Screening and Monitoring Changes at BridgeForce

March 2015

New forms New questions BridgeForce Compliance website BridgeForce Contracting issues

Agenda

Screening Confirmation Request ◦ Designed by insurers to allow MGAs to ask about

advisors moving MGAs

New Screening Forms

1. Status of the contractual relationship between insurer and advisor?

2. Any unresolved debts with the insurer? Efforts to repay?

3. If contract was terminated, would insurer consider re-contracting?

Has company investigated or reviewed a concern/complaint related to market conduct?

Questions Asked

Advisor Screening Questionnaire (ASQ) ◦ Looks like the old CLHIA application for contract ◦ Now asks you if you have

Documented AML program Written privacy program Written disclosure statement Needs-based selling practices

New Screening Forms

You need to have all of these – these are old requirements◦ AML Compliance Regime – since 2008◦ Privacy Program – since 2004◦ Written disclosure statement – since 2004◦ Needs-based selling practices – since the dawn of

time (or 2005 when CCIR endorsed the CLHIA Approach)

Impact on Advisors

Having asked the questions, there may be legal exposure in doing nothing.

Advisors have 3 months from being contracted to get everything in place.

MGA Guidance

When you apply for a contract with an insurer through us, you will be asked to sign the Code and certify either that

◦ 1. You are compliant OR

◦ 2. You have gaps you have identified and you will repair them within 3 months.

◦ At the end of 3 months, you will be asked again to certify that you are compliant. If you cannot, we contact the insurer for instructions.

BridgeForce Code of Conduct

http://bridgeforcefinancial.com/toolbox/compliance/ - It’s all there for you –

- Anti-Money Laundering Tools- Privacy Tools- Point of Sale Disclosure- Needs Analyses and KYC

And plenty more than that!

BridgeForce makes tools and templates available to you

MGAs are expected to engage in risk-based monitoring of advisors.

Where necessary, we may have to review your business.

You are expected to cooperate and produce records and files.

Enhanced Monitoring

Regulators say insurers are responsible for the conduct of their agents – even independent agents.

Insurers delegate some of the responsibility to MGAs, who act on behalf of the insurers.

This is the regulatory framework we now all operate under.

Why should I allow this?

New screening documents are already being used.

Behind the scenes monitoring has always gone on.

How will this be rolled out?

BridgeForce does not intend to institute formal “audits” but will do some reviews and sampling in agent files to satisfy itself, insurers and regulators that

1. It knows its advisors 2. It takes reasonable efforts to detect and

prevent fraud and unacceptable sales practices.

3. It complies with Anti-Money Laundering and Anti-Terrorist Financing regulations.

What about reviews?

Most will be based on random selection

We hope to provide something in return, including pointers, sample material, templates to use.

More on reviews

Reviews can assist you in improving your practices and protecting you from unpleasant surprises.

BridgeForce has committed itself to helping advisors get compliant.

The upside?

Please take part in the AML workshop this afternoon.

BridgeForce Compliance Days are a big part of that

Questions?