UMA’s – should they continue to be licenced for advice?

With the binder regulations bedded down now, although we see examples of some practical issues around the lack of on-going monitoring of binder holders by insurers and the transfer of data being less than effective in some cases, the question we are now asking ourselves is what of the advice component of a UMA’s FAIS licence?

In the early days of FAIS advice was often added to a UMA’s licence profile due to the perceived exposure of poor advice being provided by a UMA to a client when working in conjunction with brokers, especially the truly specialised UMA. This was an exposure that never materialised in our experience. With the binder regulations once and for all setting the standard that a UMA should not be in an advice giving scenario let alone doing actual business directly with the client it is now time to review the advice component of the UMA’s licence.

Our view is that now that a UMA should not be providing advice there is no need to retain this component. It will no longer be a failsafe if accused for providing advice as this would be a breach of the short term Act and being licenced, on paper at least, under FAIS, will be no defence.
Wishing to retain advice in the profile so that all staff are seen to have experience for advice in terms of the FSB’s Date of First Appointment (DOFA) system that does not recognise whether an FSP is a broker or UMA whilst technically possible can no longer be seen as a legitimate practice in our view

This stance does of course mean that newer staff being appointed at a UMA without advice in their personal profile will not be seen to be gaining advice whilst at the UMA and any subsequent move to a broker or direct insurer would mean they would join as representatives under supervision whilst they gain that experience. Whilst this may be seen as “inconvenient” it is however the correct way as you can’t really be seen to have experience if you have never done the job.

This is something we will be discussing with our UMA clients as we see you over the coming months.

The AC Team