Feedback on the Consultation Paper on the Code of Conduct for Authorised Insurance Representatives (2017-03-07)

Summary

This is the Guernsey Financial Services Commission's feedback paper on its December 2016 consultation on revisions to the Code of Conduct for Authorised Insurance Representatives, made under the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002. It summarises the ten consultation responses received, the Commission's response to each substantive point, and sets out the final, amended Code (annexed in marked up form) which replaces the prior 2015 Code.

• Switching representatives: The proposed requirement allowing a customer to switch authorised insurance representative within a firm was removed, as this is a matter for the licensee rather than the representative.
• Disclosure of authorisation scope: The requirement to disclose all classes of insurance a representative is authorised on was narrowed; representatives must still disclose the range, scope and any limitations of insurers or products they can advise on or arrange.
• Bundled insurance products: A guidance note was added clarifying that features, benefits and limitations must be explained where an insurance policy forms an integral part of a non insurance product.
• Timescales and service standards: Responsibility for compliance with a licensee's own policies and procedures on timescales and service standards is now reflected in section 3.5 of the Code.
• Prior year premium disclosure: Personal lines renewal documents must show the prior year premium; for commercial customers, disclosure depends on the customer's sophistication, and a non layman customer may agree to waive this disclosure.
• Commission disclosure on long term pure protection products: The proposed mandatory disclosure of commission for long term pure protection products was deleted from the final Code.
• Transitional arrangements: An explanatory note was added covering positive opt in for add on policies at first renewal after the Code's introduction, and phasing in of prior year premium disclosure.

The final Code applies to all Authorised Insurance Representatives (unless the Commission agrees otherwise) and to the insurance intermediary licensees who authorise and are responsible for them. It came into effect on 1 April 2017, revoking the previous Code that had been effective from 1 January 2015.

Key obligations

• Authorised insurance representatives must comply with the Code of Conduct for Authorised Insurance Representatives from its commencement on 1 April 2017.
• Licensees must maintain adequate and effective systems of control to ensure their authorised insurance representatives comply with the Code (per Rule 5.1.2 of the Intermediaries' Rules).
• Representatives must disclose the range, scope and any limitations of the insurers and/or products they are authorised to advise on or arrange.
• Personal lines renewal documents must include the customer's prior year premium unless a non layman commercial customer has agreed to non-disclosure.
• Following introduction of the Code, upon a customer's first renewal including add-on policies, the customer must positively choose to continue each add-on policy before opt-out renewal offers may be used.
• Licensees must implement any computer system changes needed to display prior year premium as soon as reasonably possible, and in any event by the first anniversary of the Code's commencement.
• Representatives advising on long term pure protection products must disclose in writing the amount or percentage of remuneration the licensee will receive from the sale or variation of the product.
• Representatives must not advise a customer to convert, lapse, cancel or surrender a long term pure protection product unless it can be demonstrated to be in the customer's best or stated interests, with such advice fully documented.

Applies to

Authorised Insurance Representatives, insurance intermediary licensees, insurance managers

Deadlines

• 1 April 2017: Commencement date of the final Code of Conduct for Authorised Insurance Representatives, revoking the Code effective from 1 January 2015.
• first anniversary of the introduction of this code: Deadline by which licensees should have made any necessary system changes to display prior year premium on renewal notices.