1. Responsible Manager and Compliance Officer Training
Prepared by MSM Compliance Services P/L

2. Who Are MSM Compliance?
MSM is a national professional services business focused on the general insurance industry.
Your company has engaged MSM to assist in the management of its obligations as a holder of an Australian Financial Services Licence.
MSM helps to ensure that you and your company comply with your AFS Licence obligations with the least disruption to your core business.

3. What Are We Going To Cover ?
Business Management
Responsible Managers (RM’s)
The concept
The legislation
ASIC’s expectations
The reality in a small/medium AFS Licensee
Compliance Officers (CO’s)
What is compliance
The role of the CO

4. The Management Role No different to business in general
Management co-ordinates the activities of others
Includes moral and ethical questions
Identifying and quantifying the business goals to strive for

5. Management Functions Licensing obligations
Developing financial services
Financial Management
Managing human resources
Marketing the business
Monitoring and reviewing service performance

6. Licensing Obligations
Comply with Corporations Act 2001 (The Act)
Comply with Licence conditions
RG104 & 105 – Organisation & Management
RG126 – Compensation Arrangements
RG146 – Training for advisers
RG165 - Dispute systems
RG166 – Financial and Cash Flow
RG168 - Disclosure
RG175 – Adviser advice, conduct and disclosure
RG181 – Conflicts of Interest

7. Responsible Manager Obligations
Directly responsible for the day-to-day business decisions about the ongoing provision of financial services.
Is of good fame and character.
Has necessary qualifications and experience.
Completes ongoing training to keep up to date.

8. Developing Financial Services
Develop and maintain a Business Plan and Financial Budget
Implement quality controls and document procedures
Define product and service deliverables
Allocate responsibility
Ensure consistency with RG 104 & RG 105

9. Financial Management Ensure business is financially viable
Maintain annual budgets with monthly breakdown
Compare actual to budget
Ensure consistency with RG166
Lodge annual accounts
Handle client money as required by The Act

10. Human Resources
Enough staff to provide services fairly and efficiently.
Comprehensive staff selection and induction system.
Training as per RG146
Monitor outcomes and performance

11. Marketing The Business
Identifying target client base
Create profile with suppliers
Develop unique sales proposition (Service Standards / Agreements)
Develop and implement sales and advertising plans
Allocate development responsibilities

12. Monitoring & Reviewing Service Performance
Performance Vs Commmitment or Plan
Policy/Renewal Rates
Client feedback including no. of complaints
Cost and profitability of clients
Debtor control

13. Responsible Managers - Why Have Them?
Required as part of Licensing Process
The people ASIC rely on when deciding to issue/maintain an AFS Licence.
Control the business day to day.
A separate concept to Boards/Directors
The people your staff go to for decision making

14. Responsible Managers - The Law
Only 2 references in The Act
Penalties generally apply to the Licensee (Directors), not the Responsible Manager.
Responsible Manager’s position is the same as an officer of a company.

15. Responsible Managers - ASIC’s Approach
ASIC have clear expectations of Responsible Managers
Mentioned throughout all of the Policy Statements
“People you rely on to meet organisational competencies”
ASIC can have Responsible Managers removed or banned
ASIC can name you in publicity

16. Responsible Managers - ASIC’s Approach
“directly responsible for significant day to day business decisions”
to be actively involved in one or more of:
Management / Service delivery
Control / Planning
Monitoring / Supervision
Individual responsibility or part of a team.

17. Don’t Be A “Norm” - Get Involved
Get involved in your AFS Licence obligations
Share the workload and the learning
Become involved / responsible for an area/function/process/product.
Seek business/compliance/specialist training
Identify areas where you complement the skills of others.

18. Responsible Managers - Practical Tips
Sole RM’s - look for a relieving option.
hours training - management / business focussed
Involve all RM’s in the annual business planning process
Succession planning - a new step

19. Responsible Managers Delegate and understand AFS Licence tasks
Training Officer
Risk Management
Finances
Compliance
Information Technology
Conflict of Interest
Policy and Procedures
Staff communication and meetings

20. Key Processes Once Licenced
Implement FSG / SOA / PDS processes
Set up Trust Account
Set up Trust Account management processes
Make sure Compliance Officer is active and effective

21. ASIC’s Expectations Documentation system Responsible Manager
Provided by MSM FSRA Mission Control
Responsible Manager
Development program (Training Plan)
Compliance
Compliance Checking System
Compliance Breach Register
Complaints
Complaints Register
FOS membership

22. ASIC’s Expectations Representatives Financial Induction process
Training Plans
Documentation – RG146, Police & Bankruptcy Checks
Financial
Cash Flow Monitoring
RG166 Worksheets

23. ASIC’s Expectations Compensation Operational
Current Professional Indemnity Cover
Operational
Up to date Organisation Chart
Business Plan
Trust Account Systems
Approved Product List (if applicable)

24. Compliance - Why A specific requirement under RG104 & 105
A specific question on the AFS Licence Application Form
Target is Australian Standards AS
It makes good business sense
It is your safetynet!

25. Compliance Concept Aim to prevent, identify and respond to problems
Promote a culture (do the right thing)
Help the business be a good citizen
Produce consistent outcomes
(Ensure Licence retention)

26. Compliance Officer Diligent and experienced person
Can be an external person or contractor
Must have full access to business and staff (do not keep it a secret)
Must report to Board or Managing Director
Get them to read about compliance

27. Steps To Compliance Success For CO
Read your Compliance documentation
Review your licence application on compliance.
Note what you should be doing and when.
Organise yourself and do it.
If you don’t have a checklist and a timetable seek help!

28. Compliance Officer Roles
Complete checklists/tasks as required
Document work, complete Breach Register
Advise ASIC of significant breaches
Promote / Reward “Compliance Culture”
Keep up to date with ASIC/Industry feedback

29. Changes In Compliance Process
Increase checking frequency/scope in problem or high risk areas.
Reduce checking frequency/scope in areas with no problems.
Discuss with RM’s
Document change decision - in a logical place
Communicate to staff.

30. What Kills Compliance CO not experienced/senior enough for role.
Failure of RM’s or CO to lead by example.
Failure by RM’s to support CO in process.
Failure of RM’s to fix issues identified.
Viewing Compliance as a negative rather than as a positive.
“Bagging” staff due to compliance issues

31. Compliance Risk Increases When ?
There is a change in:
Staff / Staff roles / Staff Structure
Technology
Office Policies and Procedures
Legislative requirements

32. Compliance Improves With
Completing a simple program rather than fiddling with a complicated one.
An organised approach - Internet/Microsoft Outlook/Diary.
Discussions with your peers
Use of regular external reviews.

33. The End RM’s - get involved and understand the business
RM’s - Business Planning - a key process
CO’s - Use your checklists
CO’s - Push the RM’s to rectify problems