having a family or personal relationship with the claimant/broker/insured; – having an interest in an outsourced provider; – providing insurance broking services to 2 clients who contract with each other; – receiving gifts or entertainment from a service supplier, insurer etc ๐™ˆ๐™–๐™ฃ๐™–๐™œ๐™ž๐™ฃ๐™œ ๐™ฉ๐™๐™š ๐™˜๐™ค๐™ฃ๐™›๐™ก๐™ž๐™˜๐™ฉ The requirement is to adequately manage the conflict. The three mechanisms that licensees would generally use to manage conflicts of interest are: (a) controlling conflicts of interest; (b) avoiding conflicts of interest; & (c) disclosing conflicts of interest Controlling conflicts of interest include: – passing the file to a colleague or another firm to manage & putting in place ‘ethical walls’; – adhering to the firms policies & procedures. This means an underwriter would follow their underwriting guidelines when managing a conflict for eg with a broker; similarly a claims handler would follow the claim guidelines where there is a personal relationship & a broker adhering to internal guidelines for commissions; – dealings with related companies would be conducted at arms-length & on commercial terms. Disclosing (to the parties) – this is commonly via a disclosure document (FSG) or on the website (stating who you act for); – raising & recording on the conflicts or gifts & entertainment register with a senior person sign-off; Avoiding If the conflict can’t be adequately managed through controls or disclosure then it must be avoided. ๐˜ฟ๐™ค๐™˜๐™ช๐™ข๐™š๐™ฃ๐™ฉ๐™š๐™™ ๐™š๐™ซ๐™ž๐™™๐™š๐™ฃ๐™˜๐™š It is best practice to document your approach to managing conflicts in a manual or policy & maintaining a conflicts of interest &/or gifts & entertainment register. Staff & representatives must be trained If you would like assistance in implementing mechanisms to manage your conflicts reach out to me.
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๐“๐ก๐ž ๐จ๐›๐ฅ๐ข๐ ๐š๐ญ๐ข๐จ๐ง ๐ญ๐จ ๐ก๐š๐ฏ๐ž ๐ญ๐ซ๐š๐ข๐ง๐ž๐ ๐š๐ง๐ ๐œ๐จ๐ฆ๐ฉ๐ž๐ญ๐ž๐ง๐ญ ๐ฉ๐ž๐จ๐ฉ๐ฅ๐ž – ๐ฐ๐ก๐š๐ญ ๐๐จ๐ž๐ฌ ๐ญ๐ก๐ข๐ฌ ๐ฆ๐ž๐š๐ง?

AFS Licensees have an obligation to ensure that their ๐’“๐’†๐’‘๐’“๐’†๐’”๐’†๐’๐’•๐’‚๐’•๐’Š๐’—๐’†๐’” are adequately trained & are competent (s912A(1)(f) Corps Act) ๐—ช๐—ต๐—ผ ๐—ถ๐˜€ ๐—ฎ ๐—ฟ๐—ฒ๐—ฝ๐—ฟ๐—ฒ๐˜€๐—ฒ๐—ป๐˜๐—ฎ๐˜๐—ถ๐˜ƒ๐—ฒ? Representative means (s9): – an authorised representative of the licensee; – an employee or director of the licensee; – an employee or director of a related body corporate of the licensee; & – any other person acting on behalf of the licensee. ๐˜ผ๐™Ž๐™„๐˜พ’๐™จ ๐™š๐™ญ๐™ฅ๐™š๐™˜๐™ฉ๐™–๐™ฉ๐™ž๐™ค๐™ฃ๐™จ ASIC expects licensees to: (a) identify the knowledge & skills your representatives need to competently provide the financial services; (b) ensure they have the necessary knowledge & skills; (c) ensure they undertake continuing training programs to maintain & update their knowledge & skills; & (d) maintain a record of the training they have undertaken (this is required under reg 7.6.04(1)(d)). As you will observe, training is an ongoing obligation. ๐™๐™ง๐™–๐™ž๐™ฃ๐™ž๐™ฃ๐™œ Most firms adopt a CPD approach to training. However, in order to meet the obligation, representatives must be trained in financial services laws & in the specific financial services & insurance products offered. Simply attending functions or events to obtain CPD points may not satisfy the AFSL obligation. The training must have a connection with your authorised financial services. ASIC has specified minimum training for representatives who provide financial product advice to retail clients (RG 146): Tier 1 products – personal sickness & accident, CCI; Tier 2 – all other general insurance products. ๐˜พ๐™ค๐™ข๐™ฅ๐™š๐™ฉ๐™š๐™ฃ๐™˜๐™š Competence includes skill, knowledge & experience. The competence must be aligned to the financial services (such as claims handling or insurance broking) & the products provided. Generally role descriptions, qualifications, short industry courses, on the job training & professional membership (ANZIIF, NIBA) are indicators of competence however on-going training is required to ensure professional development & remaining relevant. ๐™๐™ง๐™–๐™ž๐™ฃ๐™ž๐™ฃ๐™œ ๐™จ๐™ฅ๐™š๐™˜๐™ž๐™›๐™ž๐™˜๐™–๐™ก๐™ก๐™ฎ ๐™›๐™ค๐™ง ๐™ฅ๐™š๐™ค๐™ฅ๐™ก๐™š ๐™ฌ๐™ค๐™ง๐™ ๐™ž๐™ฃ๐™œ ๐™ž๐™ฃ ๐™œ๐™š๐™ฃ๐™š๐™ง๐™–๐™ก ๐™ž๐™ฃ๐™จ๐™ช๐™ง๐™–๐™ฃ๐™˜๐™š I have developed training options, specifically for general insurance, to assist in meeting your AFSL obligations: I provide training services to businesses: a) Facilitated training on financial services laws, Industry Codes, Responsible Managers; & b) Design of in-house tailored compliance training modules. Check out ‘Compliance Education & Training’ under the ‘Services’ tab on my website (link below) I provide training services to individuals: a) Compliance workshop in Brisbane 21st Mar b) Monthly virtual financial laws training: next course 14th Mar c) Membership subscription Click below & go the tabs ‘Training’ & ‘Membership’ to learn more & register Compliance Advocacy Solutions
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๐—•๐—ฟ๐—ฒ๐—ฎ๐—ฐ๐—ต ๐—บ๐—ฎ๐—ป๐—ฎ๐—ด๐—ฒ๐—บ๐—ฒ๐—ป๐˜ ๐—ถ๐—ป ๐—š๐—ฒ๐—ป๐—ฒ๐—ฟ๐—ฎ๐—น ๐—œ๐—ป๐˜€๐˜‚๐—ฟ๐—ฎ๐—ป๐—ฐ๐—ฒ

Under-reporting of breaches continues to be an industry-wide issue A business focus on incidents is key to successfully managing breaches ๐™๐™ค๐™˜๐™ช๐™จ ๐™ค๐™ฃ ๐™ž๐™ฃ๐™˜๐™ž๐™™๐™š๐™ฃ๐™ฉ๐™จ An incident is something that has happened that shouldn’t have (this includes inaction) All people across the business, Authorised Reps, distributors & anyone acting on your behalf should be trained in understanding, identifying & raising incidents If you focus on breaches then you are expecting your people to know ‘000’s laws Your obligations should be linked to key control(s) therefore control breakdowns are automatically an incident. The training should include practical examples of what an incident(s) looks like within your business & for each business area. If your incident management is inadequate, the incident will continue to grow & cause harm & detriment until such time that it manifests into a breach or a significantly larger breach than if immediately detected. There is also the risk that the breach will be identified by a customer. This suggests that your compliance arrangements are inadequate & may lead to a systemic issue investigation by ASIC or AFCA. An incident & breach register should be maintained. ๐™๐™ง๐™ž๐™–๐™œ๐™š ๐™ค๐™› ๐™ž๐™ฃ๐™˜๐™ž๐™™๐™š๐™ฃ๐™ฉ๐™จ It is important that you don’t allow the business to determine whether an incident is a breach. This analysis requires expertise. An experienced compliance person should review all incidents periodically (frequency based on the size of the organisation) & determine whether (1) additional information is required (2) the incident is a breach & if so, (3) the law &/or Code that has been breached & (4) comply with breach reporting requirements ๐™Ž๐™ค๐™ช๐™ง๐™˜๐™š๐™จ ๐™ค๐™› ๐™—๐™ง๐™š๐™–๐™˜๐™ ๐™ค๐™—๐™ก๐™ž๐™œ๐™–๐™ฉ๐™ž๐™ค๐™ฃ๐™จ Each Law/Code has its own requirements on what needs to be reported, to who & the timing Chp 7 Corporations Act (AFS Licensees) – Section 912DAA – note that ‘financial services laws’ is defined widely (s761A) & include, for example, breaches of the Insurance Contracts Act & the ASIC Act. Insurance Act (APRA regulated insurers) – Section 38AA Privacy Act – Division 3 (notifiable data breaches) GI Code of Practice – paragraph 181 Insurance Brokers Code of Practice – paragraph 11.2 Having separate processes for each law/code is impractical, adds complexity & creates gaps. A single breach management process is paramount ๐˜ฝ๐™ง๐™š๐™–๐™˜๐™ ๐™ข๐™–๐™ฃ๐™–๐™œ๐™š๐™ข๐™š๐™ฃ๐™ฉ ๐™ฅ๐™ง๐™ค๐™˜๐™š๐™จ๐™จ Your breach management process should incorporate RG 78 with pathways to incorporate the breach reporting requirements of all other laws/industry Codes. The process should include: timeframes roles & responsibilities information gathering analysis breach committee or similar breach reporting remediation & rectification learning from the breach & continual improvement Contact me for assistance with your incident & breach management process.
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๐—™๐—ถ๐—ป๐—ฎ๐—ป๐—ฐ๐—ถ๐—ฎ๐—น ๐—ฆ๐—ฒ๐—ฟ๐˜ƒ๐—ถ๐—ฐ๐—ฒ๐˜€ ๐—š๐˜‚๐—ถ๐—ฑ๐—ฒ (๐—™๐—ฆ๐—š) – ๐˜๐—ต๐—ฒ ๐—ผ๐—ฏ๐—น๐—ถ๐—ด๐—ฎ๐˜๐—ถ๐—ผ๐—ป๐˜€

As the FSG is a legal document it’s important that your FSG has legal sign-off. Copying & pasting the FSG of another should be avoided. A Licensee (s941A) or, independently, an Authorised rep (s940A), must give a person a FSG if a financial service is provided to a retail client. ๐™๐™ž๐™ข๐™ž๐™ฃ๐™œ ๐™ค๐™› ๐™œ๐™ž๐™ซ๐™ž๐™ฃ๐™œ ๐™๐™Ž๐™‚ The FSG must be given as soon as practicable after it becomes apparent to the providing entity that the financial service will be, or is likely to be, provided & in any event before the financial service is provided. Generally, for insurance brokers, this means the earlier of, an appointment or when first providing financial product advice. For insurers & underwriting agencies this generally is at the time of making an offer for insurance products (eg a quote). In respect of claims handling & settling services; insurance brokers, underwriting agencies, insurers & insurance claim managers are not required to provide an FSG as the FSG was provided at the time of sale/engagement. However, claimant intermediaries (who act for insureds) must provide an FSG before they provide the financial service. Refer to s941C for situations in which an FSG is not required ๐˜›๐˜ช๐˜ฎ๐˜ฆ ๐˜ค๐˜ณ๐˜ช๐˜ต๐˜ช๐˜ค๐˜ข๐˜ญ ๐˜ค๐˜ข๐˜ด๐˜ฆ๐˜ด If the client immediately requests the financial service or it is not reasonably practicable to give an FSG before providing the service, a statement may be provided (meeting the requirements of s941D(3)) & the FSG provided within 5 days after the statement. ๐˜พ๐™ค๐™ฃ๐™ฉ๐™š๐™ฃ๐™ฉ๐™จ ๐™ค๐™› ๐™– ๐™๐™Ž๐™‚ The title ‘๐˜๐˜ช๐˜ฏ๐˜ข๐˜ฏ๐˜ค๐˜ช๐˜ข๐˜ญ ๐˜š๐˜ฆ๐˜ณ๐˜ท๐˜ช๐˜ค๐˜ฆ๐˜ด ๐˜Ž๐˜ถ๐˜ช๐˜ฅ๐˜ฆ’ must be on the cover of, or near the front of, the FSG. Thereafter, the abbreviation ‘๐˜๐˜š๐˜Ž’, may be used. An FSG must be dated, presented in a clear, concise & effective manner & contain (see s942B also refer to Part 7.7 Div 2 of the regulations): details of the provider including AFSL or AR number the financial services provided who the provider acts for details of remuneration & benefits (incl commission) details of associations or relationships between the provider & issuer (including any related body corporate) for personal advice, details of restricted words or expressions. This includes, for insurance brokers who are paid a commission, that the broker is not independent, impartial or unbiased. information about dispute resolution & how it can be accessed (IDR & EDR) for underwriting agencies details of any binder a statement about PI cover ๐™ˆ๐™ช๐™ก๐™ฉ๐™ž๐™ฅ๐™ก๐™š ๐™™๐™ค๐™˜๐™ช๐™ข๐™š๐™ฃ๐™ฉ๐™จ ss942D & 942DA A FSG may consist of multiple documents such as, for brokers bound by the Code, a ๐˜›๐˜ฆ๐˜ณ๐˜ฎ๐˜ด ๐˜ฐ๐˜ง ๐˜Œ๐˜ฏ๐˜จ๐˜ข๐˜จ๐˜ฆ๐˜ฎ๐˜ฆ๐˜ฏ๐˜ต however must have on the cover a statement to the effect the document is part of a FSG. For insurers & underwriting agencies, an FSG may be combined with a PDS in a single document.
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