This note is intended to provide the reader with a clear statement on the management of Conflicts of Interest that exist or may exist within Leppard and Associates (Pty) Ltd (“Leppard Underwriting”). The policy is drafted in terms of section 3A(2)(a) of the Financial Advisory and Intermediary Services Act, 37 of 2002 (“FAIS”) General Code of Conduct for Financial Services Providers and Representatives, as amended from time to time. As an authorized FSP, Leppard Underwriting is obliged to comply with the prescribed Conflict of Interest provisions of FAIS. All employees of Leppard Underwriting who are involved in the business of Leppard Underwriting are obliged to conduct themselves in a professional manner and in line with this policy. This policy seeks to adopt measures to avoid any Conflict of Interest, identify the existence of any Conflict of Interest, and to disclose the existence of any Conflict of Interest. Further it seeks to set out the process, procedures and internal controls to facilitate compliance with the policy as well as to highlight the consequences of non-compliance with the policy by Leppard Underwriting’s employees. This policy is by no means an exhaustive analysis addressing every Conflict of Interest situation that may arise. The policy is intended to assist employees in making the right decisions when confronted with potential Conflict of Interest issues.
- LEPPARD UNDERWRITING BUSINESS
Leppard Underwriting is a specialist underwriting business, underwriting on behalf of Lombard Insurance Company Ltd (“Lombard” or “Product Provider” as the context requires). Leppard Underwriting is licensed as a Financial Services Provider with the Financial services Board under licence number 18178. In this context Leppard Underwriting is a product supplier and works as an insurance service provider. Leppard Underwriting activity includes the assessment of risks of and exposures to liability to a variety of professional and business risks, the determination of premium and relevant insurance contract conditions, quoting and acceptance of risk, policy issuing, administration and claims management.
The shareholders of Leppard Underwriting are Lomvest (Pty) limited; SCJ Sinclair; G Standen and ESG von Roretz.
Leppard Underwriting has a number of relationships in connection with its business.
- Leppard Underwriting has a relationship with Lombard as set out above.
- Leppard Underwriting has a 32% interest in Abelard Underwriting Agency, an independent insurance underwriting business.
- Leppard Underwriting also has relationships with other Financial Services Providers. Leppard Underwriting conducts its business only with insurance brokers or insurance intermediaries who are authorized and are registered Financial Services Providers. These Financial Services Providers have an independent obligation to declare their interests and conflicts.
- Leppard Underwriting does not interact with any policyholder directly in selling any product or in the provision of advice but where requested or as appropriate may interact with a policyholder in relation to any matter but especially policy claims, but then only to the extent authorized and in accordance with the Product Providers’ product.
- Leppard Underwriting, as part of normal business practice, has relationships with various third party service providers such as loss adjusters, attorneys, accountants, and IT companies. This list is not exhaustive.
- Leppard Underwriting also has a relationship with its employees as a result of employment contracts, and the concomitant remuneration policies. All Leppard Underwriting employees are required to complete annually a Conflict of Interest questionnaire, which is aimed at identifying any potential Conflict of Interest that might exist. Any such potential Conflict of Interest disclosed will be assessed and appropriate action taken where necessary.
- No employee is remunerated solely on the basis of the volume of business produced, although this may be one of the factors taken into consideration when salaries are reviewed annually. Leppard Underwriting has procedures in place to ensure that business is not written for volume rather than quality.
- Leppard Underwriting’s remuneration is variable but is dependent on two key elements:
(a) a management fee as a direct reimbursement of costs aligned to and commensurate with the cost of its daily activity; and
(b) a participation in the profitability of the insurance business underwritten determined after accounting for intermediary and broker commissions, Lombard management and solvency fee, Leppard Underwriting management fee, reinsurance and claims.
- Leppard Underwriting does not receive any remuneration from any Financial Service Providers..
- Leppard Underwriting receives more than 30% of its remuneration from Lombard.
Leppard Underwriting’s Board of Directors oversees the business of Leppard including the compliance with all applicable legislation, and this policy. All employees play a key role in the application of this policy and are expected to demonstrate their personal commitment to this policy and ensure their compliance with it.
- THE POLICY APPLIES TO
All directors, employees and consultants of Leppard Underwriting are required to comply with this policy. The policy applies across the whole spectrum of Leppard Underwriting’s business.
- DEFINITION OF CONFLICT OF INTEREST
A Conflict of Interest, in general terms, arises in any situation in which a person is in a position to derive personal benefit from actions or decisions made in their official capacity. In a financial services context, Conflict of Interest means any situation in which a Financial Services Provider (“a FSP”) or Representative, has an actual or potential interest that may influence their rendering of a financial service to a client or their deriving a personal benefit in such a situation.
The guiding principles of this policy are that Leppard Underwriting and its employees must, when rendering intermediary services, act honestly, fairly, with due care, skill and diligence. There must, at all times, be a due regard to the interest of the clients and the integrity of Leppard Underwriting as well as that of the financial service industry as a whole.
- WHAT IS
A financial interest can take any of the following forms - cash payment, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, other incentive or valuable considerations. This list is not exhaustive.
The purpose of business gifts and entertainment in commercial settings is to create goodwill and nurture sound working relationships, rather than to gain any unfair advantage with customers and or a provider’s clients. Reasonable business entertainment and customer gifts of immaterial financial interest are permitted, including promotional events, provided that the offer is consistent with usual business practice and cannot be viewed as bribe or a payoff and certainly cannot be in violation of this policy.
- CONSEQUENCES OF NON-COMPLIANCE WITH THIS POLICY
Leppard Underwriting’s employees are obliged to report every suspected or actual transgression of this policy to one of the Directors and all employees should avoid any situation that may create or appear to create a situation which could be determined to be a Conflict of Interest. Once there is a Conflict of Interest, employees may find it difficult to perform their duties and/or carry on with their work responsibilities impartially.
A violation of this policy is a serious matter that could cause harm to Leppard Underwriting and also could result in disadvantaging certain of Leppard Underwriting’s clients.
Any employee, who fails to comply with this policy, will be subjected to the appropriate disciplinary proceedings in terms of Leppard Underwriting’s Disciplinary Code which could result in the termination of their employment with Leppard Underwriting.
- AMENDMENTS TO THIS POLICY
Leppard Underwriting reserves the right to determine how this policy applies to any particular situation and to amend or modify this policy as it, in its discretion deems appropriate.
This Leppard Underwriting can do without giving prior notice to or having been in consultation or reaching agreement with any provider. All amendments that Leppard Underwriting may make to this policy shall be communicated to employees.
- MEASURES AIMED AT IDENTIFYING CONFLICT OF INTEREST
It is the responsibility of all employees to maintain the good name and standing of Leppard Underwriting by conducting themselves professionally and in accordance with all rules, regulations and legislation which govern Leppard Underwriting.
Compliance with all rules, regulations and legislation is the individual responsibility of each employee. Each employee must accept personal responsibility for behaving correctly and in accordance with this policy. Likewise, each employee is obliged to stop or prevent any actions that are contrary to the content of this policy and which could cause any harm to Leppard Underwriting as a result.
Set out below are various ways in which Conflicts of Interest may be identified:
- use of the Leppard Underwriting disclosure of interest register will provide information on Conflicts of Interest;
- annual monitoring of Conflict of Interest disclosure register – Leppard Underwriting conducts an annual Conflicts of Interest review together with its Compliance Officer, who is an independent service provider and reports to the FSB accordingly;
- regular monitoring of commissions and fees that are paid /received – Leppard Underwriting does not pay any commission to any Financial Service Provider. Such commission is paid by the Product Provider. Leppard Underwriting is connected to this transaction in terms of its authorities. Leppard Underwriting does from time to time entertain Financial Service Providers. The value of such entertainment is restricted to not more than R1000.00 per calendar year in respect of any Representative of any Financial Service Provider. This is managed by way of Leppard Underwriting maintaining a schedule of Representatives reflecting the value spent during the calendar year, such expenditure requiring the prior approval of a Director. No Representative of any Financial Service Provider may receive from Leppard Underwriting any incentive, reward or similar other than as stipulated above. Leppard Underwriting does not provide any preferred status to any Financial Service Provider in relation to any particular product or volume of business produced;
- monitoring of gifts/interest offered or received by Leppard Underwriting on a continual basis.
The above is not an exhaustive list of how to identify the existence of a Conflict of Interest.
- PROCESS, PROCEDURES AND INTERNAL CONTROLS AIMED AT FACILITATING COMPLIANCE
Training of all employees on the Conflict of Interest Management Policy will be provided. The relevant legislative provisions will be highlighted during training to highlight the awareness and the importance of compliance with this policy.
If any employee at is in any doubt as to whether a particular conduct amounts to a Conflict of Interest or not, that employee must contact their immediate supervisor and/or one of the Directors for clarity and guidance.
- MEASURES AIMED AT MITIGATING CONFLICT OF INTEREST
Employees should avoid engaging in activities which will result in a Conflict of Interest. One must not use improper means to, for example, obtain business from a particular representative/broker.
If employees realise that there is a potential or actual Conflict of Interest, the employee must, timeously and fully disclose any such potential or actual existence of a conflict to Leppard Underwriting by reporting same to their immediate superior and/or one of the Directors.
Employees who are faced by what is clearly a Conflict of Interest situation, must desist from continuing with any participation in such situation or activities. Should any employee not be certain about an intended transaction of theirs being a possible transgression of this policy, the employee must approach one of the Directors who will evaluate the intended transaction and give guidance.
Depending on the severity of non- compliance on the part of employees the following actions can be taken:
- Written warning,
- Training can be recommended,
- PUBLICATION AND REPORTING
This policy is available on Leppard Underwriting’s website. Leppard Underwriting’s annual FAIS Compliance Management report will include a report on accessibility, implementation, monitoring and compliance of this policy.
- MANAGEMENT OF CONFLICT OF INTEREST
This policy forms part of the risk management framework of Leppard Underwriting. All queries regarding this policy can be directed to one of the Directors.
This policy was approved by the Directors on 14 July 2016.
There are SIX KEY "TCF" OUTCOMES in terms of the Regulator's Roadmap.
This document sets out our commitment to Treating Customers Fairly.
Our Customer is both the insurance Policyholder and the insurance Broker. We understand the symbiotic relationship between the Policyholder and the Broker.
However anyone dealing with us is entitled to hold us to account and challenge us to perform as we have detailed in the pages that follow.
This is a living document and may alter from time to time. Any alteration will only be made where the result is an improvement and enhancement to Treating Customers Fairly.
This commitment is endorsed by the signature of each director below.
OUTCOME 1 : CULTURE
We are committed to Treating Customers Fairly. Our ethos and general business practice is to maintain a high ethical standard and a belief in mutual respect.
Risk assessment, selection and pricing;
Claims management, acceptance and rejection;
This is also reflected in our strategic purpose to Protect the Reputation of the Customer.Evidence of this approach is specifically embedded, by example, in our Professional Indemnity Insurance product. In the product wording we define the amount the Policyholder is responsible for in respect of each claim. However this amount only applies if the Policyholder is liable for the loss. This amount does not apply where the Policyholder is not liable.What this means is that we will support the Policyholder as required and Protect the Reputation of the Policyholder at no cost to the Policyholder though commercial considerations do receive attention. We believe this is unique in our market.
Administration and Finance;
We respond to Customer queries in a timely manner.
OUTCOME 2 : PRODUCTS and SERVICES
|Our Statement:||All our products and services are intended to meet Customer needs.|
We are precluded from providing advice to Policyholders. We therefore do not engage in any practice that may persuade any Policyholder to enter into a policy contract. However we are concerned that any policy we issue does in fact respond to the Policyholder's needs.
OUTCOME 3 : INFORMATION
When contracting with us we will communicate clearly and keep you appropriately informed before, during and after the time of contracting.
Although we rely on brokers to provide relevant information to any policy holder we contribute to the delivery of fairness by;
OUTCOME 4 : ADVICE
Although we do not provide advisory services, we recognise our product requires advisory support. We will contribute to this advisory support and where possible ensure that it is suitable and takes account of Policyholder circumstances.
Our strategic position is as a product supplier but we assist in the advisory process and fairness by;
OUTCOME 5: SERVICE DELIVERY PERFORMANCE
Our products will fulfil Customer expectations and will be supported through the provision of quality support services. Where expectations and fulfilment are at odds we will clearly communicate the reasons.
As we are precluded from dealing with the public or any Policyholder directly, we are reliant on and work with Brokers to deliver policy fulfilment and service.
OUTCOME 6:CLAIMS, COMPLAINTS and CANCELLATION
We will ensure that there are no unreasonable or unnecessary constraints when any Policyholder wishes to;
Our evidence in delivering on this outcome follows;