Financial advisors, insurance companies, banks, and affiliates need to be prepared for the risk of stalemate due to imminent enforcement of CoFI legislation or further regulation.
Thursday, November 25, 2021 7:33 AM
It will still take more than six months for the Financial Markets (Institutional Actions) Amendment Bill (CoFI) to pass, but industry experts say companies already need to be prepared for the impact on actions and fees. I am.
Congress began reading the bill a second time on June 10, but since then, due to Covid-19 restrictions, the bill has remained on Congress’s purchase order.
But yesterday’s viewer Financial Services Council Webinar -“CoFI in Focus”-Several strategies have been given to overcome the challenge of implementing a bill that is expected to be passed around July next year.
CoFI identifies companies that need to apply for a new action license from the Financial Markets Authority (FMA) for a principle-based scheme that limits the payment of incentive-based fees and sets out what is needed for the actions of intermediaries. increase.
Amy Cunningham, Head of Behavior and Culture at AIA, said insurers have already begun implementing good behavioral principles by including them in advisory contracts and mandatory behavioral training for staff. I am.
She says companies should now put together resources and setting a “tone from the top” is also important.
CoFI is probably not as challenging as FSLAA, and most of the industry has already removed soft incentives, Cunningham said, but advisors will always whistle. “Lack of transparency regarding fees can be a problem.”
Attorney Tim Williams, a partner at Chapman Tripp, hasn’t yet revealed much detail, especially on how CoFI affects intermediaries, but expects linear fees to continue to be accepted, saying “fairness.” The term.
He states that due consideration has been given to the interests of consumers. “… But this is a very open-ended definition and I leave it to the court to determine that this has very bad consequences.”
“Fairness should take into account the interests of both parties, but there is no awareness of balancing the needs of the provider.”
Beckie McCleland, Chief Risk Officer of Partners Life, said the incentives are not necessarily bad and can assist advisors and customers with solutions that may be the price of the service or package solution being implemented.
She states that CoFI and FSLAA are complementary legislation and hope that the regulatory requirements of SMEs already addressing FSLAA challenges will not be doubled.
Better use of technology, especially data and analytics, is also important, says Steve Burgess, director of compliance refinery.
“We also need to consider now how to identify risk points and when we need to serve our clients … but it’s an opportunity for companies to rethink their models and organize them for the future.”
Burgess says deploying a new system can be costly, and advisors need to be aware of what’s included in the agency contract and what they’re signed up for.
Clare Bolingford, FMA’s director of banking and insurance, said regulators want to work with the industry and have a dedicated team to support the implementation of CoFI along with a licensing approach, monitoring framework and engagement model. increase.
She states that FMA learns a lot from FSLAA and strives not to double the information already collected for the financial advice licensing process.
FMA uses a tailored approach depending on the type of entity it handles, its size, and the risks it poses to consumers.
“This isn’t just saying that customers are always right, it’s balanced and takes into account all sorts of considerations … and if you find them, share good practices. To do.”
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CoFI adds further challenges to financial services
Source link CoFI adds further challenges to financial services