What's Happening?

Compliance changes looming



If you have not already heard about the FSCA’s Omni Conduct of Business Returns (CBRs), we encourage you to inform yourselves as soon as possible.

These returns will replace the now-defunct FAIS Compliance Reports, but on steroids! All entities regulated by the FSCA will be under the spotlight of these requirements, and no longer just insurers. 

The ins and outs

While they cover many of the elements that were included in the FAIS Compliance Report, the draft CBRs which were issued by the FSCA for comment in 2022 go much further. They look to obtain data on your marketing initiatives, your client demographics, your claims and new business data, collection of money, your governance arrangements, any conflicts of interest, your complaints handling arrangements, your outsourcing and binder arrangements and much, much more.

As currently proposed, reporting will be required quarterly, which will result in substantial additional resource requirements on firms in order to ensure that the returns are appropriately and correctly completed. Support from multiple business areas will be required, and this will no longer fall simply under the ambit of your compliance function.

Of particular note, is that much of the data required is currently not held in one place, with a large proportion being held by product providers, but also other service providers, and will require significant work to obtain and collate, which will either be manual in the case of smaller FSPs or will require substantial and costly system development in the case of larger FSPs.

For those FSPs that operate across multiple licence categories, it will be hugely challenging to combine data for individuals across an organisation for one return. 

Moving the regulation goal posts

FSPs and the industry as a whole, are subject to continually increasing regulatory changes and burdens, which places huge pressure on an already struggling market, and further creates a barrier to entry for new participants in the market. With the advent of the Conduct of Financial Institutions (COFI) Bill substantial changes are expected in the regulatory landscape. This too will come at significant cost and effort to business. It is further concerning in relation to the CBRs that FSPs will need to keep making changes to match requirements, as regulation changes, making this an ever-moving goalpost.

While the FIA is in support of the Regulator’s aim of creating tools and mechanisms which would allow for the Regulator to better assess the delivery of fair customer outcomes across the financial sector, we submit that the Omni-CBR in its current format will have far reaching consequences which may have a severe impact on the service and delivery of financial services that they provide to customers.

Have your say

The FIA has made an extensive submission to the Regulator, addressing each line of the return, as well as including a supporting letter, addressing our concerns more generally. We understand that fewer responses than expected were received, and while we recognise how time-consuming it is for business on top of their day-to-day commitments to take the time to review the questions and understand the requirements, it is important that businesses do so to forearm themselves for what is to come.

In addition to reviewing the draft returns, we continue to urge all intermediary businesses to participate in the pilot when it launches, which will give businesses time to unpack the questions, understand what is required and provide their own specific input to the FSCA, which is vital, as only YOU will know what will be an issue for YOUR business. Participation in the pilot will also give business a further opportunity to shape what the future of these returns will look like. Some pain now could save a great deal of effort in the future!