Insurance facts and figures 2007 - PwC

AUTHORISED REPRESENTATIVES AND INSURANCE BROKERS
The Corporations Act requires brokers to either hold an AFSL or become an authorised
representative of a separate licensee. Except under limited circumstances, no person
or company may carry on an insurance broking business or act as an agent of a
foreign insurer unless they hold an AFSL under the Corporations Act or become a
representative of a separate licensee.
Australian Financial Services Licence
The Corporations Act requires all sellers of insurance products to retail clients,
including registered insurers and brokers, to obtain an AFSL.
To obtain a licence, the applicant must meet the obligations under Section 912A and
demonstrate that they will provide financial services efficiently, honestly and fairly.
Specific provisions under the Corporations Regulations require that financial services
licensees have in place the following:
• Documented procedures to monitor, supervise and train representatives;
• “Responsible officers” (senior management responsible for day-to-day business
decisions) with minimum standards of knowledge and skills in financial services;
• Adequate resources (financial, technological and human) to provide services covered
by the licence. These requirements do not apply to APRA-regulated entities (such as
registered insurers), but do apply to any non-APRA-regulated subsidiaries;
• Adequate risk management systems (AS4360, the Australian Standard for
Risk Management, acts as a guide to minimum requirements). These requirements
do not apply to APRA-regulated entities, but do apply to any non-APRA-regulated
subsidiaries;
• Adequate compliance framework (AS3806, the Australian Standard on Compliance
Programs, acts as a guide to minimum requirements);
• Internal and external dispute resolution procedures (where dealing with retail clients);
• Adequate compensation requirements (where dealing with retail clients as described
in Section 912B). This typically is achieved through membership of a guarantee fund
or obtaining professional indemnity insurance cover; and
• Register of representatives, i.e. directors and employees of the insurer and its related
bodies corporate, as well as authorised representatives and insurance brokers.
Once ASIC has granted an AFSL pursuant to Section 913B of the Corporations Act,
any variations to authorisations and conditions of the licence can be made electronically
via the ASIC website.
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