There are actually three certainties in this world: Death, taxes and major regulatory updates in December every year, as the industry starts winding down for the silly season.
One of these is the proposed amendments to the General Code of Conduct for Authorised financial services providers and representatives of 2003.
“The main purpose of the amendments is to update the Code in order to offer additional protection to financial customers, to align requirements relating to premium collection across short- and long-term insurance, to give effect to the RDR proposal with regards to the charging of advice fees from customers and to limit the need for a further exemption notice,” according to the FSCA.
What do the amendments include?
1. RDR related amendment:
The FSCA published its Retail Distribution Review (RDR) in November 2014, proposing a number of reforms to the regulatory framework for financial advice and distribution on financial products. The Authority proposes certain amendments to the General Code to give effect to one of these proposals.
In line with aspects of RDR Proposal JJ: Standards for up-front and ongoing product advice fees amendments are being proposed to set requirements which must be adhered to in order to charge such a fee.
2. Additional protection to financial customers:
The inclusion of an additional disclosure to customers where products other than financial products and services are sold, with the aim to ensure customers understand that they are not afforded protection under the FAIS Act for these other products or services.
3. Alignment of requirements relating to premium collection across short- and long-term insurance:
An amendment to extend the current exclusion applicable to the collection of short-term insurance premiums to also apply to the collection of long-term insurance premiums. The premium collection frameworks in the Regulations under both the Long- and Short-term Insurance Acts have also been aligned.
4. Limiting the need for a further exemption:
An amendment to include a current exemption, in place since 2015 for Insurers, as a permanent exclusion for both Insurers and Banks as these entities are prudentially regulated. The protection afforded by the requirement does not offer additional protection for the customer compared to the prudential requirements in place.
According to the FSCA, the impact of these amendments on FSPs and their representatives is also expected to be minimal.
Click here to download the Amendment Notice General Code of Conduct 2020
Click here to download the Statement Supporting the Proposed Amendments
Click here to download the Comments Template – comments to be submitted on or before 19 February 2021.