An insurance broker was suspended by ASIC in May 2012 for not meeting its ongoing financial requirements. It was found that the insurance broker breached its legal obligations and licence conditions by failing to:
All AFS licensees are required to meet certain financial requirements in accordance with ASIC’s Regulatory Guide 166 (RG166) on an ongoing basis. The surplus liquid fund requirement of $50,000 is applicable only when an AFS licensee:
The surplus liquid fund requirement of $50,000 is not required where the value of the money and property for all clients in total is less than $100,000 (RG166.69).
In calculating whether the money and property has a value of less than $100,000, the following money and property are excluded:
Section 985B relates to the status of amounts paid to insurance brokers in respect of contracts of insurance. It states that:
For an insurance broker, the surplus liquid fund requirement would not be applicable unless money held within its trust account (excluding amounts described in s 985B above) exceeds $100,000. However, the insurance broker must ensure that the trust account is still administered accordingly including making payments to insurers within 90 days of cover provided by the insurer and notifying the insurer if payment is not received within 7 days after the end of the relevant period.
Additional financial requirements may apply depending on the activities of the broker.