28 June 2019 11:30
Photo : JESHOOTS.COM (Unsplash)
Thefinancial markets Authority wanted to clarify the obligations of representatives in connection with the commission of insurance and the collection of information according to the changes made to the Law on the distribution of products and financial services (the ACT) by the Act aimed primarily to improve the supervision of the financial sector, the protection of deposits of money and the regime of functioning of the financial institutions (act 141).
The Authority interprets the law so that a non-certified person may give advice, but cannot provide the product and may not present themselves as representing. Also, this person can not receive compensation in connection with the sale.
“For example, a journalist who gives advice on insurance in the context of a chronic or a professional (accountant, lawyer, etc) who gives advice to his client would not have to be certified to the extent that it complies with the conditions laid down “, illustrates the Authority.
The regulator has also clarified what it considers to be an insurance counsel. The criteria are the following :
- Recommend an insurance product, a protection or an amendment, including its replacement.
- Answer questions relating to a contract in force, including questions relating to the procedures for termination.
- Give explanations to a client on his situation or on a product, which can get them to take a decision on a product.
- Compare insurance products.
- Help a customer choose a product or make a choice of option on a product.
- Discuss with a customer in connection with the choice of its protections.
- Show the customer the results of its analysis of needs.
- Present and provide explanations on the submission to a customer.
However, a person who is acting for the account of a firm that gives the insurance counsel to a client must be a representative, specified the Authority. A representative may not appoint a non-certified person to give advice to a client.
“The consumer that communicates with a cabinet in order to seek advice is expected that this advice will be provided by a representative, or an insurance professional, who has the required skills and who has obligations of continuous training as well as a code of ethics to abide by,” says the regulator in its opinion.
However, the Authority always reserves the right to terminate ” the activities of a firm, or a representative whose business model is based on outsourcing to a non-certified person from activities which are specific to the role of a representative.”
Attention to the collection of information
The Authority considers that there are two aspects to the obligation of a representative to inquire into the situation of a client. The first is the gathering of factual information and the second is to take note of it and analyze it.
The collection of factual information can be delegated to a non-certified person, reminds us of the Authority. But the responsibility always rests on the representative who has delegated this task in particular to ensure that it was made ” neutrally and without bias “.
In addition, if the information prove to be incomplete or do not reflect what has been disclosed by the client, ” the representative will not fulfill its obligation to “inquire into the situation of his client” and could expose themselves to sanctions, ” warned the Authority.
The regulator warns against crossing the line between the collection of factual information and those that would allow a representative to conduct the analysis. “During the collection of information, there is a high risk that the non-certified person poses a gesture which goes beyond the operations that can be performed by a non-certified person. This person must refer the client to a representative, for example, as soon as a customer’s question might lead him to take such action. “
Finally, the Authority reiterates that a non-certified person may not be remunerated for the collection of information in connection with the fact that a sale has been done or not. “This person may be remunerated at a fixed price, wage, fee, depending on the number of clients for whom it would have collected the information,” she says.