Compliance Policy

1
CompliancePolicy Procedures

• An Overview for Staff
• Prepared by
• MSM Compliance Services Pty Ltd

2
Who Are MSM Compliance?

• MSM is a national professional services business
  focused on the general insurance industry.
• Your company has engaged MSM to assist in the
  management of its obligations as a holder of an
  Australian Financial Services Licence.
• MSM helps to ensure that you and your company
  comply with your AFS Licence obligations with the
  least disruption to your core business.

3
Why Are You Reading This?

• To provide you with an introduction to our
  Compliance Policy and Procedures.
• It will present you with a synopsis, but not the
  detail.
• You should still take the time to read the full
  Compliance Policy Procedures.

4
Why Is A Compliance Program So Important?

• As an AFS Licensee we are required by law to have
  an effective Compliance program.
• A Compliance program helps us to consistently
  achieve the performance that is expected by ASIC
  and our Customers.
• Compliance programs are recognised as an integral
  part of good management practice.
• Without a Compliance program we run the real and
  possibly catastrophic risk of not meeting our
  Licence conditions therefore lose our License.

5
Who Is Responsible For Compliance?

• The Responsible Manager(s) is ultimately
  responsible for the implementation and
  effectiveness of these Policy and Procedures.
• The Compliance Officer is responsible for the
  implementation and effective operation of these
  Policy and Procedures .
• It is the responsibility of all management and
  staff to promptly advise the Compliance Officer
  of failure or potential failure of our business
  to comply with our obligations .

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Our Compliance Program

• A Compliance Policy and Procedures.
• Appointment of a Compliance Officer identified
  on our Organisation Chart (CO)
• A Breach Register to record situations where we
  fail to meet our legislative or code obligations.
• A Compliance checking system that regularly
  prompts the Compliance Officer to review the way
  we do things across all aspects of our business.
• A regular (annual) review of our business by an
  external compliance consultant.
• Reporting or all breaches to the Company Board.
• Reporting of all significant breaches to ASIC.

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Compliance Promotion

• Compliance is part of the way we do things and
  must be promoted at all levels of the business,
  including
• Requiring Responsible Managers and Staff to read
  these Policy and Procedures.
• Induction programs for all new staff, which
  includes training on the Compliance Policy and
  Procedures.
• Raising of Compliance Issues at our staff
  meetings.
• Providing feedback to staff on results of
  external reviews.
• Including Compliance as part of Staff Appraisals.

8
Compliance Monitoring, Reporting Recording

• Accurate and timely monitoring, reporting
  recording are essential for an effective
  Compliance program.
• It is essential that these processes be
  comprehensive accurate therefore we utilise
  either the Compliance Checklist or Broker
  Compliance Control.
• All Compliance tasks are identified, graded and
  allocated to a staff member or completion.
• Breaches are recorded in the Breach Register.
• Significant breaches must be reported to ASIC
  within 10 business days.
• An external audit will usually be conducted
  annually.
• Compliance and Breach reports are tabled at Board
  meetings.

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Breach Examples

• Failure of Spotters to disclose their income.
• Failure to nominate correct / final insurer on
  invoices.
• Failure to promptly advise clients of significant
  issues affecting their coverage.
• Cancelling a policy due to non payment without
  client/insurer instruction.
• Not refunding commission and fees if no prior
  notice provided to client.

10
Breach Examples

• Failure to advise ASIC of changes.
• Acting outside scope of AFS Licence
• Misleading advertising that does not clearly
  spell out the services available.
• Use words such as independent, objective,
  impartial etc.
• Failure to submit APRA returns on time.
• Failure to properly appoint Authorised Reps,
  Distributors and Spotters.

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Breach Examples

• Failure to maintain cash flow budgets and to
  monitor cash flows
• Failure to have annual audit conducted
• Failure to have adequate P.I. cover
• Failure to be a member of Financial Ombudsman
  Service (FOS).
• Failure to provide clients with details of your
  complaints system.
• Failure to have a documented complaints system
  and register.

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Breach Examples

• Not effectively managing / recording conflicts of
  interest
• Insurer profit share arrangements.
• Binders
• Buying Group relationships
• Staff incentive schemes
• Premium funding deals/commissions
• Referral to other related /income generating
  providers

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Breach Examples

• Client Money
• Not banking money on day of receipt or day after.
• Trust Assets less than Trust Liabilities
• Not paying insurers within 90 days
• Not paying insureds refunds within 7 days
• Not advising insurers of debts over 90 days
  within 7 days
• Not taking non client money out of Trust Account
  within 30 days.
• Not advising U/W agents Wholesale Brokers of
  their obligations when paying.

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Breach Examples

• Client Money
• Not banking money on day of receipt or day after.
• Trust Assets less than Trust Liabilities
• Not paying insurers within 90 days
• Not paying insureds refunds within 7 days
• Not advising insurers of debts over 90 days
  within 7 days
• Not taking non client money out of Trust Account
  within 30 days.
• Not advising U/W agents Wholesale Brokers of
  their obligations when paying.

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Breach Examples

• Advice Disclosure
• Not providing oral disclosure / warnings when
  quoting Retail Clients over the phone.
• Not providing General Advice Warning with
  documentation
• Not providing required information when providing
  Personal Advice.

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Breach Examples

• Financial Services Guide
• Incomplete / not up to date
• Old FSG on website
• Not providing within 5 days to new clients
• Not providing to existing clients when changed
• Not recording date and version no when sent to
  client.
• No separate FSG for Authorised Reps.
• Sending electronically without specific client
  consent.

17
Review Updates

• Our Compliance Policy Procedures will be
  reviewed on an annual basis as part of our the
  Business Planning process.
• The review will necessarily involve senior
  management together with input from staff where
  relevant.
• Any changes will be documented in the annual
  Business Plan, and will be advised to you either
  via email or at our regular Staff meetings

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In Summary

• You should
• read the full Policy Procedures.
• understand your role responsibilities in the
  Compliance Program
• be aware of what constitutes a breach and the
  action required by you.
• Identify from our Organisation Chart who our
  Compliance Officer is.

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Where To From Here?

• Please take the time to read our full Compliance
  Policy and Procedures and if you require further
  clarification discuss with our Compliance
  Officer.