Australian Credit Licence (ACL) Licensee Reviews
AC Licensee Compliance Reviews or Audits
Many Australian Credit Licensees tell ASIC that they will conduct annual external reviews using an external services provider as part of their initial ACL application. In any case, whether you under scrutiny by ASIC or want to avoid it, having an independent review of your compliance arrangements is a worthwhile exercise.
Our on-site visits take between half-a-day and three days, depending on the nature of your business. We speak with key people in your organisation, and review office policies and procedures, as well as client files. We then typically make an assessment of your compliance arrangements in light of your ACL conditions, your obligations under the National Consumer Credit Protection Act and Regulations, ASIC's regulatory guides and industry best practice.
The review will usually cover:
We also look at your disclosure documentation such as your Credit Guides (CGs).
- compliance with licence conditions;
- outsourcing arrangements;
- compliance arrangements;
- risk management;
- responsible managers;
- appointing, supervising and training representatives;
- responsible lending;
- IT resources;
- human resources;
- dispute resolution procedures;
- conflicts of interest; and
We then prepare a detailed report, identifying potential breaches and areas for improvement, without overlooking and acknowledging the licensee's strengths. We can also provide template procedures to fill any gaps identified in the licensee's processes.
Issues-spotting Short-form Reviews and Detailed Reviews
We scope the review to your specific needs. We can conduct “issue spotting reviews” where we will provide a short, risk-based list of issues that we identify. Alternatively, we can focus on areas of concern that you may have and how this fits in with your arrangements as a whole. We can also conduct a more detailed review not unlike what we would expect ASIC would undertake if it was to conduct a surveillance of your organisation.
ASIC Audits due to Enforceable Undertakings or Licence Condition Requirements
Sometimes, ASIC requires a Credit Licensee to conduct a compliance audit using external compliance professionals. It may do this instead of requiring the licensee to enter an enforceable undertaking (EU), or it might require it when granting an ACL. An example wording in the licence looks like this:
Compliance Consultant Requirements
The Licensee must:
(a) by 25 October 201X engage an external compliance consultant ("the Consultant") whose appointment and terms of reference are to be approved by ASIC;
(b) require the Consultant to:
(i) comprehensively review the licensee's compliance measures generally to ensure that they comply with condition 3 of this licence; and
(ii) provide a report in writing to the licensee and ASIC that sets out:
(A) a description of the review being undertaken by the Consultant;
(B) an assessment of whether the licensee's compliance measures comply with condition 3 of this licence; and
(C) any specific or general recommendations on the steps to be taken by the licensee to ensure that it complies with Condition 3 of this licence;
(c) cause the Consultant's report required by subparagraph (b) (ii) of this condition for the period from the date of this licence to 25 October 201X (the due completion date) be completed by 17 November 201X and
(d) ensure that within 7 calendar days after the due completion date:
(i) the consultant lodges with ASIC a copy of the report;
(ii) the licensee provides a report to ASIC on the steps to be taken, including a timetable for the implementation of any recommendations in the Consultant's report referred to in sub paragraph (b) (ii); and
(e) not vary the terms of reference for the Consultant without the advance written approval of ASIC.
Since the National Consumer Credit Protection Act 2009 commenced, we have helped many licensees obtain and maintain their Australian Credit Licences. We also have extensive experience in assisting financial services firms who must comply with the financial services laws. Prior to that, we assisted many types of financial services industry groups in complying with their legal obligations, as well as their quasi-legal obligations (remember the Life Insurance Code of Practice?!).
Since 1995, we have provided services to mortgage aggregators, mortgage brokers, financial planners, life insurance companies, banks, responsible entities, global foreign exchange providers and industry regulators. We've helped in compliance, and we've helped in litigation. Through an associated business, Compact - Compliance & Training, we've also provided ongoing coaching and training services to help "keep clients out of court and the hands of the regulator", and to help turn compliance into a competitive advantage.
Organise a Licensee Review today!
Contact us to organise a licensee review today or ask a question about our review service.
Tuesday, 5 April 2016
10 tips to keep your marketing material from being misleading or deceptive - whether your business is financial services, credit services or anything else, you are responsible for the content of the material that you publish or otherwise issue into the
public arena. In this article we set out ten tips to keep your marketing material from being misleading or deceptive.
Wednesday, 9 December 2015
This blog considers ACL holders’ similar obligation to identify changes in control and to report these changes to ASIC in the appropriate manner.
Tuesday, 11 August 2015
We have put together a list of the most common mistakes licensees make that we have seen, and how to avoid them. Although some of these are specific to the credit industry, many of the points are applicable to AFSL holders as well.