Distribution Arrangements Compliance with requirements for 3rd party GI distribution arrangements is critical for Brokers, underwriting agencies & insurers. It is an offence to distribute general insurance products if you are not: an ASF licensee; an AR of a licensee; acting under an ASIC instrument; or relying upon an exemption. ???????????????????????????????? ???????????????????????????????????????????????? This arrangement allows a broker or MGA to access the referrer’s customer database & offer them insurance products/service. Typically the referrer is a non-financial service business. A referrer does not provide financial services (& is not required to hold a licence or be appointed as an AR) provided: they only inform their customers that another person (A) provides insurance products or services; provide the contact details of (A); & disclose to their client if they are being paid a referral fee by (A). It is critical that the referrer does no more than referring. The more involved in the insurance transaction, the more likely they are to provide a financial service. ???????????????????????????????????????? ???????????????????????????????????????????????????????????? An AR arrangement enables firm B to provide financial services under firm A’s AFS Licence. An AR may be authorised to provide all or part of the Licensee’s financial services. The licensee is responsible for ensuring the AR complies with financial service laws & its licence conditions however, the AR also has independent obligations. Generally, AR’s must be notified to ASIC within 30 business days of appointment. There are also a number of other formalities that are required. ???????????????? ???????????????????????????????????????????????? ???????????????????????????????????????? Under this instrument, a person may distribute insurance products on behalf of the licensee, subject to: the distributor not being an AR of the Licensee; provides details of the licensee’s IDR; discloses the relationship & remuneration received; & does not provide financial product advice. ???????????????? ???????????????????? ???????????????????????????????????????? ???????????????? ???????????????????????????????????????? Under this instrument, typically a person is provided with a master insurance policy & extends cover to its clients as a named individual for payment of a premium. The GPB: must not be carrying on financial services as its primary business, the arrangement is ‘incidental’ to its primary business; & must not make a profit from the arrangement. They can only cover their reasonable expenses in administering the arrangement. ???????????????????????????????????????? & ???????????????????????????????????????????? A licensee has obligations to monitor all these arrangements & should adopt a systematic approach.
Insurance brokers – Tidying up after a busy June: a compliance perspective You’ve had a hectic June but feel satisfied because you assisted so many clients There is an alarming amount of paperwork that you need to clear & you’re desperately trying to remember all the compliance stuff that you’re supposed to do. I’m not condoning non-compliance however you have a small window to rectify. We are only human after all & we all make mistakes. Don’t forget to raise any non-compliance as an incident in either CCX 360 or similar register & declare on your attestation. ???????????????? ???????????????????????????????????? ???????????????????????????????????????? ???????????????????????????????????? Over the past 4 weeks 1 Did you provide Terms of engagement to prospective clients? Did you provide an FSG? If the client is a retail client did you disclose your actual $ remuneration? Was any client dissatisfied with your service? If so, raise as a complaint, give the client a call to check in, apologise & advise of your IDR process Did you provide support to any client experiencing vulnerability? Did you correctly identify consumer insurance contracts & comply with your client’s duty to take reasonable care not to make a misrepresentation? In all other cases did your client comply with their duty of disclosure? Did you contact your client at least 14 days before the policy expiry date? Did you bind terms for your client? If the insurer or underwriting agency did not provide renewal terms or non-renewal notice to you 14 days prior to the due date your client has the benefit of statutory cover for renewals. Did you ensure that your retail client fell within the Target Market Determination? Did you send your retail client the PDS? (Which also includes the policy schedule). If you are a NIBA member & won the account but the previous broker did all the renewal work. Did you send the commission to the previous broker? In your client dealings, did you act honestly & with integrity? Did you act with commercial decency? Did you provide a duty of care to your client that a reasonable broker in your circumstances would? Was all client money paid into your trust account? Any E&O matters that you need to disclose to your PI insurer? ???????????????? ???????????????? ???????? ???? ???????????????????? ???????????????? ???????????? ???? ???????????????????????????????????????? ????????????????????????-???????????????????? As the dust settles in June, now is a great time to think about a compliance health check. When conducting a compliance health check of your broking business I consider: 1. Financial service laws 2. Your AFSL authorisations & conditions 3. Your obligations as an Authorised Rep 4. Your monitoring of your staff, ARs & referrers 5. If you’re a Steadfast member – Steadfast Broker Code of conduct 6. If you’re a NIBA member – the Code of Practice 7. CCX 360 or equivalent (evidence of compliance)