ASIC gives brokers choice in appointing agents
ASIC has announced that AFS licensees will now be given the option to appoint people to distribute general insurance products on their behalf without having to appoint them as authorised representatives, but only in cases where no advice is provided.
The benefits of taking up the option include:
While NIBA welcomes the change it will be discussing a number of technical and practical issues that need to be addressed in relation to the proposed relief with ASIC.
Who can be appointed as such a "distributor"?
Under the arrangements a licensee will be able to appoint anyone as a distributor and not have to appoint them as an authorised representative provided certain requirements are met.
It is likely that persons such as travel agents, car dealers, and real estate agents, etc who are not traditional participants in the financial services industry, will seek to rely on the relief.
A person can act as distributor of more than one licensee. An authorised representative of a licensee, however, cannot be appointed by that licensee as a distributor.
A body corporate appointed as a distributor is able, with the written consent of the licensee, to sub-authorise other distributors. A distributor, however, that is not a body corporate cannot sub-authorise individuals to act on behalf of the licensee.
What can a distributor do?
A distributor can deal (they cannot provide advice, general or personal) in all general insurance products and bundled consumer credit products (i.e. CCI with a life and general insurance component).
What obligations are imposed on the licensee?
The licensee must take reasonable steps to ensure the distributor gives retail clients when they provide the financial service, information about:
The information could be included in the licensee FSG, if the distributor provides the FSG to the retail client, or it could be included in a separate document to be given to the retail client by the distributor. NIBA will specifically discuss with ASIC how telephone transactions are to be handled.
The licensee is responsible for the distributors it appoints and should ensure that its obligations in relation to training and supervision continue to be met.
ASIC will also require the licensee to keep a record of distributors they appoint and advise the public whether or not a person is one of their distributors.