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Financial Services
Tuesday, August 1, 2000
Better support

It looks like the long-awaited laws governing the registration of insurance brokers have stumbled into fruition.

The Financial Services Board has recently presented a revised draft of what is now called ‘the Financial Advisory and Intermediary Services Bill’ to the Policy Board for Financial Services and Regulation for consideration.
The Bill has appeared under several previous names, including the Financial Service Providers Bill, the Financial Advisors Bill, and the Regulation of Retail Investment Service Providers Bill. The Policy Board agreed that the Bill should be released for public comment in its current form, and comment was required before April 18 2000. 
Barry Scott, executive director of the SA Insurance Association explains that the Bill intends to regulate all market conduct within the financial services sectors. “In order to achieve this, a wide definition of advice and intermediary services has been produced.
“The intention of the FSB is that market conduct should in future be regulated in legislation separate from the legislation dealing with authorisation and solvency of the financial institutions themselves.
“In this regard, all legislation dealing with market conduct contained in legislation dealing with financial institutions will be repealed.  Therefore, financial institutions and intermediaries are included within the ambit of the Bill.”

The Bill provides for:

• A registrar of financial services providers
• An Advisory Committee on financial services providers
• Once-off authorisation of financial services providers, but not their representatives
• Suspension, withdrawal and lapsing of licences
• Rules regarding representatives of authorised financial services providers
• Codes of conduct
• Compliance officers
• An Ombudsman for financial services providers
• Offences and penalties

The SAIA Finance and Regulation Committee has considered the draft Bill.  Mr Scott says that the SAIA now supports the Bill in principle. “This is a shift from the previous SAIA position of opposing the concept based upon its inclusion of product providers within the ambit of previous versions of the Bill,” notes Mr Scott. “It was felt that this shift was justified on the basis of the split between market conduct and prudential legislation.
“The change to a once-off basis of authorisation of providers is also supported.
“Previous versions proposed an annual authorisation, and it was felt that this would impose additional costs without significant additional benefit. Previous versions of the Bill were based upon a compliance-driven principle.  The current version has moved towards a complaints-driven principle.  This is also supported.”

Copyright © Insurance Times and Investments® Vol:13.7 1st August, 2000
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