Brokers caught out by new policy
Insurance brokers must act now to implement a compliance infrastructure to meet the demands of the ASIC policy statement 161 according to Paul Harding-Davis head of the Financial Services Reform project team at Zurich Financial Services.
Insurance brokers must act now to implement a compliance infrastructure to meet the demands of the ASIC policy statement 161 according to Paul Harding-Davis head of the Financial Services Reform project team at Zurich Financial Services.
Harding-Davis says most brokers are under the false impression that they have un-til two years from the enactment of the Financial Services Reform Bill (FSRB) be-fore having to comply with new regulations.
“There is a general perception amongst brokers that there is no rush,” Harding-Davis says.
“However, PS161 has been in force since July this year and ASIC has already stated it will monitor the industry closely to make sure it complies.”
He says the policy dictates that the relationship between the broker and their sub-agent must be completely transparent.
“Under the new licensing regime, the broker must be able to demonstrate that he or she ‘owns’ the client information. Historically, this hasn’t always been the case, and creates some real challenges for managing relationships in the marketplace,” Harding-Davis says.
“Brokers also need to be reminded that undisclosed payments for referred leads from other professional firms amount to secret commissions, which are illegal.”
Harding-Davis says there is a need for a rapid “cultural change” in the industry to catch up with regulatory requirements.
Head of distribution Steve Newnham warns that brokers who fail to instigate a satisfactory compliance process for their authorised representatives may suffer se-rious consequences.
“The bottom line is that if your subagent is seen to be behaving like a broker, your registration may be revoked or simply not renewed again,” Newham says.
“Likewise, the subagent will be in breach of the Insurance (Agents and Brokers) Act for operating as an unregistered broker.”
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
