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Services to Licensees
In today's competitive
business and changing legislative environment the risk of not knowing
how to maximise the intrinsic value of your business means that you may
be unwittingly giving your hard-earned fortune away. After all, your
business is worthy of protecting just as much as you protect your
clients' interests.
Inspector Compliance understands financial services and shares your
business acumen to accurately assess an acceptable level of business
risk without jeopardising your reputation and position in the
marketplace. Ultimately, it is through our consultative process that
you decide the level of business risk acceptable.
Consequently, you end up with an appropriate corporate structure to
yield a financially satisfying arrangement for your skills and
experience in the financial services industry. By also embracing the
legal and compliance requirements correctly, Inspector Compliance
assists your business increase its saleability, profitability and/or
reputation.
Your Obligations as an AFS Licensee
As an AFS licensee you have obligations relating to:
- conduct and disclosure;
- the provision of your financial services;
- the competence, knowledge and skills of your responsible managers, as well as their good fame and character;
- the training and competence of your representatives;
- ensuring your representatives comply with the financial services laws;
- compliance, managing conflicts of interest and risk management;
- the adequacy of your financial, technological and human resources; and
- your dispute resolution and compensation arrangements.
These are only some of obligations you must adhere to. You must also comply with the conditions of your licence as well as the Corporations Act 2001.
Further Financial Obligations
Many AFS licensees now have heightened financial obligations following changes made to net tangible asset and preparation of cash flow projections requirements. Licensees who are impacted by these changes are:
- responsible entities;
- operators of Investor directed portfolio services;
- custodial or depository services providers;
- trustee companies providing traditional services;
- issuers of margin lending facilities;
- foreign exchange dealers; and
- retail OTC derivative issuers.
These financial conditions may have changed from when your licence was granted. It is therefore important that you are up to date with the changes so that you remain compliant.
Your Obligations as a Corporate Authorised Representative
An entity which is an authorised representative of an AFS license, is known as a Corporate Authorised Representative (CAR). The licensee may consent to the CAR appointing individuals to be authorised representatives however, licensee's rarely grant this due to the risks assumed by the licensee.
An AFS licensee may require the CAR to comply with additional obligations such as:
- Disclosing any communications with regulators;
- Notifying changes / appointment of staff (including seeking the AFS licensee’s approval for the appointment of any staff);
- Adhering to strict procedures when handling client money;
- Maintain your own PI policy or require contribution to a deductible; and
- Ensuring that promotional material is not misleading or deceptive or capable of being misleading or deceptive in respect to the Competition and Consumer Act 2010.
For further information on Corporate Authorised Representatives and how Inspector Compliance can help you meet your obligations, contact us using the links above.
Experience
Inspector Compliance is one of Australia’s leading firms providing regulatory compliance consulting services to financial institutions. We have a robust understanding of the accounting, credit, financial services and legal industries and have been offering compliance related services in Australia since 2001.
Our team have in excess of 80 years experience in various financial services sectors (covering distribution, product manufacturing, life insurance, funds management, banking, trustee services, superannuation funds and call centre operations). We bring together a unique breadth and depth of expertise in all aspects of regulatory compliance.
Our principal was a Senior Lawyer with, and expert witness for, ASIC. Therefore, we know what regulators are looking for, the types of tests that are applied, and the acceptable solutions – all from first-hand experience.
Your Obligations as an Authorised Representative
An individual who is acting on behalf of the AFS licensee is known as an Authorised Representative.
An AFS licensee, and its Corporate Authorised Representative, may require the AR to comply with obligations such as:
- Disclosing any communications with regulators;
- Notifying changes / appointment of staff (including seeking the AFS licensee’s approval for the appointment of any staff);
- Adhering to strict procedures when handling client money;
- Maintain your own PI policy or require contribution to a deductible; and
- Ensuring that promotional material is not misleading or deceptive or capable of being misleading or deceptive in respect to the Competition and Consumer Act 2010
For further information on Authorised Representatives and how Inspector Compliance can help you meet your obligations, contact us using the links above.
Enquiry
Australian Financial Services Licence
Inspector Compliance provides comprehensive service addressing all aspects of applying for an AFS licence. As experienced and expert providers in the field, we assist you in compiling your Application, obtaining your Bankruptcy & Police Checks, joining an external dispute resolution scheme, obtaining References and applying for Professional Indemnity Insurance.
Inspector Compliance are able to assist with your licensing requirements by:
- Assessing the practices of licensees, authorised representatives and employees;
- Consulting on the duties and responsibilities of licensees;
- Assessing the authorisations required by your business and determining sufficiency of the qualifications of your responsible managers;
- Compiling and submitting licensee applications and proof documentation; and
- Provide all relevant ongoing support
We help you to attain your licence in the shortest possible period. On the other hand we will tell you if your application will not succeed or if it's not in your best interest to obtain your own licence.
Vary Your Licence
Unlike some business documents, AFS and AC Licences are not "set and forget" type documents.
CCritical issues with these licenses include the continual need to understand the restrictions imposed by the type of licence obtained, the general licensing conditions and conditions imposed by the Corporations Act/Regulations.
Concerns that Licensees need to continuously consider include:
- Changes in Key Person (if there is a requirement to have a Key Person);
- Not having the appropriate level of, or any, Professional Indemnity Insurance in place;
- Not understanding the difference between the various types of licences in existence and whether you are acting within the scope of your license;
- The consequences of failing to notify ASIC of a breach of a licence condition.
The consequences of many of these issues can be phrased as "failing to act honestly efficiently and fairly." This phrase is normally used by ASIC in banning individuals or revoking licences.
If you have changed the focus of your business let Inspector Compliance help you with your variation.
Whether you need to:
- Have your licence explained to you, or
- Vary your licence
Contact us or call us on 1800 COMPLY (266 759).
Manuals
Some Licensees like to think that if they provide an Authorised Representative with a Manual that it has substantially discharged its legal responsibility to its Authorised Representatives. That's not the case in reality.
Both Authorised Representatives and ASIC expect more than just manuals. Providing a manual, which has not been updated, or refers to the wrong legislation, merely evidences the opposite. Nor is it good enough to have a manual just sitting on a bookshelf.
Inspector Compliance has developed two manuals; one for the Licensee and one for the Authorised Representative, which steps you through the business process of operating a credit or financial services business.
Unlike most manuals, these have been developed with the industry processes, procedures and ongoing obligations in mind and are drafted in a manner to facilitate the continued use and reference by Licensees and Authorised Representatives respectively.
Licensee Manual
Comprehensive and tailored compliance manuals are a necessary business requirement for any AFS Credit Licensee. Our Licensee's compliance manual outlines the relevant responsibilities of the licensee, authorised representatives and employees. In addition, it is continually updated to keep pace of legislative, organisational and industry practice changes.
Authorised Representative Manual
The Authorised Representative Manual includes all the documentation under the heading of 'Corporate Documentation' including the Financial Services Guide, Statement of Advice, Business Stationery, Marketing and Advertising Material.
For further information on manuals and how Inspector Compliance can help you meet your obligations please contact us or call us on 1800 COMPLY (1800 266 759).
Compliance Services Review
Licensee Compliance Review
The Licensee Compliance Review assists a licensee to assess whether it has met its obligations under the licence.
Once you have completed our review process an exception report is generated outlining any deficiencies identified. This report is referred to as "an exception report" on the basis that it only mentions the issues which need to be reviewed. The exception report also includes a suggested timetable to rectify the identified deficiencies and specifies the frequency of Licensee Compliance Review.
The Licensee Compliance Review can be tailored to peculiarities with your business operations or accepted business risks.
The Licensee Compliance Review is not complete without undertaking Authorised Representative Compliance Reviews. It is through Authorised Representative Compliance Reviews that other Licensee's operational deficiencies may be identified. Any Licensee deficiency identified during the Authorised Representative Review is reported separately to the Licensee only.
Authorised Representative Review
The Authorised Representative Compliance Review assists a licensee to assess the quality of services provided by its Authorised Representatives.
Once your Authorised Representative has completed our review process an exception report is generated outlining any deficiencies identified. The exception report also includes a suggested timetable to rectify the identified deficiencies and specifies the frequency of Authorised Representative Compliance Review and individual compliance rating.
The review process does more than just produce a report. It also notifies relevant personnel (whether that person is the Compliance Manager, Business Development Manager, State Manager, Director or Responsible Manager) of pending actions required and reminders to finalise action items. Inspector Compliance is also available to assist with these matters and provide additional stopgap solutions.
Should you require enhancements to our Authorised Representative Compliance Review to take into account peculiarities with your business operations or your accepted business risks this can also be catered for by Inspector Compliance.
For further information on compliance reviews and how Inspector Compliance can help you meet your obligations please contact us or call us on 1800 COMPLY (1800 266 759).
Corporate Documentation
Financial Services Guide
Some Licensees are leaving themselves open to litigation for what could be considered as "misleading and deceptive representations", due to standard information contained within their Financial Services Guides (and yet not operationally applicable to them).
Inspector Compliance welcomes you to send your Financial Services Guide for review and we will advise you if you need to consult us in relation to these particular concerns. Email your Financial Services Guide to info@icpl.au
Data Collection Forms
Inspector Compliance has developed four (4) versions to cater for credit, securities and risk business. The documents also include authorities to retain tax file numbers, privacy act declaration and authority to rely on the information provided by the client.
Deficient data collection forms can form part of a claim against you for failing to know your client to enable you to provide reasonable advice.
Business Stationery
These documents are generally considered as "set and forget" documents. This may be true if they have been reviewed in the last three months or were signed off by a Compliance consultant in the first instance.
ASIC Regulatory Guide and Corporations Act set out the information required on a business document, define what it considers a business document to be, and the clarity as to which entity is providing the advice. Inspector Compliance provides templated stationery which meets ASIC requirements.
Statements of Advice (SOA)
Inspector Compliance has developed various versions of plans to be used as a guide within your business. The plans include leading edge paragraphs, which have been specifically developed to minimise your risk. Our plans also cater for recent determinations by external dispute resolution schemes, Administrative Appeals Tribunal, and developments by ASIC.
We recommend that you utilise the paragraphs identified in these SOA's and incorporate them into your existing models.
For further information on corporate documentation and how Inspector Compliance can help you meet your obligations please contact us or call us on 1800 COMPLY (1800 266 759).
Agency Agreement
Inspector Compliance uses agreements prepared by LFS Lawyers. These agreements cater for the impact of:
- Client ownership;
- Privacy laws;
- Liability for advice provided; and
- Buyer of Last Resort
Difficult issues, which the industry as a whole needs to address, are simplified right here.
A key reason for using LFS Lawyers' contracts is that it provides you with leading edge documentation. This means, unlike some general law firms, there is no cost to you to educate their industry-experienced lawyers.
You should also be mindful that some professional associations compel its members to have contracts in place between the Licensee and the Authorised Representative. Failure to have such agreements in place may result in a technical breach of the professional association's Rules.
For further information on template agency agreements, please contact us or call us on 1800 COMPLY (1800 266 759). For information on further tailoring these agreements contact LFS Lawyers.
Risk Management
Risk management is the process of analysing exposure to risk and determining how to best handle such exposure. In effect, it gauges how you control and assess your risks.
Effective risk management includes the notion of forward thinking and applying a systematic approach to determining what actions can be taken to reduce potential risk exposures.
As a Licensee you are required to establish and maintain adequate risk management systems. Any risk management systems implemented by a Licensee must also comply with the standard Australian and New Zealand Standards ISO 31000:2009.
Inspector Compliance can help realise your current Risk Management Plan which meets the regulatory standards. As we have years of experience in the financial services industry we understand your field of work and know what are realistic solutions for your practice.
For further information on risk management and how Inspector Compliance can help you meet your obligations please contact us or call us on 1800 COMPLY (1800 266 759).
Complaint Handling
An example of a poor process of complaints handling (and yet, perceived as commendable by the Authorised Representative at the time) was how a client complaint was settled.
The Authorised Representative paid the amount claimed by the client (an amount lower than the perceived "actual loss"), despite the Authorised Representative's personal belief of not being at fault. Unfortunately, this was done without the Licensee's knowledge and without notice to the Professional Indemnity insurer.
Later, the client sought the balance of the "actual loss" incurred from the Licensee. The Licensee refused to pay the compensation sought. The client reported the Licensee to an external complaint scheme seeking the balance of the losses. This resulted in the Authorised Representative having to pay the complaint scheme fees.
The Licensee reported the complaint to the Professional Indemnity insurer however it denied the claim because the Authorised Representative technically admitted liability through its conduct in paying the initial amount sought by the client. The Licensee in return asked for a personal guarantee from the Authorised Representative for any amount to be paid to the client. The Authorised Representative refused to provide this guarantee and the Licensee proceeded to terminate the Authorised Representative's authority.
Complaints handling can be deceptively complicated. Inspector Compliance can assist you to implement a professional complaints handling procedure which complies with the Australian Standards. This includes:
- Guidance on how to deal with complaints;
- Identification of which parties (if any) are responsible for, or contributed to, the complaint;
- Assistance in dealing with your Professional Indemnity Insurer;
- Guidance as to any settlement; and
- Representation on your behalf at the industry complaints scheme or with ASIC.
In the process of settling any complaint, LFS Lawyers will prepare any necessary documentation, including the required Deed of Release, to ensure that your client does not have two bites at the cherry.
For further information on complaint handling and how Inspector Compliance can help you meet your obligations please contact us or call us on 1800 COMPLY (1800 266 759).
Business Coaching
Business Coaching is not as easy as some people make out.
Inspector Compliance's approach to coaching is to facilitate succession and realise the potential of your business.
The starting point is re-assessing your investment strategy and relationships with fund managers and service providers.
We analyse how secure your relationship to these service providers are and establish parameters of servicing which ought to be provided to you.
Next we analyse marketing strategy and positioning in the marketplace. Market positioning is to consider the market awareness and build towards presence for market acquisitions (either as a potential buyer or a seller).
This consequently leads to an analysis of how to best realise return on investment. Whether this is achieved as a member of a Licensee, as a licensee in your own right or through the right partnering arrangement.
For further information on business coaching and how Inspector Compliance can help, please contact us or call us on 1800 COMPLY (1800 266 759).
Contact Us
| Telephone | |
|---|---|
| Sydney | (+612) 9046 8388 |
| Melbourne | (+613) 9607 6388 |
| National | 1800 COMPLY (1800 266 759) |
| General | info@icpl.au |
| Enquiries | Enquiries Form |
| Postal | |
| Sydney |
GPO Box 1194 SYDNEY NSW 2001 |
| Melbourne |
GPO Box 4294 MELBOURNE VIC 3001 |
| Location | |
| Sydney |
Suite 101 “Point” 2 Point Street PYRMONT NSW 2009 |
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| Melbourne |
Level 8 530 Little Collins Street MELBOURNE VIC 3000 |
News
The Hard Yards
Inspector Compliance works closely with our licensees to determine the most efficient and effective approach to obtaining and maintaining your AFSL & ACL. With years of experience in the industry, our staff know what is required of you to successfully attain, and retain the licence required.
So we can help you to:
- Obtain your AFSL or ACL;
- Variations to your license or key person aspects;
- Adding, varying or ceasing authorised representatives and responsible managers;
- Assessing the practices and procedures of the licensee, representatives & staff;
- Consulting on the duties & responsibilities of licensees;
- Undertake compliance reviews - at licensee and or representative level;
- Assist in complaints handling and negotiation of concerns; and
- Act as independent experts for litigation concerns or enforceable undertakings.
Inspector Compliance can help you with any aspect of your AFSL or ACL application and all the ongoing statutory compliance obligations.
For further information on how Inspector Compliance can help you with the hard yards please contact us or call us on 1800 COMPLY (1800 266 759).
Integrated Compliance
Occasionally our licensees don't need Inspector Compliance to do the hard yards but just want the knowhow. That’s where Integrated Compliance comes into play.
Integrated Compliance is our software platform which provides online support systems for:
- Accountants;
- Credit participants; and
- Financial Services participants
in Australia, New Zealand, Singapore, the European Union, the United States of America & Canada to name a few.
Integrated Compliance offers a complete web-based Compliance package to monitor and report on your businesses’ ongoing statutory compliance requirements. The system is customisable to your needs.
Conflict Check
Conflict Check is our standalone software platform which provides online independence / conflict of interest search systems for:
- Accountants
- Credit participants;
- Financial Services participants; and
- Lawyers
in Australia, New Zealand, Singapore, the European Union, the United States of America & Canada to name a few.
Conflict Check offers a synchronised web-based conflict of interest / independence search which is customisable to your needs.
Links
Terms & Conditions
Welcome
Welcome to the website of Inspector Compliance Pty Ltd. For the purpose of these Terms and Conditions, Inspector Compliance Pty Ltd shall be referred to as “Inspector Compliance”.
1. Acceptance of Terms and Conditions
Your access to Inspector Compliance is conditional upon your acceptance and compliance with the terms, conditions and privacy statement contained in this document and elsewhere on the Inspector Compliance Website (‘Terms and Conditions’). Your use of and/or continued use of the Inspector Compliance Website constitutes your agreement to the Terms and Conditions. Inspector Compliance believes the information in this site is correct (as of the date of its last update), and it has reasonable grounds for any opinion, statement or recommendation found within. Inspector Compliance will endeavour to update the information in this site as soon as practicable after any changes. However, as information can change without notice, it does not guarantee the accuracy of the information. You should seek legal or other professional advice before acting or relying on any of the material on the Inspector Compliance website.
2. Access
To use the Inspector Compliance Website you need to access the internet, including an appropriate computer, related equipment, and software (your “Computer”), you are responsible for any connecting or accessing fees, and for installing, maintaining, and operating your Computer. Inspector Compliance is not responsible for any problems caused to or by your Computer, including any virus or related problems with your use of the Inspector Compliance Website.
3. Restrictions
The Inspector Compliance Website is available only for your personal, non-commercial use. You must not:
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Copy, reproduce, adapt, republish, combine, frame, post, upload, distribute, transmit or modify in any way all or any part of the material contained in this website unless expressly provided for on the website or expressly authorised in writing by Inspector Compliance.
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Inspector Compliance reserves the right, in its sole discretion, to terminate your access to any or all Inspector Compliance Sites/Services and the related services or any portion thereof at any time, without notice.
4. Intellectual Property Rights
You acknowledge and agree that all of the intellectual property rights in the
Inspector Compliance Website are owned by or licensed to Inspector
Compliance. Any unauthorised copying, annotation, reproduction,
communication or translation to the Inspector Compliance Website may
infringe Inspector Compliance’s intellectual property rights and may result in
liability.
Photo 1 on the homepage of this website is a derivative of a photo by Corey Leopold, used under CC BY. Derived Photo 1 is licensed under CC BY by Inspector Compliance Pty Ltd.
Photo 3 on the homepage of this website is a derivative of a photo by eGuide Travel, used under CC BY. Derived Photo 3 is licensed under CC BY by Inspector Compliance Pty Ltd.
Photo 4 on the homepage of this website is a derivative of a photo by Phil Whitehouse, used under CC BY. Derived Photo 4 is licensed under CC BY by Inspector Compliance Pty Ltd.
Photo 5 on the homepage of this website is a derivative of a photo by Victor1558, used under CC BY. Derived Photo 5 is licensed under CC BY by Inspector Compliance Pty Ltd.
5. Warranties
The Inspector Compliance Website and all material within, are provided on an as is basis without any warranties of any kind. Except as provided by the Prescribed Terms, all warranties either express or implied by law, in any way relating to the website or its materials, are excluded. In addition, Inspector Compliance does not warrant that the website will operate error free or that this website and its servers are free of computer viruses and other harmful goods. If you experience any damage or liability through the use of the Inspector Compliance Website or the materials therein, Inspector Compliance will not be responsible for the costs relating to repair, servicing or any other associated costs.
6. Exclusions and limitation of liability
You accept all responsibility and liability for your use of the Inspector Compliance Website including, but not limited to, all website material. You indemnify Inspector Compliance against, and exclude Inspector Compliance from any liability, which may arise in relation to your use of the website.
The Inspector Compliance Website may contain links to other websites (“Linked Sites”) operated by third parties. Inspector Compliance is not responsible or liable for the content of these Linked Sites or for your transactions with them. Inclusion of Linked Sites is for your convenience only and does not imply any endorsement of the content on such websites by Inspector Compliance. The materials on any Linked Site are the responsibility of the operator of the Linked Site and you link to any such Linked Site at your own risk.
7. Indemnity
You indemnify, defend and hold harmless, Inspector Compliance and its directors, officers agents, employees and Related Bodies Corporate, with respect to any claim, demand, cause of action, liability, loss, damage, expense (including legal fees) and cost incurred by you or a third party as a result of any error in any information, opinion or recommendation in this site.
8. Trademarks
All names, logos and trademarks on this website are the property of Inspector Compliance. Nothing on the website should be interpreted as granting any rights to use or distribute any names, logos or trademarks of Inspector Compliance without the express agreement of Inspector Compliance.
9. Copyright
Copyright in this site is owned by Inspector Compliance unless otherwise indicated. The site has however been developed to assist you in your personal use of the information and content of this site. You are however restricted from reproducing, transmitting or distributing the content of this site, or any part of it, in any way in any other document or materials. Should you wish to reproduce, transmit or distribute the content of this site, or any part of it, in any way in any other document or materials you must obtain Inspector Compliance’s specific written content. Please email us.
10. No offer or recommendation
The information contained within this site ought not to be construed as an offer, invitation or recommendation.
11. Governing Laws and interpretations
The Terms and Conditions are governed by and construed in accordance with the laws of the State of Victoria and you agree to submit to the exclusive jurisdiction of the Victorian Courts and the Federal Court.
12. Miscellaneous
If any provision of the Terms and Conditions is found to be invalid or unenforceable by a court of law, such invalidity or unenforceability will not affect the remainder of the Terms and Conditions which will continue in full force and effect.
Schedule 1: Defined Terms
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Inspector Compliance means Inspector Compliance Pty Ltd ACN: 097 023 857 of Level 5, 1 Alfred Street, SYDNEY NSW 2000.
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Inspector Compliance Website means the website located at:
www.icpl.au.au,
www.inspectorcompliance.co.uk,
www.icpl.au,
www.inspectorcompliance.net,
www.inspectorcompliance.co.nz. -
Related Bodies Corporate has the meaning given in section 50 of the Corporations Act.
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You refers to the party accepting this terms and conditions through use of and/or continued use of the Inspector Compliance website.
Prescribed Terms- The Australian Consumer Law (ACL) as set out in Schedule 2 of the Competition and Consumer Act 2010 and all corresponding state legislation implies terms, conditions and warranties into some contracts for the supply of goods and services and prohibits the exclusion, restriction and modification of such terms.
Requirement for Improved Quality of Investment Research
Are you an Investment Research Provider or an AFS Licensee who uses a Research Provider? ASIC released updated policy guidance back in December 2012 advising that providers had until 1 September 2013 to implement key changes to their business, and to improve the quality and transparency of the research reports. Continue reading for an overview of these mandated changes.
Research is frequently relied upon by advice providers to identify products that may be suitable for their clients and by licensees. Risks within the investment sector are heightened where there is undue reliance on research reports coupled with a deficiency in disclosures of conflicts of interest which would adversely impact on the independence and therefore the reliability of those reports.
Not all research is of similar calculation and quality and therefore it is important that research providers maintain a certain standard. The requirement for this improved level of quality in investment research has been recently been highlighted in several Australian corporate collapses whereby the investment products that failed were either highly rated or given positive recommendations by research providers prior to failure.
From 1 September 2013, research report providers need to comply with ASIC’s updated guidance in the amended regulatory guides. The amendments are to ensure that providers improve the quality and transparency of research reports by implementing changes in the areas of:
- management of conflicts of interest - specifically business model conflicts amongst research report providers;
- quality and strength of the research process - including the requirement to allocate suitable resources and expertise to a given research task;
- transparency of the research process – also to include the method in which products are nominated for research, what ratings mean and how they are applied; and
- the ease in which the end user of the research is able to determine the quality and reliability of the research.
In simplest terms, ASIC is strongly advising that all advice providers test the market for investment research and reconsider the product offering of third party research providers by questioning:
- their business model;
- conflicts of interest; and
- how they produce ratings and their comparative significance.
Upon considering responses to the above, licensees and advisers should then elect how to use the research material produced by the research provider in their own business.
ASIC will be conducting targeted surveillance of research report providers to ensure that the new compliance measures are adhered to.
If you would like further information regarding the new obligations for research report providers and the use of product reports, or would like us to undertake an audit of your current procedures, please contact us or call us on 1800 COMPLY (266 759).
Quality of SMSF Advice
On 16 September 2013 ASIC released a proposed guidance to help improve the quality of advice given to investors in relation to the self-managed superannuation fund (SMSF) sector. Do you provide advice to clients regarding SMSF’s? If so, it is important that you remain aware of your current obligations and be aware of ASIC’s proposal to impose specific disclosure obligations on advisers. Read below for an outline of the proposed changes.
ASIC has found that there is substantial room for improvement in the quality of advice received by clients in relation to SMSFs. The recent review highlighted, in particular, the necessary improvement of disclosure information which is relied upon by clients when deciding whether to establish or switch to an SMSF.
ASIC advised that SMSFs account for 99% of all superannuation entities in Australia, with $439 billion of total superannuation assets held by SMSFs. As at 30 June 2012, there were approximately 478,263 SMSFs in Australia. This is an increase of 127% since 30 June 2001.
The consultation paper released by ASIC comprises proposals to improve specific disclosure requirements and obligations on advisers. In brief, these include the adviser’s obligation to:
- caution clients that SMSFs do not have access to the compensation arrangements under the Superannuation Industry (Supervision) Act 1993 in the event of theft or fraud; and
- clarify other matters that may impact the client’s decision to set up an SMSF.
ASIC is concerned with the prospect of an increased number of unfit trustees who are unable to adequately adhere to the obligations of managing an SMSF. Surveillance of the SMSF sector has confirmed this and further established that client advice has not been of an appropriate standard. The majority of the issues, observed by ASIC, occurred when:
- the advice was not adequately tailored to the investor’s circumstances;
- insurance recommendations were absent or inadequate;
- an inappropriate single asset class was recommended to clients;
- disclosure about product replacement was absent or inadequate;
- suitable alternatives to an SMSF were not considered; and
- there was inadequate consideration of the investor’s long-term retirement planning objectives.
ASIC Report 337 found that the majority of advice provided to SMSF clients as part of the conducted file review process was of an acceptable standard. However, the report did highlight that 28% of the advice examples were in fact below acceptable standards.
If you currently advise clients in relation to SMSFs and would like further information regarding the current and proposed obligations, or would like us to undertake an audit of your current procedures, please contact us or call us on 1800 COMPLY (266 759).
New Requirements for Dark Liquidity and High-Frequency Trading
ASIC has implemented new market integrity rules on dark liquidity and high-frequency trading. Major considerations in implementing the new rules were the required improvements in transparency and integrity of crossing systems whilst strengthening the requirements for market participants to deter market manipulation. If you believe that ASIC’s new market integrity rules affect you and your current business practices, please read the brief overview of the changes below.
ASIC advises that the following rules will come into force incrementally over a nine month period.
Dark liquidity
- Crossing system operators must publish information on a website about their system to increase transparency and disclosure. They must also make disclosures to clients on the crossing system operation, identify in trade information to wholesale clients about the crossing system and whether they traded as principal. Crossing systems will also be publicly identified in course of sale reports.
- Tick sizes that apply to exchange markets will now also apply to crossing systems. Crossing system operators must have a common set of procedures which do not unfairly discriminate between different users. Clients must also be given the option to opt out of using the crossing system.
- Suspicious activity must be reported to ASIC when it has been recognised within a crossing system. Crossing system operators must now also continually monitor activity on their system.
- Prevailing system and control requirements for automated order processing will extend to crossing systems. Crossing system operators will also be obligated to notify users and ASIC about system issues as soon as practicable.
- Market participants are obligated to better protect confidential client information whilst dealing with client orders fairly and in due turn.
- Negative commissions may no longer be accepted by market participants.
High frequency trading
- Additional circumstances must be considered by market participants when determining whether a false or misleading market has been created. These include; the volume of products that are the subject of each order, the extent to which orders made are cancelled or amended relative to the orders executed and the frequency with which orders are placed.
- Market participants of the ASX 24 market will be required to comply with new requirements to prevent manipulative trading, the same as presently apply to the ASX and Chi-X markets.
If you would like further information regarding any of the new requirements for market participants, the mandatory time frames for implementation or would like us to undertake an audit of your current procedures, please contact us or call us on 1800 COMPLY (266 759).
Weakness in Industry Practice of Debt Consolidation Sector Proves a Risk to Consumers
Does your organisation provide debt consolidation as part of your Australian Credit Licence? A recent ASIC report has revealed that an amazing 30% of files reviewed by ASIC found that the credit assistance provider failed to record or maintain sufficient information to identify the consumers pre-existing contracts. Do your organisations record keeping practices comply with the responsible lending obligations?
Debt consolidation consists of credit assistance activities, for example, securing new or additional credit for the purpose of paying off pre-existing credit contracts or to reduce the total number of payments being made.
An ASIC review of debt consolidation providers has found that noncompliance with responsible lending obligations is not uncommon by Australian Credit Licensee. In particular ASIC are alarmed with the standard of record-keeping practices. A recent review of 82 client files across 17 licensed providers proved that current practices are not up to standard. More specifically the report showed that in relation to credit assistance providers’ responsible lending conduct for debt consolidation that:
- of the files reviewed there was a 30% failure to record or keep sufficient information to identify the consumer’s pre-existing credit contracts;
- credit assistance providers generally did not appear to document if potential significant risks and costs of debt consolidation had been discussed with consumers in their client file;
- there was insufficient recording of the consumer's requirements and objectives;
- improper recording of inquiries about verification of the consumers financial situation;
- inconsistencies with assessments of loan suitability and the eventual loan application; and
- contradictions in assessments of loan suitability where the amount recorded for consumer expenses with different to the information on the licensee's file.
ASIC have advised that following the introduction of the National Consumer Credit regime, they have been undertaking reviews of high risk sectors of the consumer credit industry to evaluate compliance levels in regard to the responsible lending obligation.
The responsible lending obligations which are contained in the National Consumer Credit Protection Act 2009, require credit providers and credit assistance providers to:
- make reasonable inquiries into a consumer’s requirements and objectives;
- make reasonable inquiries into a consumer’s financial situation;
- take reasonable steps to verify a consumer’s financial situation;
- assess whether a proposed credit contract will meet the consumer’s requirements and objectives; and
- assess whether the consumer will be able to comply with their financial obligations under the proposed credit contract without substantial hardship.
If your organisation provides debt consolidation as part of your Australian Credit Licence and need further information on you obligations under the National Consumer Credit Regime or would like us to undertake an audit of your current procedures, please contact us or call us on 1800 COMPLY (266 759).
Updated ASIC advice on Dispute Resolution and Misconduct
ASIC has released updated information on 18 July 2013 with regard to disputes involving financial services and credit providers, unpaid debts, external dispute resolution and misconduct within companies under external administration. If you are currently experiencing any of these issues and need further information or assistance please contact our office.
ASIC had previously published five key reports regarding its attitudes to handling complaints with respect to reporting misconduct in October 2012. ASIC promoted a transparent approach to the way they dealt with reports of alleged misconduct it received from the public. A transparent approach allows ASIC to demonstrate the typical outcomes that would be expected and the additional suitable avenues or remedies which are accessible.
Below is a brief explanation of what is contained in each of the four newly revised information sheets:
- Disputes About Unpaid Debts: Small Proprietary Companies
- Disputes with Financial Services or Credit Providers
- Misconduct within Company under External Administration
- External Dispute Resolution: What to do if you are unhappy with a scheme decision
This information sheet outlines ASIC’s standpoint with regard to disputes arising from unpaid debts. It provides that ASIC are unlikely to become involved in disputes regarding unpaid debts. It is also unlikely that they will intervene if a small proprietary company is experiencing financial difficulty. Should ASIC suspect that a proprietary company is trading while insolvent, they may be inclined to consider the issues surrounding the situation, but are still unlikely to intervene.
This information sheet provides that all licensed financial services or credit providers must have in place a process to resolve disputes with consumers. The licensee must firstly attempt to resolve the dispute with the individual directly. If the outcome of the internal dispute resolution process is not to the client’s satisfaction, then, they can seek support from an external dispute resolution scheme.
This information sheet provides ASIC’s perspective with regard to misconduct within a company under external administration. Misconduct occurs when a director or company officer breaches their duties to the company. ASIC advises to first report your concerns to the insolvency practitioner, as they are best placed to investigate them. Insolvency practitioners are required under law to report to ASIC any offences they discover during their investigation.
This information sheet provides that schemes may take different approaches to deal with complaints lodged by clients. This includes negotiation between the parties, conciliation or mediation which may lead the parties to find a mutually agreed resolution. Alternately, after considering the facts and information, the scheme can make a decision about the issues in dispute and how to resolve it.
The disputes outlined above can prove costly should your organisation have the correct systems and protective regulatory measures in place to deal with any such complaint. If you would like further information regarding any of the revised ASIC information or would like us to undertake an audit of your current procedures, please contact us or call us on 1800 COMPLY (266 759).
ASIC Offers New Guidance when Applying for a Limited AFS Licence
Are you an accountant offering advice on self-managed super funds (SMSFs)? From 1 July 2013 accountants will be able to apply for the new limited Australian Financial Services (AFS) licence as part of the Future of Financial Advice (FOFA) reforms. Whilst anyone may apply for the new limited licence, recognised accountants who apply between 1 July 2013 and 30 June 2016 can take advantage of the transitional provisions.
The introduction of the Future of Financial Advice (FOFA) reforms will repeal the existing regulation in the Corporations Regulations 2001 (Cth) (“Regulations”) which previously allowed recognised accountants to give advice about SMSFs without holding an AFS licence. This will be repealed on 1 July 2016, meaning that accountants will be required to obtain an AFS license.
ASIC has advised that in order to simplify the process of accountants moving to the new AFS licencing regime, amendments to the Regulations have created a new simplified AFS licence. This will be known as a ‘Limited’ AFS licence.
A limited AFS licensee would be authorised to give advice regarding:
- SMSFs;
- a client’s existing superannuation holdings in select situations; and
- ‘class of product’ advice about a range of products.
‘Class of product’ may include the following financial products; Superannuation, securities, general insurance, life risk insurance, basic deposit products and simple managed investment schemes. A limited AFS licensee can also be authorised to arrange to deal in an interest in an SMSF.
A benefit of holding a limited AFS licence is that a licensee does not need to lodge an auditor’s report annually. Instead they can lodge an annual compliance certificate.
However, a licensee must ensure they meet the relevant requirements of the Corporations Act 2001 (Cth), including the conduct and disclosure obligations, and their licensing conditions.
Whilst anyone may apply for the new limited AFS licence, applicants whose responsible managers are recognised accountants and who apply between 1 July 2013 and 30 June 2016 can benefit from the transitional provisions for admittance into the AFS licensing scheme. Under these transitional provisions, changed organisational competence requirements will apply where the responsible managers of the applicant are recognised accountants.
If you are looking to apply for a limited AFS licence and would like any further details, the relevant licensee requirements, conduct and disclosure obligations or specific licensing conditions, please contact us or call us on 1800 COMPLY (266 759).
ASIC Consults on Enhanced Training Standards
Do you provide financial product advice? ASIC has released a consultation paper proposing enhancements to the training standard in order to provide investors and consumers with a higher quality of advice.
ASIC have released Consultation Paper 212 which proposes to lift the standards of training by introducing two further regimes of training for those who provide financial product advice. The current training standards as outlined in RG 146 will remain as a ‘base level’ standard with the proposed to be implemented in 2015 and 2019.
RG 146 states the minimum training standards for financial advisers. Training standards differ depending on whether general or personal advice is provided by the adviser and contingent to the complexity of the financial products. Currently guidance on how advisers can meet the training standards is outlined in the guide. The consultation paper outlines the incorporation of increases in:
- generic knowledge requirements;
- specialist knowledge requirements for financial planning, securities and superannuation;
- skill requirements for personal advice; and
- educational level requirements.
By proposing the implementation of these increased standards, ASIC are ensuring that investors and consumers receive a higher standard of advice. The consultation paper also seeks feedback on the time frame for the appropriate training standards for personal sickness and accident insurance and consumer credit insurance.
ASIC are also currently in the process of reviewing the ASIC Training Register. A separate consultation paper has been planned to evaluate the effectiveness of the register and potential mechanism to replace it. Currently the Training Register lists individual assessment services and training courses that meet the training standards in RG 146. AFS licensees are largely required under their licence conditions to ensure that individuals who provide financial product advice on their behalf have either:
- completed appropriate training courses; or
- been individually assessed as competent by an assessor that has been approved by ASIC.
ASIC have advised that until a scheme has been implemented to replace the current training register, they will not take action for the breach of the licence conditions provided above if the licensee is satisfied that each individual who provides financial product advice on behalf of the licensee has satisfied one of the following:
- completed training courses before 25 September 2012, which were listed on the ASIC Training Register, at an appropriate level that are relevant to their functions and tasks;
- been individually assessed as competent before 25 September 2012 by an assessor listed on the ASIC Training Register;
- completed training courses, at an appropriate level that are relevant to their functions and tasks, that an authorised assessor has approved as meeting the relevant training standards in RG 146; or
- been individually assessed as competent by an authorised assessor.
If you believe that the proposed changes outlined in the consultation paper for the increased training standards will affect you or you would like further details on compliance with the interim training register requirements, please contact us or call us on 1800 COMPLY (266 759).
Australian Credit Licence
Most people who engage in credit activities will need to be covered by an Australian Credit Licence, either as a licensee or as a representative. Inspector Compliance offers an extensive service which provides for all aspects of the Australian Credit Licence application. As experienced and expert providers in the field, we assist you in compiling your Application, obtaining your Bankruptcy & Police Checks, joining an external dispute resolution scheme, obtaining References and applying for Professional Indemnity Insurance.
Inspector Compliance is able to assist with your licensing requirements by:
- assessing your current business practices and determining your requirement for a ACL;
- consulting on the duties and responsibilities of licensees;
- compiling and submitting licensee applications and proof documentation;
- assessing the authorisations required by your business and determining the sufficiency of the qualifications of your responsible manager; and
- determining the licensing fee required for your application.
Inspector Compliance will help you attain your licence in the shortest possible period. If however your company is not suited for such an application we will advise you accordingly and help provide you with suitable alternatives.
Australian Credit Licence Compliance
Not unlike the compliance obligations of a Financial Services Licensee, there are stringent obligations which must be met on a continued basis to remain compliant when holding an Australian Credit Licence. These obligations include:
1. Annual Compliance Certificate – This is required annually and will require you to–
- update details about your business activities, credit or credit intermediary activities and representatives for the previous 12 months;
- provide information about the money you have held in trust during your past financial year;
- provide information about your dispute resolution and compensation activity – the number of accounts you held, the number of complaints you received and the number of voluntary, proactive compensation programs you ran;
- calculate your annual compliance certificate fee;
- certify that you are complying with your ACL obligations;
- certify matters and notify changes about all your fit and proper people, both current and those that have ceased to perform that role in the past 12 months – or provide details of any exceptions;
- complete a statement of personal information for all new fit and proper people; and
- notify any changes about your responsible managers.
2. Adhering to the General Conduct Obligations which include–
- engaging in credit activities efficiently, honestly, fairly;
- maintaining organisational competence and training; and
- managing conflicts of interest.
3. Complying with the Responsible Lending Conduct Obligations which requires you to-
- make reasonable inquiries about the consumer’s financial situation, and their requirements and objectives;
- take reasonable steps to verify the consumer’s financial situation; and
- make a preliminary assessment (if providing credit assistance) or final assessment (if the credit provider) about whether the credit contract is ‘not suitable’ for the consumer.
4. Maintaining a Dispute Resolution System consisting of-
- internal dispute resolution (IDR) procedures that meet the standards and requirements made or approved by ASIC; and
- membership of one or more ASIC-approved external dispute resolution (EDR) schemes.
5. Maintaining adequate Compensation and Insurance Arrangements.
6. Determining if Trust Accounting Obligations apply to you and if so-
- keep a trust account with an Australian authorised deposit-taking institution;
- designate the account’s title as your trust account; and
- pay into the trust account any money received by your representatives on behalf of another person in your capacity as a credit licensee.
For further information on Credit Licenses and how Inspector Compliance can help you meet your obligations please contact us or call us on 1800 COMPLY (266 759).
Stronger Super Introduction to Cause Compliance Headaches
Are you affected by the Government's Stronger Super reforms? From July 1 2013 the new regime will require greater compliance controls with deliberate or systemic breaches resulting in strong regulatory action.
ASIC’s introduction of key Stronger Super reforms on July 1 2013 have helped to strengthen the superannuation system in Australia. Key features of the Strong Super reforms include:
- the introduction of MySuper, described as a simple, cost‑effective default superannuation product;
- the introduction of the SuperStream package of measures;
- the defining of duties for directors of superannuation trustee boards to increase the control and integrity of the current superannuation system; and
- improved integrity in the self-managed superannuation fund sector.
In implementing these reforms, ASIC has advised that it will be essential for trustees to undertake significant work to improve their current IT infrastructure so as to adhere to new compliance requirements under the Stronger Super regime. By increasing the superannuation trustee requirements, the Government aims to improve trustee decisions, fund efficiency and effectiveness.
Additionally, ASIC have developed an online registration system for Self-Managed Super Fund (“SMSF”) auditors. From 1 July 2013 auditors must be registered with ASIC to be engaged by trustees as an approved SMSF auditor and to sign off on SMSF audits. Registration begun on 31 January 2013 and in order to be registered as a SMSF auditor you must now meet new minimum education, experience and competency requirements as well as maintaining professional indemnity insurance. ASIC will further control the registration process and be responsible for developing a competency exam. They have advised that they will remain strict in disqualifying non-compliant auditors. There is no further transition period so if you would like to apply, you will need to meet all the registration requirements.
If you are a superannuation trustee and need to improve you current IT system to be compliant under the reforms or require further information on the new compliance requirements under the Stronger Super regime,
or
If you are seeking registration as a SMSF auditor and require guidance on how to meet the new minimum education, experience and competency requirements simply contact us or call us on 1800 COMPLY (266 759).
Changed Financial Requirements for Custodians
Are you a custodial or depository service provider? Are you intending on providing these services in the future? ASIC has changed the financial requirements for providers and they apply from 1 July 2013 for new licensees.
All Australian Financial Services (AFS) licensees, unless they are a body regulated by the Australian Prudential Regulation Authority (APRA), are subject to the obligations to have adequate resources available to provide the financial services covered by the licence and to carry out supervisory arrangements whilst maintaining adequate risk management systems.
The changed financial requirements submit that all custody providers and asset holders adhere to the new requirements regarding the preparation of cash flow projections and liquidity.
The most significant change being the Net Tangible Assets (“NTA”) requirement. Under the changes, custodians (not including incidental providers) and asset holders will be required to hold NTA amounting to the greater of:
- $10 million, or
- 10% of average revenue.
However, providers who meet the definition of ‘incidental provider’ will be required to hold NTA amounting to the greater of:
- $150,000, or
- 10% of average revenue.
Custody providers and asset holders are crucial service providers in the financial services industry and play an important role in the protection of client assets. By implementing these changes, ASIC strives to provide investors with additional confidence.
These new financial requirements apply from 1 July 2013 for all new licensees. For existing licensees, there will be a one year transition period and compliance will be required from 1 July 2014.
If you would like more details on the changed financial obligations for custodians, whether you meet the definition of an ‘incidental provider’ or if you would like Inspector Compliance to assess your compliance with the new custodian requirements generally, please contact us or call us on 1800 COMPLY (266 759).
Due Diligence
Due diligence isn’t undertaken often enough when Representatives, Practices or Licensees are buying other entities or books.
We have found occasions when hundreds of thousands of dollars are outlaid without actual verification of what you are buying or whether the assets you need are included in an acquisition. In one example, we were required to come in after a purchase was completed and all payments made to determine whether the recurring income sold was in fact transferred; on other occasions found that the referral centres where excluded from a sale and therefore the income reduced in later years.
So the purpose of a due diligence is not isolated to are the files in order and confirm the lack of complaints but more substantive issues.
For further information on due diligence and how Inspector Compliance can help, please contact us or call us on 1800 COMPLY (266 759).
Privacy Statement
Your rights to privacy
Inspector Compliance is committed to providing you with the highest levels of client service. We recognise that your privacy is very important to you. The Privacy Act 1988 (Cth) sets out a number of National Privacy Principles (NPPs). Our aim is to both support and ensure that we comply with these principles. Further information on privacy in Australia may be obtained by visiting the website of the Office of the Australian Information Commissioner.
Collection of clickstream and other information
When you browse our website, our service provider logs the following information for statistical purposes - your server address, top level domain name (eg .com, .gov, .biz, .net, .au, etc.), the date and time of your visit, the pages accessed (and duration you remained in each page), documents downloaded, the previous site visited and the type of browser used.
We will not try to identify users or their browsing activities except, in the event of an investigation, where a law enforcement agency may exercise a warrant to inspect the service provider's logs.
Our website is cookie-free. We may record your e-mail address if you send us a message.
Collection of personal information
Inspector Compliance does not collect personally identifiable information about individuals except when such information is specifically provided by an individual on a voluntary basis. For example, when the individual sends an email to one of the email addresses or submits details through a form provided on the website.
We can only collect personal information via our website with your consent as you must click on a button provided on each web page to submit information to our website.
When or before it collects personal information, we will take reasonable steps to inform you of:
- the purposes for which the information is collected;
- where applicable, any law that requires the particular information to be collected; and
- the main consequences for the user if all or part of the information is not provided.
Access to and alteration of records containing personal information
You have a right to access and alter your personal information, subject to certain exceptions allowed by law. We ask that you provide your request for access in writing (for security reasons) and we will provide you with access to that personal information. Access to the requested personal information may include:
- providing you with copies;
- providing you with the opportunity for inspection; or
- providing you with a summary.
If charges are applicable in providing access to you, we will disclose these charges to you
prior to providing you with the information.
Some exceptions exist under law where we will not provide you with access to your
personal information. Should we refuse you access to your personal information, we will
provide you with a written explanation for that refusal.
Information quality
Inspector Compliance takes all reasonable precautions to ensure that the personal information we
collect, use and disclose is accurate, complete and up-to-date, however, when you provide information to us via the internet, we rely on the accuracy of that information.
To ensure we can
maintain the accuracy and completeness of your information, we recommend that you:
- inform us of any errors in your personal information as soon as possible; and
- update us with any changes to your personal information as soon as possible.
Information storage and security
Personal information is stored in transmission logs and archived for a period of 7 years under legislative requirements. After this time any collected inofrmation will be destroyed.
Where appropriate, our website provides a secure environment by using Secure Sockets Layer (SSL). This establishes a session, and encrypts all traffic, between our web server and your browser.
Use and disclosure of information
We will only use your personal information (including your e-mail address) for the purpose for which you have provided it, eg for responding to your query or provide further information regarding developments. We will not use it for any other purpose, nor will we disclose it, unless with your consent or in other circumstances where such use or disclosure is permitted under the Privacy Act 1988 (Cth).
Sensitive information
Without your consent we will not collect information about you that reveals your racial or ethnic origin, political opinions, religious or philosophical beliefs or affiliations, membership of professional or trade association, membership of a trade union, details of health, disability, sexual orientation, or criminal record.
Transborder data flow
Inspector Compliance operates throughout Australia and overseas, as part of our operations some uses and disclosures of your information may occur outside your State or Territory and/or outside of Australia. In some circumstances we may need to obtain your consent before this occurs.
Risks of using the internet
You should note that there are security risks in transmitting information via the internet. You should assess these potential risks when deciding whether to use our online services. If you do not wish to transmit information via our website, there are other ways in which you can provide this information to Inspector Compliance.
Complaints resolution
If you have any questions about privacy, complaints about breach of privacy, or a request to access personal information, please contact:
Inspector Compliance Pty Ltd
Level 5, 1 Alfred Street
Sydney NSW 2000
Australia
Tel: (+612) 9046 8388
Email: info@icpl.au
© Inspector Compliance Pty Ltd 2001-