In addition to binder rules, the new fit and Proper Regulations introduce operational requirements for FSPs that would outsource. The person to whom the function is outsourced must be able and, if necessary, empowered. The PSP must have metrics in place to assess the performance standards for outsourced delivery. A written agreement should govern the subcontracting agreement and include rights, obligations, service level requirements and conditions for access to the business and information by the PSP and the Registrar. A Moneyweb article titled New Insurance Rules Offer More Protection, Less Bias discusses the introduction of a 9% binder compensation cap in the changes to long- and short-term insurance rules that came into effect on January 1, 2018. For all those who were present at the insurance regulatory seminar in November, it would be obvious for the regulatory authority to take a firm stance with regard to file agreements and outsourcing agreements. This is because of the resulting abuses that have taken place in this room over the years. The total remuneration of the binder must be proportionate and proportionate to the costs of performing the binder function, taking into account the nature of the function and the resources, skills and competences necessary for the performance of the function. There must be no double counting. Conflicts or potential conflicts with the interests of policyholders must be mitigated and payment must not impede the provision of fair results to policyholders. The following below is a snapshot of what we think are the most important aspects when it comes to file and outsourcing agreements.
It is understandable that it is not possible to discuss every detail of this newsletter. However, your compliance officer will take care of you and we will also run national workshops on these and other topics. Under the amended regulations, record holders authorized to provide advice under the Financial Advice and Intermediation Services Act (Fais) can receive a maximum remuneration of 9%. The fee is 3.5% for the conclusion, modification or extension of policies, which may be increased to 5% if the aforementioned functions include the definition of policy formulas, premiums or benefits. . . .