Decrease in Australian adviser numbers related to increased lapse rates, and more daily news
Legal and regulatory review for the life and health insurance sector

Partners Life on preparing for 15 March, and more daily news

In preparation for 15 March, Partners Life has compiled a list of things that financial advisers must do to ensure compliance. The list is designed as an informative piece as well as a mini checklist with questions regarding duties. ​The list is made up of the following six points:

  1. “Ensure you come under a transitional licence by 15 March You may obtain your own licence, or be engaged under someone else’s. If the licence hasn’t come through by 15 March, you cannot give financial advice until it arrives. Use this time wisely for business planning, reviewing your processes, documenting what you do, and any number of other business-related activities. Note that the FSPR will be mostly offline from 2-15 March to prepare for the new regime (more details here). 
  2. Get your disclosure sorted You must meet the new disclosure requirements from 15 March, including your website, Facebook page, engagement letters, and statements of advice. Use the FSC Disclosure Guide templates to write your text. Have your website developer draft your new site and be ready to go live late at night on 14 March. Use this opportunity to review your other client documents – do they meet the requirements of the Privacy Act (e.g. permission to share client data with the FMA and your compliance consultant), Secret Commissions Act (do you disclose referral fees and commissions), and other legal obligations? 
  3. Have you documented your complaints process? Ask your Disputes Resolution Scheme for help. They are very likely to have learning resources and templates to help you. Implement a Complaints Register, and check monthly that it is completed properly. Write down your process, including how you check it is working. 
  4. Is your record-keeping up to scratch? Do you have all client files backed up? Are they secure – how do you protect client information from being seen or taken by others? Can you access them quickly when you need them? Are they complete – do you record all of your interactions with each client? Challenge your process – where are the risks that privacy could be breached? What interactions are not recorded? Write down your process, and what you do to check that it is being followed 
  5. Do you comply with the new duties? Challenge your process against the new duties, and write down how you meet your obligations. Good advisers meet these obligations now, and may only have a few minor tweaks to make. How can you prove that you meet them? 
    1. ​How do you ensure that your clients understand the nature and scope of your advice, the limitations to your advice, and the advice you give them? 
    2. How do you ensure you give suitable advice? Do you use research tools? Do you use advice tools? How do you calculate the quantum of cover, and choose the best provider and products for each client?
    3. Care, diligence and skill? This is already the law. If you don’t meet this now, step it up!  
  6. Some of the duties are a no-brainer But just because they’re a no-brainer, don’t forget to properly document how you are observing them – if anyone asks, don’t just tell them you are a good adviser: make sure you can show them! 
    1. Do you recommend products for your benefit, or for your client’s? If you give advice other than to benefit your clients, you are breaking the law. How do you prove that your advice is for your client’s benefit, and you are not influenced by commission?
    2. Treat clients fairly and act with integrity – this should underpin everything you do as a financial adviser. Think about it hard – do you?
    3. Don’t recommend financial advice products that don’t comply with the law.”

Partners Life has also stated that advisers that make structural changes and advisers that make a mistake must inform the FMA. Partners Life has explained that advisers must tell the FMA what they are doing to about the issues and steps they are taking to minimise any potential harm.

“If you do anything wrong, or make structural changes to your business or key personnel, you have to tell the FMA about it if it is material. If this happens, don’t just give the FMA a problem. Tell them what you are doing about it – how are you minimising any harm that the problem may cause?

If you hold a licence and have other financial advisers working in your business, you must ensure that they meet these obligations too. How are you ensuring that happens?

While the full list of obligations is long, many of them articulate things you should already be doing. Work through the list above, and embrace the opportunities that FSLAA brings!”

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