Responsible Manager and Compliance Officer Training

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Responsible Manager and Compliance
OfficerTraining

• Prepared by MSM Compliance Services P/L

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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.

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What Are We Going To Cover ?

• Business Management
• Responsible Managers (RMs)
• The concept
• The legislation
• ASICs expectations
• The reality in a small/medium AFS Licensee
• Compliance Officers (COs)
• What is compliance
• The role of the CO

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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

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Management Functions

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

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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

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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.

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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

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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

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Human Resources

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

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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

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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

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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

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Responsible Managers - The Law

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

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Responsible Managers - ASICs 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

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Responsible Managers - ASICs 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.

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Dont 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.

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Responsible Managers - Practical Tips

• Sole RMs - look for a relieving option.
• 20 - 30 hours training - management / business
  focussed
• Involve all RMs in the annual business planning
  process
• Succession planning - a new step

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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

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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

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ASICs Expectations

• Documentation system
• Provided by MSM FSRA Mission Control
• Responsible Manager
• Development program (Training Plan)
• Compliance
• Compliance Checking System
• Compliance Breach Register
• Complaints
• Complaints Register
• FOS membership

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ASICs Expectations

• Representatives
• Induction process
• Training Plans
• Documentation RG146, Police Bankruptcy
  Checks
• Financial
• Cash Flow Monitoring
• RG166 Worksheets

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ASICs Expectations

• Compensation
• Current Professional Indemnity Cover
• Operational
• Up to date Organisation Chart
• Business Plan
• Trust Account Systems
• Approved Product List (if applicable)

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Compliance - Why

• A specific requirement under RG104 105
• A specific question on the AFS Licence
  Application Form
• Target is Australian Standards AS3806 - 1998
• It makes good business sense
• It is your safetynet!

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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)

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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

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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 dont have a checklist and a timetable
  seek help!

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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

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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 RMs
• Document change decision - in a logical place
• Communicate to staff.

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What Kills Compliance

• CO not experienced/senior enough for role.
• Failure of RMs or CO to lead by example.
• Failure by RMs to support CO in process.
• Failure of RMs to fix issues identified.
• Viewing Compliance as a negative rather than as a
  positive.
• Bagging staff due to compliance issues

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Compliance Risk Increases When ?

• There is a change in
• Staff / Staff roles / Staff Structure
• Technology
• Office Policies and Procedures
• Legislative requirements

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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.

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The End

• RMs - get involved and understand the business
• RMs - Business Planning - a key process
• COs - Use your checklists
• COs - Push the RMs to rectify problems