The obligation One of the general obligations for AFS Licensees under Section 912A(1) Corporations Act is the ‘organisational competence obligation’. s912A(1)(e) ASIC assesses your compliance with this obligation by looking at the knowledge and skills of the people who manage your financial services business. ASIC refer to these people as your ‘responsible managers’. (refer RG 105) This is on ongoing obligation therefore it is important that your compliance measures, including how you comply with your obligations, are documented. How many responsible management should we nominate? At a minimum, you need to nominate responsible managers who: (a) are directly responsible for significant day-to-day decisions about the ongoing provision of your financial services; (b) together, have appropriate knowledge and skills for all of your financial services and products; and (c) individually, meet one of the five options for demonstrating appropriate knowledge and skills (refer Table 1 of RG 105). If you have a responsible manager with appropriate knowledge and skills for some, but not all, of your financial services or products, you need to ensure that your other responsible managers have appropriate knowledge and skills for the remaining services and products. The number of people you need to nominate as responsible managers will depend on the nature, scale and complexity of your business. However, ASIC expects that you will nominate at least two responsible managers. If you are heavily dependent on the competence of one or two responsible managers (e.g. in a small organisation with one or two principals), ASIC will generally impose a ‘key person’ condition on your AFS licence. Telling ASIC about your responsible managers You must demonstrate your organisational competence when you apply for an AFS licence. You may also need to demonstrate your organisational competence if you later apply to vary your licence authorisations. When you apply for an AFS licence, or to vary your licence authorisations, you must nominate your responsible managers in your application and answer questions about their role, training and experience, and which of the five options in they meet. You must also support your application with a ‘core proof’ demonstrating that your responsible managers: (a) individually meet one of the five options for demonstrating appropriate knowledge and skills; and (b) together have appropriate knowledge and skills to cover all of your financial services and products You must advise ASIC within 10 Business Days when you remove or add a responsible manager, refer the following link Changing your responsible managers If the responsible manager you are changing is named on your AFS licence as a key person, you must also apply to vary the key person condition on your licence. (Form FS03) If you need assistance with adding/removing responsible managers or varying your AFS Licence conditions, contact me. Obligations of a responsible manager The obligation for organisational competence applies to the licensee not the responsible manager with civil penalties applying for non-compliance however responsible managers may be subject to banning or disqualification orders for failing to fulifill their duties. The following cases are relevant […]
