By Nicole Alexander, Head of Licensee Standards
Over the last few weeks I have been presenting at workshops around the country. At every session, there are three main areas that prompt questions and discussion.
For many licensees, the prospect of being sent a notice by regulators can leave them in a cold sweat. And with ASIC outlining their plans for the coming years’ surveillance and enforcement activities, the chances are that many will soon receive a notification to provide information.
Providing licensees with the tools and skills to manage their business and respond to regulators with confidence is part of the Centrepoint Alliance Responsible Manager training. In the recent workshops, ‘Are you Regulator Ready?’, there were three themes that kept arising as advisers worked through how ready they were should a regulator come knocking.
1. What are the ASIC focus areas?
ASIC has been quite transparent about their areas of focus. These areas can be found in their Corporate Plan (2019-23) and include:
- Examining the effectiveness of measures to improve quality of advice
- Inadequate management of conflicts of interest with misaligned remuneration
- Inadequate controls to detect and act on wrongdoing
- Inadequate handling of complaints and remediation
- Inappropriate reward and remuneration structures
- Inadequate policies and ongoing training programs
2. How can I make sure my compliance arrangements are adequate?
Licensees may be asked about their compliance arrangements, policies and procedures. You might ask yourself some key questions:
- Are your arrangements consistent with the size, nature and complexity of your AFSL?
- Do you have documented policies and procedures for complying with your obligations?
- How do you monitor compliance to check that your policies are effective?
- Who, how and when are arrangements reviewed to ensure they are adequate?
- How do you address non-compliance?
3. If I’m responding to a request from ASIC and discover a breach, what should I do?
Timely, honest communication with ASIC is the best policy. If you are responding to a request for information and you uncover a breach, take action. Report the breach and provide details on what are doing to rectify the breach and what will be done to ensure future compliance. A good breach report showing how you have addressed an issue will be viewed favourably.
It’s essential to act promptly when you receive the notice. And if you are unsure of what you need to do or how to respond, reach out to an expert for help. Talk to your compliance consultant or lawyer.