FSRA Authorised Representative Training - CRM...

CRM Brokers Pty Ltd

ACN 088 887 138

ABN 68 088 887 138

AFS Licence 246622

FSRA Authorised Representative Training

Level 29, Chifley Tower,

2 Chifley Square, Sydney 2000

P: 1300 880 494

F: (02) 9225 9943

E: [email protected]

Authorised Representative Training

Introduction

Part 1: Overview of the Financial Services Reform Act and how to work 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 2

Introduction

What is Strata Insurance?

It is a Class of Insurance that is specifically designed to protect the Owners Corporation’s property(ies) and interests in compliance with Strata Schemes Management Act.

What covers are mandatory under the Strata Schemes Management Act?

The Owners Corporation is responsible to ensure insurance cover is in place at all times for their Building(s), Legal Liability and to protect Voluntary Workers who do work in their building and/or Common Property on behalf of the Owners Corporation.


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!**


Part 1: What is FSRA?

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.


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 Owners Corporation (OC) or Executive Committee (EC) at the time of taking out the insurances (for the first year only).


Part 1: What is a PDS?

The PDS is usually in the first few pages of an Insurer’s policy wording booklet. It will list:

• details of the underwriting agency and the insurer who provides authority for the agency to bind cover on its behalf

• 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


Part 1: What is a PDS?

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)


Part 2: Advice

Under CRM’s Authorised Representative Agreement, you can give:

• Factual Information

• General Advice

BUT NOT PERSONAL ADVICE


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.


Part 2: General Advice

What is a General Advice?

General advice is a general statement, recommendation or opinion that influences or could influence the OwnersCorporation to make a decision about the strata insurance.

It is not based on their personal circumstances (as this will then be personal 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.”



General Advice Warning

A written general advice warning also appears in theinsurance 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.”



General Advice Examples:

Example 1: “Strata schemes that allow pets may benefit from a policy that

offers temporary pet accommodation cover.”

Example 2: “We recommend you remain with your current insurer as they

have an excellent claims paying record.”

Example 3: “Environmental upgrade cover may be beneficial in all cases

given the current policy push towards greener and more efficient buildings.”

Example 4: “Policies with very low landscaping sub-limits aren’t generally

suitable for schemes with extensive or valuable landscaping.”

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!



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 Owners Corporation.



Personal Advice Examples:

Example 1: “I think you should insure your building for $5 million. That will cover you in the event of a total loss.”Example 2: “Because your building includes an underground car park, you should consider a policy thatincludes 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.Example 3: “You should only get $500,000 Office Bearers’ cover. That will be enough.”

Office Bearers

Office Bearers are:

• Chairman

• Treasurer

• Secretary

• Elected members who

Voluntarily represent the

Owners Corporation

(Up to 9 people)


Office Bearers’ Liability (OBL Cover)

• Coverage for any decisions Executive Committee (EC) make or failed to make but should have made.

• Does not cover fraudulent, dishonest acts, libel or slander

• Cover is on a ‘claims made’ basisi.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.

• Aggregate cover limit

For example: Cover is for all EC members. If they had

$100,000 cover and there are nine members, that equates

to $11,111 each.

*New strata laws will start on 30th of November, 2016 will see the previous Executive Committee

become the new ‘strata committee’.



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



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?

EC – Executive Committee (chairman, treasurer, secretary, anyone who voluntarily

represents Owners Corporation)



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?



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 Owners Corporation 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?


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 ofclaims. What is it worth for peace of mind?


Claims

What is required for Claims Lodgment?

• Strata Plan Number

• Date of Loss

• Description of claim

• Cause of Damage

• Resultant Damage

• Itemised repair quote(s)/invoice

• Photos – where applicable


In the event of a claim

The Strata Manager is to complete a Strata Claims Notification Form and

forward it to CRM Brokers via [email protected], or call our

Claims Team on 1300 880 494.

CRM Brokers’ Strata Claims Notification Form allows for the upload of a

Strata Managers’ Claim Form to reduce duplication of data.

For times when claims occur late at night or on weekend, you have access

to Insurers’ contact information via our After Hours Emergency Contact

page. They will assist you with the claim and then communicate their

procedures to CRM Brokers on the very next business day.


mailto:[email protected]

http://www.crmbrokers.com.au/Emergency-Contacts-Strata/

Part 3: Test


Please complete the short test available at

www.crmbrokers.com.au/authorised-representative-training

http://www.crmbrokers.com.au/authorised-representative-training

FSRA Authorised Representative Training - CRM...

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