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Licensee Reviews

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“AFS Licensees must comply with the financial services laws or risk losing their licence. .. ASIC will not hesitate to take action when licensees or their representatives don’t comply with the law”

— ASIC Commissioner Danielle press, 19-051MR

Organisational Design

“…every financial services entity, whether examined in a case study or not, must look at its own conduct and the way in which it governs itself”

— Final Report of The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

“All financial services entities should, as often as reasonably possible, take proper steps to assess the entity’s culture and its governance, identify any problems … deal with those problems; and determine whether the changes it has made have been effective.”

— Recommendation 5.6 – Changing culture and governance

As an Australian Financial Licensee or Credit Licensee, you operate in a highly scrutinised, highly regulated and frequently changing environment.

Laws, regulations, policies, commercial pressures, ethical and professional obligations, consumer expectations and industry standards create a complex web of duties and obligations with which you must comply.

In addition, you’re expected to regularly assess your culture, compliance frameworks and governance arrangements to reassure Regulators, Insurers and other stakeholders that your business operates “efficiently, honestly and fairly”.

We start by considering the measures, processes and procedures you have in place and, through analysis and interviews, appropriately expand the review beyond compliance to encompass an assessment of other matters including your:

  • culture

  • governance structure

  • approach to advertising and promotion

  • application of FASEA Code of Ethics

  • regulated documents

  • remuneration model; and

  • your human, financial and technological resources.

The report you receive is a detailed, objective and insightful assessment of your compliance arrangements, culture and controls.

Operational Effectiveness

“the licensee environment has a substantial bearing on the quality of advice delivered by an adviser.”

— Mark Hoven, Australian Financial Review, 31 July 2018

“Compliance with the Law is not a matter of choice”

— Commissioner Kenneth Hayne, “Royal Commission into misconduct in the banking, superannuation and financial services industry”, Final Report page 494

The Law requires that you operate “efficiently, honestly and fairly” and have measures, processes and procedures in place that are adequate for the nature, scale and complexity of your business.

In addition, you are required to manage conflicts of interests, maintain the competency to provide financial services, prioritise the interests of your clients and ensure your representatives comply with the financial services laws and provide advice is reasonable, appropriate and in the clients’ best interests.

Our Licensee Review will provide you with a methodical, objective and considered assessment of your compliance, risk management and governance arrangements (including your advice documents and processes) against internal requirements and your legal and professional obligations.

By including a risk-based review of the advice produced by your representatives, the review will highlight how, and to what extent, your culture and compliance arrangements affect the conduct of your advisers, their ethical decision-making and the quality of their advice.

Comparative Analysis

“Culture, governance and remuneration march together. Improvements in one area will reinforce improvements in others; inaction in one area will undermine progress in others.”

— Final Report of The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

In addition to detailed observations and specific recommendations, we’ll provide you with an assessment of your business against our industry data.

Better yet, although our algorithms base your overall rating on a consideration of both your compliance arrangements and your advice quality, we’ll also report these measures separately so that you can make evidence-based decisions about your business.

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Every fortnight “Three Hit Tuesday” delivers thought leadership, considered analysis and insights that will help you improve your advice, more effectively manage your regulatory risks and make you better informed than your peers.

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