Financial services legislation protects you as the consumer so you can easily compare similar products, make informed decisions as to whether to acquire these products or not and trust that your provider is regulated by an independent body.
The Corporations Act makes sure there is:
a) a uniform license and definition applying to all providers of financial services
b) there is a consistent set of requirements for advise and product disclosure for all financial products sold to you.
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The Corporations Act imposes overriding obligations on Australian Financial Services (AFS licensees) to:
- Do everything necessary to ensure financial services covered by their licence are provided efficiently, honestly and fairly;
- Comply with the conditions on their licence and the financial services laws;
- Take reasonable steps to ensure that their representatives (i.e. employed brokers) and Authorised Representatives comply with the financial services laws and are adequately trained and competent to provide the financial services;
- Have available adequate resources (including financial, technological and human resources) to provide the financial services covered by their licence and carry out supervisory arrangements;
- Have adequate risk management systems;
- For retail clients:
a) Have a complying dispute resolution system;
b) Have adequate arrangements for the management of conflicts relating to the provision of financial services;
c) Have approved compensation arrangements; and
d) Comply with any other obligations prescribed by the Regulations.
In addition, licensees need to comply with various other obligations in the Corporations Act including ASIC’s (The Australian Securities and Investments Commission) requirements, the disclosure and advice obligations, and the conduct obligations.
There is also further legislation and Codes of Practice which govern the running of an insurance intermediary business. These include:
Australian Securities and Investments Corporation Act;
Insurance Contracts Act;
Insurance Brokers’ Code Of Practice;
NIBA Code of Conduct;
General Insurance Code of Practice;
Privacy Act;
SPAM Act;
Federal Trade Practices and State Fair Trading Acts;
Federal and State Employment laws;
Occupational Health & Safety legislation; and
Anti-Discrimination legislation.
Gillian Lilley
Freelance Business Writer
(Information sourced and edited from the Gold Seal Gold Book.)
