AFS Licensee Compliance Reviews or Audits
Many AFS Licensees tell ASIC that they will conduct annual external reviews using a professional compliance services provider as part of their initial AFSL application. In any case, whether you are 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 and size 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 AFSL conditions, your obligations under the Corporations Act and Regulations, ASIC's regulatory guides and industry best practice. We don't just look at documentation - we strive to test how behaviour (behavioural compliance) lines up with what you say you do in writing (procedural compliance).
The review will usually cover:
- Compliance with licence conditions;
- Outsourcing arrangements;
- Compliance arrangements;
- Risk management;
- Responsible managers;
- Appointing, supervising and training representatives;
- Giving advice;
- IT resources;
- Human resources;
- Dispute resolution procedures;
- Conflicts of interest;
- Breach reporting; and
- Promotional material.
We also look at your disclosure documentation, like your Product
Disclosure Statements (PDSs), Financial Services Guides (FSGs), Statements of Advice (SOAs) and Records of Advice (ROAs) where
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 Audits
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.
ASIC Audits due to Licence Condition Requirements
Sometimes, ASIC requires an AFS 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 AFS licence. The typical 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
(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
(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.
We have often conducted reviews of this nature.
Click here to see how we can assist in EUs following an ASIC investigation.
Since the Financial Services Reform Act 2001 commenced (in 2002), we have helped many licensees obtain and maintain their AFS licences. 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 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 now 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.
Tuesday, 5 June 2012
In regard to auditors reporting matters to ASIC Regulatory Guide 34 – Auditor’s obligations: reporting to ASIC provides helpful discussion around the obligations arising from ss311, 601HG and 990K.