Australian Financial Services Licence (“AFSL“) holders have a variety of obligations which must be documented and adhered to in order to ensure compliance with the law. Many of these obligations can often be overlooked during the course of running a business.

AFSL Compliance Requirements

• Implement a compliance program – Sophie Grace can assist with drafting the required compliance documents for your AFSL. Our standard compliance program includes a compliance calendar of obligations so you can see all important dates in one place.
• Ensure your compliance documents are up to date – many changes can impact whether your compliance documents are current, including changes to your business and changes to the law and ASIC regulation. Compliance documents should be reviewed on a regular basis to ensure they remain current and adequately reflect your business. Sophie Grace can assist with your regular compliance program review and make updates to reflect new or changed requirements.
• Implement regular compliance meetings – a compliance committee should comprise a group of people within your organisation who have responsibility for the AFSL’s functions – including the Directors and current Responsible Managers. Meetings should occur on a regular basis to discuss the various compliance obligations of the AFSL and whether they have been met.
• Appoint a Compliance Officer – someone within your business should have responsibility for compliance. The Compliance Officer should have the appropriate level of seniority and competence to complete the role.
• Track and record complaints – AFSL Holders must have adequate internal dispute resolution procedures to ensure complaints are dealt with in a timely and efficient manner. Sophie Grace can assist in implementing and documenting the appropriate procedures.
• Complaints – AFSL holders who provide financial services to retail clients must be a member of the Australian Financial Complaints Authority (AFCA), the ASIC approved External Resolution Dispute Scheme.
• Managing conflicts of interest – identifying conflicts of interest and recording them in a register is an important step in managing conflicts. Sophie Grace has a template register which is part of our suite of compliance documents available for purchase.
• Review your marketing material – most AFSL holders issue marketing or promotional material as part of their business operations. All material should be in line with ASIC’s guidelines and relevant legislation. Sophie Grace can assist AFSL holders to meet their obligations by reviewing marketing material before it is released.
• Complete CPD training – Responsible Managers and representatives involved in the provision of financial services to clients must ensure they complete ongoing CPD training each year.
• Update your training registers – all training completed by Responsible Managers and other representatives should be recorded in a training register. Sophie Grace has a template register which is part of our suite of compliance documents available for purchase.
• Provide ongoing training for all representatives – all representatives should receive training in the legislative and compliance obligations of the AFSL holder.
• Complete your AFSL Audit – Sophie Grace can assist AFSL holders organise the documentation required for their AFSL Audit to ensure it is completed and lodged on time.
• Monitor service providers – most AFSL holders outsource a number of functions and these service providers should be monitored and reviewed for their performance on a regular basis. Sophie Grace can assist AFSL holders to implement a formal system for monitoring service providers.
• Manage risk – AFSL holders are required to have adequate resources and procedures to manage the risks associated with their operations. Sophie Grace can assist AFSL holders to implement and document appropriate risk management procedures.
• Industry Funding Levy – AFSL holders are required to submit to ASIC the organisation’s business activity metrics on an annual basis. From these metrics, ASIC will be able to calculate the payable fee for each organisation for the previous financial year.
• APRA Form 701 – twice per year, AFSLs who deal in general insurance products are required to lodge details with APRA about the nature and levels of insurance business being conducted.
• Document breaches – Sophie Grace can assist AFSL holders to document their breach reporting policies and ensure breaches are identified, rectified and where required, reported to ASIC in a timely manner.
• Have adequate compensation arrangements – AFSL holders who provide financial services to retail clients need to hold Professional Indemnity (PI) insurance.
• Monitor financial resources – AFSL holders should review their financial resources on at least a quarterly basis to ensure the business is complying with the relevant requirements of ASIC Regulatory Guide 166.
• Record Keeping Obligations for personal advice AFSLs –  ASIC requires AFSL holders that provide personal advice to keep records for up to seven (7) years after the day advice was provided to their clients. This includes having access to records which are kept by someone other than the AFSL holder (such as an authorised representative)
• Client Money Obligations – AFS Licensees should ensure they are abiding by the requirements and obligations when dealing with client money.
• Design and Distribution Obligations (“DDO”) –  Issuers and Distributors of financial products are required to have a consumer-centric approach to designing and distributing products to consumers. Requirements include documentation to capture product governance arrangements initially and over the lifecycle of the product.
• Conflicted Remuneration – Licensees should ensure they have adequately assessed their remuneration arrangements, including documenting any staff and third party performance benefits so these are structured in accordance with Regulatory Guide 246.

How can Sophie Grace Assist you?

Compliance obligations must be constantly satisfied, whether on a monthly, quarterly or yearly basis. With this in mind, Sophie Grace can provide your business with ongoing compliance solutions. Our services include:

• conducting a regular review of and updating compliance policies and registers;
• creation of a compliance calendar to distribute the compliance workload to responsible persons and make it easier to meet obligations;
• lodging statutory forms and reports to regulators as required;
• responding to compliance questions and queries; and
• conducting marketing reviews for any marketing materials to be released.

Sophie Grace can provide ongoing compliance support in relation to the following:

• compliance plans and management framework;
• compliance reporting;
• Compliance Committee membership;
• Compliance procedures and policy documents;
• Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) and AUSTRAC;
• risk management systems;
• conflicts management systems;
• ASIC regulations and guidance;
• Code of Ethics implementation;
• disclosure;
• complaints – assist with compiling responses to clients or AFCA;
• breaches and incidents, including reporting to ASIC where required;
• insurance; and
• outsourcing.

Sophie Grace also has a range of compliance programs and document templates that can be purchased from our online shop. These documents can assist you in ensuring your compliance obligations are met, should you wish to take a more hands-on approach.

For further information regarding your ongoing obligations as an AFSL holder, please don’t hesitate to contact us.