Introduction
The ASIC Corporations (Financial Services Guides) Instrument 2022/910 (Instrument) commenced on 29 November 2022.
The Instrument grants relief to authorised representatives (ARs) of financial services licensees who:
- deal in general insurance products and bundled consumer credit insurance products; and
- provide claims handling and settling services (CHSS),
from the requirement to provide a Financial Services Guide (FSG).
It aims to:
- reduce burdensome regulatory requirements relating to FSGs for distributors of general insurance products who provide CHSS; and
- ensure consumers receive the same level of protection when purchasing general insurance through distributors and product issuers.
What’s the existing position?
Section 941B(1) of the Corporations Act requires ARs to give retail clients an FSG if the AR provides a financial service to the retail client.
The requirement to give an FSG is subject to exemptions in section 941C of the Corporations Act, including an exemption for an AR from providing an FSG where it is only providing CHSS which does not consist of representing a client as an insured person pursuing an insurance claim (s 941C(7A) of the Corporations Act).
Therefore, an AR who deals in general insurance and provides CHSS would need to provide an FSG in respect of the dealing service.
What’s changed?
The Instrument exempts an AR from the obligation to provide an FSG under s 941B(1) of the Corporations Act where:
- the AR is authorised by the licensee to (i) deal in a financial product and (ii) provide a CHSS only and not provide any other financial services;
- the financial services relate to a general insurance product or a bundled consumer credit insurance product;
- the financial services licensee has taken reasonable steps to ensure the AR:
- draws the client’s attention to the availability of a dispute resolution system of the licensee that covers complaints by the client and how that system may be accessed; and
- gives the client information in writing about who the AR acts for when providing the financial service, and any remuneration or other benefits that the AR (or an associate of the AR) may receive or is attributable to the financial service.
The Instrument’s purpose is to exempt ARs that are authorised by the licensee to deal in a financial product and provide CHSS from the requirement to give an FSG.
The Instrument will be effective for 5 years, until 30 November 2027, after which the relief may be incorporated into primary legislation.
What does this mean?
The Instrument now provides an FSG exemption for an AR that both provides CHSS and deals in a financial product. This expands the current exemption available under the Corporations Act.
However if the AR provides financial product advice apart from CHSS, then an AR would still be required to provide an FSG.
