𝗧𝗵𝗲 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝗰𝗲 𝗼𝗳 𝗱𝗶𝘀𝗰𝗹𝗼𝘀𝗶𝗻𝗴 𝘄𝗵𝗼 𝘆𝗼𝘂 𝗮𝗰𝘁 𝗼𝗻 𝗯𝗲𝗵𝗮𝗹𝗳 𝗼𝗳 Little-known, Section 911C of the Corporations Act is simple, yet packs a powerful consumer-protection punch. Section 911C provides: 𝗣𝗿𝗼𝗵𝗶𝗯𝗶𝘁𝗶𝗼𝗻 𝗼𝗻 𝗵𝗼𝗹𝗱𝗶𝗻𝗴 𝗼𝘂𝘁 A person must not hold out: 1. that the person has an Australian financial services licence; or 2. that a financial service provided by the person or by someone else is exempt from the requirement to hold an Australian financial services licence; or 3. that, in providing a financial service, the person acts on behalf of another person; or 4. that conduct, or proposed conduct, of the person is within authority (for example, as an Authorised Representative) in relation to a particular financial services licensee; if that is not the case 👈 [This is the really important bit]. A breach of s911C is an offence. 𝘾𝙤𝙢𝙥𝙡𝙮𝙞𝙣𝙜 𝙬𝙞𝙩𝙝 𝙨911𝘾 You should obtain legal advice on s911C however, in my experience as a compliance specialist: A 'representation statement', is critical, that includes: 1. The full legal entity name & trading names of all relevant parties; 2. AFSL and AR numbers (& ABN); 2. All the parties involved in the distribution or claims handling end-to-end value chain & their role; & 4. Who is representing who [acting on behalf of]. 𝙈𝙮 '𝙣𝙤-𝙘𝙡𝙞𝙘𝙠' 𝙧𝙪𝙡𝙚 The representation statement should be included in all business documents (including marketing materials) & on your website (& as a seperate regulatory requirement in your TMD, FSG & PDS, as relevant). I frequently, due to my compulsive compliance appetite, explore representation statements on websites of underwriting agencies, insurance brokers, insurance claim managers and claimant intermediaries. I expect to be able to easily find and read your representation statement on your website without having to click on any further links or images on your website. The statement should be prominent, clearly displayed & written in plain english however I accept that business practice is often to have the statement included in the terms & conditions located in the footer of the webpage. 𝘾𝙪𝙨𝙩𝙤𝙢𝙚𝙧-𝙘𝙚𝙣𝙩𝙧𝙞𝙘 𝙖𝙥𝙥𝙧𝙤𝙖𝙘𝙝 𝙩𝙤 𝙘𝙤𝙢𝙥𝙡𝙞𝙖𝙣𝙘𝙚 A customer-centric approach to compliance is being able to clearly & honestly explain to a consumer, the financial services & products that you are providing, and on whose behalf you are acting. It is not your role to determine that, '𝘯𝘰-𝘰𝘯𝘦 𝘤𝘢𝘳𝘦𝘴 𝘢𝘣𝘰𝘶𝘵 𝘰𝘳 𝘳𝘦𝘢𝘥𝘴 𝘵𝘩𝘪𝘴 𝘴𝘵𝘶𝘧𝘧', your role is to be upfront, transparent & honest with consumers & not hold-out that you are something that you are not. #compliance #insurance #generalinsurance
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𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐢𝐧𝐝𝐢𝐜𝐚𝐭𝐨𝐫𝐬 - 𝐚𝐬𝐬𝐢𝐬𝐭𝐢𝐧𝐠 𝐭𝐡𝐞 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐭𝐨 𝐞𝐦𝐛𝐞𝐝 𝐜𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 A well documented compliance framework, of itself, does not serve the true purpose of compliance, protecting the business, its people, customers & partners. Compliance must also be embedded as part of day-to-day business practices. Compliance arrangements need to be both embedded & documented. Compliance in General Insurance is complex with a plethora of financial service laws, reg guides, court decisions, AFCA Approaches, Codes, guidance from Code committees, the list goes on. 𝘽𝙪𝙨𝙞𝙣𝙚𝙨𝙨 𝙘𝙤𝙢𝙥𝙡𝙞𝙖𝙣𝙘𝙚 𝙘𝙝𝙚𝙖𝙩 𝙨𝙝𝙚𝙚𝙩𝙨 A simple way to embed compliance in business operations is to develop cheat sheets for each functional business area. 𝓮𝔁𝓪𝓶𝓹𝓵𝓮𝓼 An underwriting cheat sheet would include: - if you are providing an opinion or recommendation = provide a general advice warning - if you are providing a personal lines quote = include a PDS An insurance broker cheat sheet would include: A new (prospective) client = provide a FSG & Terms of engagement Insurance claims? cash payment = Cash Settlement Fact Sheet Everyone 1. A customer is not satisified with an outcome = a complaint 2. Something has happened that shouldn't have = an incident Support functions also benefit from compliance cheat sheets Finance. The flow of money = client money obligations Marketing. Messages to customers = misleading or deceptive conduct 𝙋𝙤𝙨𝙞𝙩𝙞𝙤𝙣 𝙩𝙝𝙚 𝙗𝙪𝙨𝙞𝙣𝙚𝙨𝙨 𝙖𝙘𝙩𝙞𝙫𝙞𝙩𝙮 𝙛𝙞𝙧𝙨𝙩 To embed compliance into business operations it's necessary to position the business activity first, then consider the compliance requirements. The requirements are 'obligation or source neutral'. It doesn't matter whether the obligation arises as part of general AFSL obligations or code or a binder or agency agreement. Start with the business activity using words that resonate with the business then add in the compliance obligation. 'When I provide a motor quote to a customer - include a PDS' 'When I ask for information to assess a claim - only ask for relevant info' 'When I (broker) sign-up a new client - send a FSG/Terms of engagement 'When I make a change to our website - is it true & accurate (& not misleading or deceptive) 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝗮𝗻𝗱 𝗲𝗻𝗴𝗮𝗴𝗶𝗻𝗴 𝘁𝗵𝗲 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗴𝗼 𝗵𝗮𝗻𝗱-𝗶𝗻-𝗵𝗮𝗻𝗱 Well documented compliance arrangements without business engagement remain well documented compliance arrangements. To ensure that your compliance arrangements protect your business, people, customers & partners you need to engage the business, using the language of the business & placing the business activity first. What's more engaging? Winning new business or Part 7.7 Corporations Act 2001? They both are related but a conversation with an underwriter or broker that starts with winning new business is far more engaging. Speak to me if you would like to explore this further.
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I heard from someone yesterday that they have very serious clients. “But what does that mean?” I asked. “Well, they’re financial services. Law firms. Serious industries.” Hmm… and this is where we need to look at the nuance. You see, working in a serious industry isn’t the same as being a serious person. I work with the legal sector, the insurance market (I’m presenting to a load of insurance cisos this evening), the military, local government… they’re all pretty serious industries. But the people who work there? Well, they’re just people. Sure, some are a bit more straight laced than others. Variety is the spice of life after all, but it’s human nature to laugh, smile, joke around. We can discuss serious topics in not so serious ways. I’m sure insurance people are fed up of formalities at every turn because we think their industry is serious and so vendors target the sector with their marketing and sales spiel, rather than the people. If we all lightened up a bit, brought some fun to proceedings, tried to make each other smile… well, we might just find that we make some HUMAN connections. In fact I’ve got evidence of it 👇🏼 Food for thought.
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Global eTelligence provides a new business service on a nationwide basis. Global eTelligence can perform a market analysis and in the event of a total loss or accident that will create a dininished value of your vehicle we can handle that and assist. We had several clients that experienced this and were not able to reach a fair and reasonable settlement with their insurer. The insurers use CCC that provides an a average ACV or market value of comparable vehicles. Global eTelligence is experienced to develop the current market value or ACV , locate comparible vehicles where a replacement vehicle can be purchased and represent the insured party and clients that require this service. In the event the insurance claim reaches an impasse and a settlement if not agreed in then Ron Kubiak of Global eTelligence can assist you in policy appraisal process to push the insurance claim to a settlement. In last market analysis report Global eTelligence was able to negotiate an additional $4,500 for our client ! This is one if many business legal services that Global eTelligence can offer you or your clients or to insurance carriers. We represent many insuers and claimants reach fair and reasonable settlements. Just tell us what you require and need. Global eTelligence will address your tougest Legal & Business needs and protect your digital world. Global eTelligence can provide business and investigative solutions that will address your business needs! If we can be of service please email or call : Ronald J Kubiak , CFE , SCLA , FCLA CEO , President, Founder of Global eTelligence Cell : 817-312-9166
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Riskinfo.com.au last week announced our relationship with Viridian Advisory who now outsource their claims process to us at TPD Claim Support. It attracted some of the highest clicks of reader interest a Risk Info article has ever attracted. A follow up survey on "outsourcing claims" would you consider? was released yesterday with additional content. I would love you all to read this article/survey, however, more importantly if you are a financial planner or a dealer group who would love to know more about "Why Outsourcing Claims" is making such an impact please DM me. 'for any genuine enquiries" my marketing team has produced a "Welcome Kit" which you may find insightful. I am more than happy to invest some time to chat through and answer Key Research points like; - Client Ownership - Fee Model - who pays and how - De Risk - Litigation when things go wrong or escalation - What happens if you have a Decline or (PF) where to next - Capacity, When you don't have the time or knowledge - Avoiding delays & Declines and the impact to you and your clients - Understanding how/why our model has far more success and less delays - What are the 4 critical key learnings from our research within the profession, we ensured are a mandatory part of our Client Value Proposition Riskinfo Susan Hedt Peter Sobels David Baccinelli TPD Claim Support
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We are thrilled to announce the launch of our Contingent Risk Insurance (CRI) practice, providing coverage for known legal risks identified during M&A transactions. This development is significant as traditional insurance, such as W&I, only addresses unknown risks. Of course we needed to do our own diligence! Earlier this year, I went to London to speak to the markets, and followed up by speaking with litigators across Asia. As the first broker in Asia to place a CRI policy, our expertise and research speak volumes about our understanding of contingent risks. Clients, we encourage you to explore the 3 core CRI products: - Specific Risks: Sellers’ indemnity issues, flags in DDRs - Adverse Judgment: Trial Insurance - Judgment Preservation: Appeal Insurance Please feel free to reach out if you have more questions and stay tuned for more insights on CRI in Asia next week! Ai Ling Cheow Haoren Fu Li Ye Bryan Kuah Nadene Law Charlotte Chew Eugene Lim Joshua Wong Sin Yan Thomas Soh Hanna Beatriz Oblepias Ejeen Ong, ACCA Myra Ang
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Dear Financial Advisor and Insurance Agent,📝 your job is about solving and helping people, families, businesses and Organizations make decisions that will impact their present but majorly their future financial status and continued existence. Knowing how important your duty is, there are pitfalls you should avoid to engender trust and confidence from prospects and clients... ...they are 📌Misrepresenting Policies Avoid exaggerating benefits or hiding limitations of insurance policies. Always present information honestly. 📌Pressure Tactics Don't use high-pressure sales tactics to get a prospect sign up for a policy. If they require time to make a decision, move on to the next prospect. They'll get back to you when they have decided on signing up. 📌Ignoring Needs: Avoid marketing a product that doesn't meet the client's need. Focus on providing solutions to their unique needs. 📌Misleading Information: Don't provide false or misleading information about competitors' products to make yours seem superior. It's against the ethics and regulations of the profession. 📌Ignoring Regulatory Compliance: Educate yourself with industry regulations and guidelines and apply them in your prospecting and financial advising. 📌Overpromising: Stick to the terms, conditions and benefits of a policy while marketing it. Don't promise a prospect a benefit which is not listed with the product because the client put it as a condition. 📌Focusing Solely on Commissions: Don't be carried away by desire to earn huge and steady commissions, thereby jeopardizing the client's needs. Maintaining ethical and professional conduct in business builds trust and help grows your list of clientele. More points listed at the comments section.... Follow me Michael N. Molokwu for similar insightful, educational and strategic posts for financial counsel.
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Consumer Duty reviews. What will you need to send to the FCA? The FCA has been conducting thematic reviews on Consumer Duty since inception; the recent report in the insurance market is just one area of their ongoing work. Now the deadline for the Consumer Duty annual report has been and gone, firms should be able to supply the FCA with several aspects of their work on the duty since implementation. So, what can you expect the FCA to request from you if you are involved in this work? ▶ A copy of your Consumer Duty report ▶ Management Information/supporting material for the report (your supporting evidence - which should be relevant, comprehensive, well organised - and of support the findings of the report) ▶ Board/Senior Management - minutes of the meeting where the report was discussed, reviewed/challenged, and any further actions agreed i.e., if there were failings in evidence gathering, delivery of good outcomes, or the potential for future failures (i.e., based on the inherent risks in your business model) ▶ A copy of the 'next steps' agreed, action points, remedial work and such following the output of the report (i.e., if the report said do more - what are you doing/who is repsonsible/when delivered) ▶ This is a point often poorly understood - however, do expect the FCA to ask whether business strategy has been considered All firms subject to the consumer duty should reflect on whether they can provide this information to the FCA. And if not, simply get this sorted a.s.a.p. To briefly expand on some of the areas we have seen firms struggle with - which may help improve your ongoing work: 💡 Business model risks - consider the relevant 'Dear CEO' letter for your business sector. 💡 Additional risks are based on your 'USP'. If you offer complex products, deal with more vulnerable customers, work with lots of 3rd party introducers...these are specific risks you have accepted as a business. How do you then ensure they do not impact delivery of good consumer outcomes? 💡 Business strategy. The annual assessment requires firms to consider '...how the firm’s future business strategy is consistent with acting to deliver good outcomes under the Duty'. In our view, some firms have taken a narrow view of the term 'business strategy' and are simply focussing on products and services offered to customers. 💡 In our view, a more holistic review of 'strategy' is required. Consider staff remuneration (are they driving the right behaviours), management of conflicts of interest, resourcing and management focus on the firm's control framework (particularly measured against the risks inherent in the business model), overall prudential resources, and of course, culture and conduct of the firm in thr ound. Are you placing customers at the heart of what you do - or is it profit? Growth...? Need help? Get in touch.
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It’ not uncommon for professional service firms to expand into new offerings. We have seen investment advisors contemplating resuming trading desks, broker dealers expand into alt placements, management consultants begin offering (non-legal) advice regarding regulatory matters, and advertising firms expand to provide more cyber/tech offerings. Unfortunately, as often as we see firms expand into new products and services, we also see a fair share of mistakes by insureds and brokers alike, when addressing (or failing to address) their insurance programs, here are some tips: · As an insured, never assume these services are automatically covered and don’t wait until renewal to discuss these changes, be sure to advise your broker and carrier mid-term · Review the definition of “professional services” and/or any service endorsements carefully – does the policy effectively include these services, or does it require an additional amendment? · Is there a new entity or subsidiary performing those services? If so, have they been added to the policy appropriately? · Are those services being provided by employees, or are they being outsourced to independent contractors? If using independent contractors, does the policy include such contractors as “employees” for the purpose of providing professional services. · If the services being provided are higher risk, it may be prudent to consider increased policy limits. It’s also important to remember, in some cases, inexperience with new offerings can also increase the likelihood of potential claims. · Have the E&O’s policy exclusions been carefully reviewed? Providing of new services could trigger certain policy exclusions in new ways. Exclusions such as the bodily injury, privacy/cyber, and contractual exclusions should all be carefully reviewed. Even lesser triggered exclusions such as broad securities exclusions could come into play, depending on the type of service being provided. · Do these new services create new regulatory risk? Can the policy be further amended to better cover that additional risk? · Where D&O insurance is in place, it’s also critical to review the D&O policy terms including the named entity/individuals, critical policy exclusions and scope of coverage for regulatory claims. · Lastly, in situations where services are being discontinued, it’s equally important to remember to ensure those services are included on subsequent renewals in order to properly tail coverage for them.
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HOW TO NEGOTIATE ON BEHALF OF MULTINATIONAL COMPANIES? Multinational corporations typically have standard Terms and Conditions (T&C) that they use across all contracts. However, when negotiating with state entities that hold a monopoly, or with other multinational companies of equal or larger size, it's necessary to negotiate Master Service Agreements (MSA). These MSAs establish the T&C to be used in any eventual contracts signed between the parties within a specified period. Regardless, the corporate headquarters always defines non-negotiable points such as: •Large companies never accept unlimited liability. • Large companies always seek insurance protection. • Large companies never sign promissory notes with blank spaces. • Large companies always include OFAC, Ethics, and Human Rights clauses. The most delicate clauses, which always require approval from the Legal Department, are: •Indemnity. • Force majeure. • Warranty. • Insurance. It's essential to remember that when negotiating a contract with a party larger than yours or one that holds a monopoly, any deviation from standard T&C will require approval from the Legal Department at corporate headquarters. Failing to do so could prove very costly (your job!).
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In Part 1, I talk about the changes made. Part 2 next week will focus on action steps for compliance officers.
Is Your Compliance Program Ready for 2025? DOJ's Latest Guidance Raises the Bar The U.S. Department of Justice has just raised the stakes for corporate compliance programs. In its September 2024 update to the Evaluation of Corporate Compliance Programs guidance, the DOJ sets new expectations that could reshape how companies approach compliance. From leveraging data analytics in risk assessments to demonstrating the effectiveness of training beyond mere completion rates, the updated guidance pushes companies to adopt more sophisticated, proactive approaches to compliance. It emphasizes the need for continuous improvement, robust third-party management, and seamless integration of compliance considerations in M&A activities. But perhaps most importantly, the DOJ is looking for evidence that compliance is more than just a set of policies – it should be woven into the very fabric of your organization, from the C-suite to entry-level positions. As a compliance officer, are you prepared to meet these elevated expectations? Our latest blog post breaks down the key changes in the DOJ's guidance and offers actionable insights to help you align your compliance program with these new standards. Don't miss this essential update that could impact how your company fares in potential investigations or enforcement actions. To learn more about these changes, and how they are applied over time, subscribe to Insurance Compliance Insight today!
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