Responsible Managers are how licensed financial services
businesses demonstrate the competency to provide the financial
services authorised by their AFSL.
So what does that mean?
Competency in the financial services
(financial product advice, dealing, operating a registered scheme,
etc). So, for example, for those licensees in the personal advice
space, the RMs would need to be aware of the ramifications of the
FOFA requirements to their licensee.
Competency in the financial products
authorised under the AFSL. Of course, the competency in both the
services and products can be demonstrated collectively by the RMs.
That being so, RMs should be aware of those products for which they
bring their experience, knowledge and expertise to the table and
should be ensuring that such expertise is maintained and, ideally,
enhanced over time.
Competency in the regulatory environment. RMs
should have a working knowledge of:
the fundamental obligations of an AFSL holder as listed in
section 912A of the Corporations Act (we refer to these as the
"AFSL's 10 commandments") and other key obligations
such as breach reporting ("the un-Australian
the conditions on the AFSL which will vary slightly from
licensee to licensee but may include a key person condition,
compliance arrangements, training requirements, financial
requirements, dispute resolution, record keeping plus others.
regulatory developments as they impact their licensee.
The above represents what might be referred to as an RM's
And then there's culture. Why is this
important for RMs and AFSL Holders?
The criminal law via the Commonwealth Criminal Code
now recognises the role of culture in determining the mind of a
corporate entity and whether it had the requisite intention to
commit the crime.
Case law has considered the role of culture, particularly in
relation to the imposition of penalties.
ASIC has frequently made adverse comments about an
organisation's compliance culture. As early as 2006, ASIC
observed that "ASIC expects directors and Responsible
Officers (as they were called then) of financial services companies
to play an active role in fostering a compliance culture in the
So, how do RMs drive an appropriate organisational and
compliance culture within the financial services business?
That's the next question!
In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).