FSRA Authorised Representative Training

Transcription

1 FSRA Authorised Representative Training CRM Brokers Pty Ltd ACN ABN AFS Licence Level 29, Chifley Tower, 2 Chifley Square, Sydney 2000 P: F: (02) E: crm@crmbrokers.com.au

2 Claims What is required for Claims Lodgement? Strata Plan Number Date of Loss Cause Resultant damage Refer to handouts for more information FSRA Authorised Representative Training 2

3 Office Bearers Office Bearers are: Chairman Treasurer Secretary Plus other elected members (Up to 9 people) FSRA Authorised Representative Training 3

4 Office Bearers Liability (OBL Cover) Coverage for any decisions they make or failed to make but should have made. Does not cover fraudulent, dishonest acts, libel or slander Cover is on a claims made basis (i.e. you must notify us of any possible Office Bearers claim before the policy expires, meaning coverage applies only to claims first made against the EC during the period of insurance and notified to the insurer during such period of insurance.) Cover is for all EC members. If you only had $100,000 cover and 9 EC members, that s $11,111 each FSRA Authorised Representative Training 4

5 Office Bearers Liability (OBL Cover) What is the risk? They are governing the Strata Plan on a voluntary basis No payment for their service But they can be sued for any decision they make and the dollar amount is unlimited Their personal assets are at risk FSRA Authorised Representative Training 5

6 Office Bearers Liability (OBL Cover) Example One An individual on the EC approached a lot owner who was pruning a tree which the council had ordered was not to be pruned. The EC member placed her hand on the lot owner s shoulder when talking to her. Cover under OBL? FSRA Authorised Representative Training 6

7 Office Bearers Liability (OBL Cover) Example Two An EC member (Treasurer) was heading overseas and paid just over $100,000 to a painter before he left. This was payment in advance for painting the building. The painter disappeared. Cover under OBL? FSRA Authorised Representative Training 7

8 Office Bearers Liability (OBL Cover) Example Three A lot owner in a townhouse complex asked the EC member if they could replace the fences in their lot. The EC member gave permission. The OC told the lot owner to replace the new fence with something similar to the rest of the fences in the complex. The lot owner sues the EC member. Cover under OBL? FSRA Authorised Representative Training 8

9 Office Bearers So what does it cost? Pricing ranges from $100 to $500 (plus government charges) Are Office Bearers claims increasing? Yes! In both dollar value and number of claims. Average claim cost increased by 52% over the last 3 years. What s it worth for peace of mind? FSRA Authorised Representative Training 9

10 Authorised Representative Training Part 1: Overview of the Financial Services Reform Act and how to walk the line within this legislation Part 2: The advice you can give under your Authorised Representative Agreement with CRM Brokers Part 3: Short test to cement the learning and qualify you as an Authorised Representative of CRM Brokers FSRA Authorised Representative Training 10

11 Part 1: What is FSRA? Financial Services Reform Act (FSRA) Federal Government legislation that regulates providers of financial services and products (including insurance products) It is designed to: bring various financial services and products under one licensing regime; introduce a new disclosure regime for most financial products; and establish a standard of conduct for financial service providers. ** This will improve the way we do business!** FSRA Authorised Representative Training 11

12 Part 1: What is a Financial Service? FSRA deems a person will be considered to provide a "financial service" if they: deal in a financial product; provide financial product advice; make a market for a financial product; operate a registered managed investment scheme; provide custodial or depository services etc. As an Authorised Representative of CRM Brokers, you are providing financial product advice when it comes to insurance products. FSRA Authorised Representative Training 12

13 Part 1: Disclosure FSRA has various disclosure requirements for financial products and services. For strata, this includes: Product Disclosure Statement (PDS); Financial Services Guide (FSG). These documents include material information that might reasonably be expected to influence a client's decision to purchase the service or product. They must be sent to the EC or OC at the time of taking out the insurances (for the first year only). FSRA Authorised Representative Training 13

14 Part 1: What is a PDS? The PDS is usually in the first few pages of an insurers' policy wording booklet. It will list: details of the underwriter and the insurer who backs the underwriter a basic summary of the insurance product details of the cooling off period duty of disclosure requirements (Insurance Contracts Act) claim lodgement details dispute resolution privacy of information details FSRA Authorised Representative Training 14

15 Part 1: What is a FSG? CRM Brokers Financial Services Guide will list: details of CRM Brokers as the holder of an Australian Financial Services Licence details of the strata company as an Authorised Representative of CRM Brokers the type of advice the strata company can give i.e. general financial advice only (includes factual information) who to contact if the client has a complaint i.e. the Financial Ombudsman Service (FOS) FSRA Authorised Representative Training 15

16 Part 1: Duty of Disclosure Under the Insurance Contracts Act, you have a duty of disclosure. You must reveal everything you know or that a reasonable person in the circumstances could be expected to know, information about the strata plan. This would include (but not be limited to): claims information known defects general information about the building FSRA Authorised Representative Training 16

17 Part 2: Advice Under CRM s Authorised Representative Agreement, you can give: Factual Information General Advice BUT NOT PERSONAL ADVICE FSRA Authorised Representative Training 17

18 Part 2: Factual Information What is Factual Information? Factual information is accurate and objective information about: What you, as an authorised representative of CRM Brokers, are able to do in relation to the insurance; The services that you offer (e.g. arranging the strata insurance policies); and The features of the strata insurance (e.g. the benefits, the various limits on cover etc). As long as you can factually support the statements you make, you are giving factual information. Do not give your personal opinion! FSRA Authorised Representative Training 18

19 Part 2: Factual Information Factual Information Examples Fact 1: The Product Disclosure Statement summarises the policy benefits, limits of liability, and what it does not cover. Fact 2: Office Bearers Liability and Legal Expenses operates on a claims made and notified basis. This means that the policy section covers you for claims made against you and notified to us during the period of insurance. Fact 3: The minimum cover for Public Liability is $10million as per the Strata Schemes Management Act. Fact 4: Catastrophe cover is available with this insurer. FSRA Authorised Representative Training 19

20 Part 2: General Advice What is a General Advice? General advice is a general statement, recommendation or opinion that influences or could influence the owners corporation to make a decision about the strata insurance. It is not based on their personal circumstances (as this will then be personal advice). FSRA Authorised Representative Training 20

21 Part 2: General Advice General Advice Examples General Advice 1: Strata schemes that allow pets may benefit from a policy that offers temporary pet accommodation cover. General Advice 2: Your current insurer has an excellent claims paying record. General Advice 3: Policies with very low landscaping sub limits aren t generally suitable for schemes with extensive or valuable landscaping. FSRA Authorised Representative Training 21

22 Part 2: General Advice General Advice Warning FSRA legislation says: If you give general advice you must give the following general advice warning: This is general advice and it may not be right for you. FSRA Authorised Representative Training 22

23 Part 2: General Advice General Advice Warning A written general advice warning also appears in the insurance documentation: This is general advice. It doesn t take account of your personal circumstances and whether the product is right for you. Before you make a decision, read the Product Disclosure Statement. FSRA Authorised Representative Training 23

24 Part 2: Personal Advice What is Personal Advice? Personal advice is a statement, recommendation or opinion you make that influences or could influence the owners corporation to make a decision about strata insurance where: You have considered their needs, financial situation or objectives; or They reasonably assume you have considered their needs, financial situation and objectives. Don t be a Dr. Phil! FSRA Authorised Representative Training 24

25 Part 2: Personal Advice What is Personal Advice? Even though you may know about the owners corporation s circumstances because you manage the strata scheme, you cannot advise them if insurance is appropriate for them. They must decide for themselves. You can tell them about the different policies, and the types of situations a policy may be suitable for, but you cannot tell them which policy suits them. You must leave the decision to the owner s corporation. FSRA Authorised Representative Training 25

26 Part 2: Personal Advice Personal Advice Examples Personal Advice 1: I think you should insure your building for $5 million. That will cover you in the event of a total loss. Personal Advice 2: Because your building includes an underground car park, you should consider a policy that includes cover for removal of water from a car park or basement. This is personal advice because you have made a recommendation based on the client s personal circumstances. Personal Advice 3: You should only get $500,000 Office Bearers cover. That will be enough. FSRA Authorised Representative Training 26

27 Part 3: Test Please complete the short test provided This is a vital component of your FSRA/Authorised Representative training. Upon successful completion, you will be issued with a certificate. FSRA Authorised Representative Training 27