Posts in Licensees
Our Gap Year: Comprehension, Compliance and Capacity.

Smarter Compliance. In March 2019, ASIC released Report 614 titled “Financial advice: Mind the gap” summarising their research into consumer understanding of the differences between general and personal advice. No responsible licensee would be surprised to learn that ASIC’s research identified “substantial gaps in consumer comprehension”. These weren’t the only gaps that concerned ASIC and this article also considers ASIC’s response to AMP Financial Planning and SMSF Advisers Network.

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The lure of technology: Limits, practices and reality.

Smarter compliance. For those of us interested in the future of advice (and the far smaller number of us interested in compliance), technology - and, specifically, in regulatory technology (“reg-tech) - is particularly appealing. Well-designed solutions, customised and properly supported, can make advisers and licensees both more efficient and more effective. Better yet, the proper technology can be a source of competitive advantage in a highly regulated industry. This article looks at alternative views, offers seven questions to consider and reminds us that, if we make the wrong calls, technology can be “a good servant but a bad master”

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Getting to the right place: Research and Approved Product Lists

Smarter Compliance. The business of financial advice is hard. In addition to a range of legal and professional obligations, the complexity of individuals’ specific needs and the challenge of regulatory arbitrage, Licensees and Advisers are expected to be well-informed about an ever increasing number of financial products and platforms. Consistently providing appropriate financial product advice is an insurmountable challenge unless the Licensee has an effective research process and a well constructed APL. In this article, we answer a user’s questions on the role and use of the APL.

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An argument for unification: why risk and compliance should be joined

Smarter Compliance. For all their obvious similarities, Compliance and Risk Management are two management disciplines demarcated, fundamentally, by arbitrary distinctions, assumptions and biases. As appealing as the status quo may be to existing players, the Banking Royal Commission has highlighted the desperate need for licensees to take compliance and risk management seriously and build effective and efficient functions. The best approach might be to combine them . This article examines the obstacles in the way of a building an effective CGRM function and the reasons to do so quickly.

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Reasonable Steps: Licensee obligations and regulatory risk management

Smarter compliance. Section 912A(1)(a) of the Corporations Act requires a financial services licensee to “do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly”. As we’ve seen from the Banking Royal Commission, this is neither verbiage nor aspirational sentiment but a compendious expectation that requires consistent and demonstrable competence, capability, efficiency and integrity. It’s also an obligation that the law expects to apply equally to the Licensee and their representatives. This article moves from the specific case of ASIC v Financial Circle to the reasonable compliance arrangements expected of licensees.

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Compliance Reviews: Livin' on a prayer

Smarter compliance. For over ten years, in various iterations, we've worked hard to develop a credible and fact-based alternative to institutional box-ticking. Abandoning the bureaucracy and arbitrary classifications so loved by institutional licensees, we pioneered reg-tech and built a consistent and predictable risk and conduct-based methodology that embeds transparency, comparability and granularity. We appreciate that the "sweet science" of compliance is not for everyone, but everyone can benefit from a little more knowledge. Addressing three "key myths" might not change your life, but it might provide the context and reassurance you need. 

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MDA Providers: Time for action

If you're an AFSL that wants to continue to operate as an "MDA Provider" and you don't already have the required authorisations, you'll need to have your licence varied. Assuming you're already authorised to advise and deal, you'll need to apply to vary your AFSL. Submitting the application for a variation isn't too difficult but remember that your application needs to be true, correct and complete (and supported by all the required mandatory information and proof documentation). This article curates the relevant material for you to consider and outlines five steps you should take now.

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The challenges of growth: recruitment and reference checking

As a Licensee, you operate in a commercial environment subject to a range of legal, moral and social obligations. You, and the advisers you authorise, routinely act and make decisions that can significantly impact the lives and circumstances of your clients. As focused as you may be on growth, you need to discriminate; you cannot simply recruit without investigating, and assessing, the people you propose to authorise. Nor can you simply make a decision on the basis of information you have at hand or that offered to you by the potential recruit. This article outlines some practical ways to manage recruitment risks and access to some tools that might assist you.

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Once more unto the breach (register), dear friends, once more

The Royal Commission has highlighted some curious processes followed by some of the larger licensees. Their laidback approach to breach reporting, in particular, has attracted the type of attention they might otherwise preferred to avoid. Breach reporting isn’t that difficult to grasp, but perhaps everyone needs a little help from time to time.

This post covers the key things you need to know and the What, Why, How and When of breach reporting.

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"Regrets, I've had a few": The risks and opportunities with appointing advisers

As the Banking Royal Commission has highlighted, advisers have generally enjoyed unfettered mobility between licensees; neither their compliance, conduct nor capability have provided any real obstacle to determined licensees focused on growth. The obvious limitations of this approach are commemorated on the ASIC website and in Rep515, the Regulator’s  recognition of “inadequate background and reference-checking processes” and releases on strategic changes and cancellation of licenses. This article proposes five steps to minimise the risks and costs of adviser recruitment.

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Last man standing: "Bloody but unbowed"

It’s hard not to read recent media coverage of our industry without anticipating a fundamental shift in advice. New education changes, a renewed focus on conflicts and a regulatory challenge to the ongoing service model that underpins the entire industry. While media focus on the institutional players, this article discusses the impact on, and opportunities for, professional advisers in the post-Royal Commission environment.

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What was and what will be: Let's talk some more about compliance

We previously wrote about ASIC's 2018 enforcement activity, and with the publication of ASIC's second-half report, we thought it would be a great opportunity to take stock of what else occurred last year. Depending on your perspective, you may find it alarming, depressing or thrilling; in any event, it will to help you assess whether you are, or are likely to, meet their expectations.  In summary, ASIC will continue their focus on ‘gatekeepers’ to ensure that they are conducting themselves in a manner consistent with the law, professional standards and community expectations. In the Shadow of the Royal Commission, ASIC have reiterated that they will continue to take action against any who do not meet these standards. This article will explore their successes and their intentions for 2018.

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Building in 'best interests' and better supervision

Since 2012, the Industry struggled first to understand, and then to operationalise, the 'best interest' duty. While the majority of Licensees eventually embraced this fundamental new duty, some participants failed spectacularly. In a previous article we suggested that competent AFSL should review their compliance arrangements in the wake of ASIC v NSG and ASIC v WRM. This article addresses where to start.

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Ineffective compliance: 'best interests' and supervision

Smarter Compliance. Since 2012, the Industry struggled first to understand, and then to operationalise, the 'best interest' duty. While the majority of Licensees eventually embraced this fundamental new duty, some participants failed spectacularly. This article considers how competent AFSL should review their compliance arrangements in the wake of ASIC v NSG and ASIC v WRM.

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