Compliance Policy & Procedures

1. CompliancePolicy & Procedures An Overview for Staff Prepared by MSM Compliance Services Pty Ltd

2. Who Are MSM Compliance? • MSM is a national professional services business focused on the general insurance industry. • Your company has engaged MSM to assist in the management of its obligations as a holder of an Australian Financial Services Licence. • MSM helps to ensure that you and your company comply with your AFS Licence obligations with the least disruption to your core business.

3. Why Are You Reading This? • To provide you with an introduction to our Compliance Policy and Procedures. • It will present you with a synopsis, but not the detail. • You should still take the time to read the full Compliance Policy & Procedures.

4. Why Is A Compliance Program So Important? • As an AFS Licensee we are required by law to have an effective Compliance program. • A Compliance program helps us to consistently achieve the performance that is expected by ASIC and our Customers. • Compliance programs are recognised as an integral part of good management practice. • Without a Compliance program we run the real and possibly catastrophic risk of not meeting our Licence conditions therefore lose our License.

5. Who Is Responsible For Compliance? • The Responsible Manager(s) is ultimately responsible for the implementation and effectiveness of these Policy and Procedures. • The Compliance Officer is responsible for the implementation and effective operation of these Policy and Procedures . • It is the responsibility of all management and staff to promptly advise the Compliance Officer of failure or potential failure of our business to comply with our obligations .

6. Our Compliance Program • A Compliance Policy and Procedures. • Appointment of a Compliance Officer – identified on our Organisation Chart (CO) • A Breach Register to record situations where we fail to meet our legislative or code obligations. • A Compliance checking system that regularly prompts the Compliance Officer to review the way we do things across all aspects of our business. • A regular (annual/bi annual) review of our business by an external compliance consultant. • Reporting of all breaches to the Company’s Responsible Managers. • Reporting of all significant breaches to ASIC.

7. Compliance Promotion Compliance is part of the way we do things and must be promoted at all levels of the business, including • Requiring Responsible Managers and Staff to read these Policy and Procedures. • Induction programs for all new staff, which includes training on the Compliance Policy and Procedures. • Raising of Compliance Issues at our staff meetings. • Providing feedback to staff on results of external reviews. • Including Compliance as part of Staff Appraisals.

8. Compliance Monitoring, Reporting & Recording • Accurate & timely monitoring, reporting & recording are essential. • We use either the Compliance Checklist or Broker Compliance Control. • All Compliance tasks are identified, graded and allocated to a staff member for completion. • Breaches are recorded in the Breach Register. • Significant breaches must be reported to ASIC within 10 business days. • An external compliance review will usually be conducted on a scheduled basis (typically annually / bi annually). • Compliance and Breach reports are tabled at Board or Management meetings.

9. Breach Examples • Failure to • Ensure Spotters to disclose their income. • Show correct / final insurer on invoices. • Promptly advise clients of significant issues affecting their coverage. • Get client/insurer instruction on all policy cancellations. • Refund commission & fees if no prior notice provided • Maintaining training plans & registers for all advisory staff.

10. Breach Examples • Failure to advise ASIC of changes in address, Authorised Representatives etc. • Acting outside scope of our AFS Licence • Misleading advertising that does not clearly spell out the services available. • Use words such as “independent”, “objective”, “impartial” etc. • Failure to submit APRA 701 returns on time. • Failure to properly appoint Authorised Reps, Distributors and Spotters.

11. Breach Examples • Failure to • maintain cash budgets and to monitor cash flows • have an annual financial audit conducted • have adequate P.I. cover • be a member of Financial Ombudsman Service • provide clients with details of your complaints system. • have a documented complaints system and register.

12. Breach Examples • Not effectively managing / recording conflicts of interest • Insurer profit share arrangements. • Binders • Buying Group relationships • Staff incentive schemes • Premium funding deals/commissions • Referral to other related /income generating providers

13. Breach Examples • Client Money – failure to … • Bank money on day of receipt or day after. • Have Trust Assets exceed Trust Liabilities • Pay insurers within 90 days • Pay insured’s refunds within 7 days • Advise insurers of debts over 90 days in 7 days • Take non client money out of Trust in 30 days. • Advise intermediaries of their obligations when paying them.

14. Breach Examples • Advice Disclosure • Not providing oral disclosure / warnings when quoting Retail Clients over the phone. • Not providing General Advice Warning with documentation • Not providing required information when providing Personal Advice.

15. Breach Examples • Financial Services Guide • Incomplete / not up to date • Old FSG on website • Not providing within 5 days to new clients • Not providing to existing clients when changed • Not recording date / version no when sent out • No separate FSG for Authorised Reps. • Sending electronically without specific client consent.

16. Review & Updates • Our Compliance Policy & Procedures will be reviewed on an annual basis as part of our the Business Planning process. • The review will necessarily involve senior management together with input from staff where relevant. • Any changes will be documented in the annual Business Plan, and will be advised to you either via email or at our regular Staff meetings

17. In Summary You should • read the full Policy & Procedures. • understand your role & responsibilities in the Compliance Program • be aware of what constitutes a breach and the action required by you. • Identify from our Organisation Chart who our Compliance Officer is.

18. Where To From Here? Please take the time to read our full Compliance Policy and Procedures and if you require further clarification discuss with our Compliance Officer.