AIA has updated the financial adviser agreement applicable to Sovereign and AIA advisers. The updated agreement includes a requirement to abide by a code of conduct, a revised series of obligations, and a right to transfer the servicing of clients to other advisers. I have been asked by AIA to point out that there is no automatic transfer of renewal commissions for life insurance in this case. Remuneration can only be terminated under a narrower set of conditions. The new obligations appear specifically designed to give AIA the necessary tools to meet the expected requirement to have effective oversight of the actions of financial advisers distributing insurance products on behalf of AIA. The code of conduct information includes a facility for whistleblowers:
"Don't ignore potential fraud or misconduct. If you see something you believe or suspect could violate the law or the AIA Code of Conduct - speak up.
The AIA Ethics and Compliance Hotline is available via telephone or internet 24 hours a day, 7 days a week, worldwide. It is operated by an independent third party, so you can feel comfortable voicing your concerns or reporting suspected violations."
Fidelity, on the other hand, has recently written to advisers to re-assure them that they need not be concerned about changes to either commissions or their financial adviser agreement between now and the end of next year.
"Commissions won’t be changing ... We’re pleased to say that, unless required by law or regulation, Fidelity Life has no intention of changing our commission structure during the next 12 months to the end of June 2020... Agency agreements remain as is for now... And finally, we currently have no plans to change our agency agreements before January 2020 - at the earliest."
I could happily argue for either proposition. While we have a pretty good idea of the likely requirements of the new regime, it could be said that one should wait, and then make the change. On the other hand, as so much must change with AIA's acquisition of Sovereign, and with many international standards in place - like the whistleblower facility - why not make changes as you are ready to do so?
No one should expect that adviser terms will remain unchanged for the long-term, however. The Chatswood team has done a gap analysis between several current sets of agency terms and what would be required to meet the FMA's current guide to conduct. Changes to most sets of terms will be required at some point.