Top tips to help ARs stay compliant!

If you are a Whitbread Authorised Representative (AR) you’d know that we are continually carrying out audits to ensure you understand and meet your obligations while operating under the Whitbread Australian Financial Services License (AFSL).

We are happy to share that after our recent audits, most of our ARs are doing a fantastic job!

If you haven’t been audited yet, review our tips below to assess whether you are compliant when it comes to arranging insurance for your clients.

1. Disclosure requirements

Whether you are an AR, a Distributor, or an Australian Financial Services Licence (AFSL) holder, you are legally required to provide all clients with the following documentation;

• Financial Services Guide (FSG)
• Product Disclosure Statement (PDS)
  
  

a) Financial Services Guide (FSG)

Did you know?

• It is mandatory for Strata Managers to provide a copy of the FSG.
• The FSG must be given to the client as soon as practical, generally prior to the Strata Insurance being arranged.
• The FSG only needs to be given at the outset unless the information in the original FSG changes.
• If you are an AR of more than one entity, then all FSGs must be provided to the OC.
• Severe penalties may apply for failing to provide an FSG, or providing a defective FSG.

The FSG includes information on:

• What current and potential clients can expect when a financial service is provided to them, in order to help them decide whether or not to use those services
• Advice that the Strata Manager is authorised to provide.
• Remuneration (including commissions) and benefits.
• The products and services that ARs can offer.
• Any associations or relationships with the insurer or others.
• Cooling off periods.
• The complaints handling process.

The FSG must include the following information:

Your business name, ABN, contact details, and your AR Number.

Important Tips Strata Managers should ensure that a copy of the FSG is sent of made available at both the initial meeting and tabled at each AGM. It should be presented in such a way that individual lot owners or Committees are explicitly aware of the above information included in the FSG. If you do not have a personalised FSG please contact Whitbread so we can provide one.

 

b) Product Disclosure Statements (PDS)

Did you know?

• A PDS is prepared by the insurer and contains policy terms and conditions with regards to the Strata Insurance.
• A PDS must be provided prior to the client purchasing the insurance or at time a recommendation is made so they can make an informed decision.
• A copy of the PDS only needs to be provided at policy renewal if there has been a change of insurer or a change in the PDS wording.
• Failure to provide a PDS as stated in ASIC guidelines may result in significant civil penalties.
  
  

Important Tips The PDS must be worded and presented in a clear, concise and effective manner. To assist you and your staff with disclosures our office provides PDS with all renewals and new business quotes – any additional questions? Just ask.

 

2. Annual General Meetings (AGM) and Record Keeping

Did you know?

• The AGM is the most important time to discuss the current or potential insurance policy in place for the strata property.
• Full and complete disclosure should always be given to OC Committees and unit owners when it comes to insurance and your role as an AR.
  
  

Important Tips The minutes should include references to the following: Provision of the FSG and relevant PDS. Current insurance policy schedule or Certificate of Currency. Details on who you represent as an AR e.g. Whitbread Insurance Brokers. Confirmation of your role as an AR’s e.g. only allowed to provide Factual and General Advice. Commission received for arranging insurance. Reminding owners and tenants that the strata policy excludes Landlords fixtures & fittings as well as Contents Insurance.

 

3. Discussing insurance

Did you know?

• As an AR of Whitbread you can only provide Factual Information and General Advice.
• Legally you are not authorised to give Personal Advice – this means that you can’t advise on what is individually suitable, or make a recommendation tailored to a client’s personal circumstances. To do this, you must refer your client to Whitbread.
  
  

  This can get confusing, so below we clarify what you can and can’t say…

• • Factual Information is an objective statement of fact and can be provided by anyone as it is not regarded as a “financial service”. ARs and Distributors may legally provide this information.
  • General Advice is classified as advice or an opinion, and may influence the client’s decision about insurance. ARs can legally provide this advice but Distributors cannot.
  • Personal Advice is advice where one or more of the client’s objectives, financial situation and needs has been considered. Neither ARs or Distributors are legally authorised to provide this advice.

Important Tips Remember to revise your Authorised Representative Agreement – it is essential to know what you can and cannot discuss when it comes to insurance. If unsure, please give us a call.

 

4. AR Training

Did you know?

• It is a legal requirement that ALL staff involved in the provision of insurance must be adequately trained.
• Whitbread offer all individuals and strata management companies in-depth AR training as part of the process of becoming an AR.
  
  

Important Tips   Make sure all of your staff that deal with insurance for OC clients have successfully completed the AR Training provided by Whitbread. If you employ any new staff who will handle insurance for OC clients, please advise our office so we can arrange training as soon as possible.

 

5. AR Agreement

Did you know?

• As an AR you operate under a written agreement.
• ARs can be authorised to act for multiple licensees providing each licensee has consented, this is called Cross Endorsement.
• A trust cannot legally enter into any agreement or contract.
  
  

Important Tips Take care to ensure you fill out AR agreements correctly e.g. make sure that the correct ABN, Registered Company name and Address are noted. Ensure you provide Whitbread with a list of all licensees where you are an AR or a Distributor. Remember: it is the trustee that is entering into the AR agreement. All trusts and associated trading names should be noted on the Authorised Representative Agreement forms.

 

6. AR Insurance correspondence

Did you know?

Whitbread’s insurance renewal and new business email documents disclose essential information to OC clients such as:

• The commissions Whitbread receives
• The commissions the AR receives
• Whitbread’s broker fee

In order to uphold a high level of transparency with OC clients it is essential to ensure the information above always features in the new business and renewal documentation sent to the OC.

Important Tips Ensure the insurance renewal or new business email you send to OC clients includes accurate information on the commission Whitbread receives, the commission you receive as an AR, and Whitbread’s broker fee. ARs should not edit the new business or insurance renewal email documentation provided by Whitbread to exclude the information aforementioned before sending it to the OC.

 

In summary, we have developed a checklist to help make it easy for you to stay compliant. If you are uncertain of your obligations as an AR of Whitbread please contact our Compliance Manager Bill Enright 1300 424 627 or info@whitbread.com.au.

Your compliance checklist

1. Provide the FSG to clients.
2. Ensure the PDS and FSG are always available to owners, and is tabled at the AGM.
3. Be vigilant when taking minutes.
4. Make sure your FSG shows the correct trading name, legal entity, AR No. and contact details.
5. Disclose commissions received.
6. Advise Whitbread about any other license agreements.
7. Only provide General and Factual Advice.
8. Make sure your staff regularly update their insurance training.
9. Ensure your renewal and new business emails to OC clients includes information on the commission Whitbread receives, Whitbread’s broker fee and the commission you receive as an AR.

 

 

^{This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.}