Keep your AFSL & Clients

ASIC and other regulators (i.e. AUSTRAC) constantly carry out constant surveillance of AFSL holders. The objective which is to determine if your company is meeting its obligations under the Law, in particular the authorizations and conditions of your license.  Responding to regulators questions is a time consuming task and may result in further questions, an onsite visit and interviewing your staff. Action and fines might be issued, It so, you and your company might appear in an ASIC press release. This is not good for business. Your institutional clients will be concerned with their reputations should they be identified as a client of yours. Even if you are not identified as a client, deficiencies the regulator might find will be reported in writing to your senior executive.

THE REGULATORS ARE NOT YOUR FRIENDS

Don’t make the mistake of thinking the regulator is your friend. REGULATORS ARE NOT YOUR FRIENDS. They will report trivial and profound findings. That is their job. (The Hayne Royal Commission found that ASIC had become too friendly with Banks and other major financial services companies and this affect their enforcement of the Law).

REACTION OF INSTITUTIONAL CLIENTS AND RETAIL RESEARCH HOUSES.

Institutional mandates always require you to notify them of such investigations. They will ask for a copy of the regulators findings. The regulator will always find something to complain about.  Research houses that provide research reports for retail products (and often for wholesale investment products), they will ask if you have been subject to regulatory investigation.

CLIENT CONTRACTS

Institutional clients

Each month / quarter you will be required to complete a written attestation about their compliance with the Law, your AFSL  and the conditions of your investment management agreement with them. It goes without saying that you don’t want to make a negative report.

Retail Clients

Your contractual obligations to retail clients are often not given serious attention. Managed Discretionary Accounts (MDAs) and similar (i.e. SMAs, IMAs) often have specific portfolio management requirements. The contractual obligations of a unit trust (i.e. management investment scheme) are often ignored as team members focus on managing the investments. Some of the finer contractual requirements are overlooked.

Don’t expect any trouble while investment performance is competitive. But have a major portfolio problem, one creating significant financial loss, and expect the big private investors, or distributors of your product, to find weaknesses in your portfolio administration  that they can exploit to claim compensation for their loss.

WHAT INTRINSIC AFSL SOLUTIONS DOES TO MITIGATE THESE RISKs

What we do is create documents, policies and procedures that ensure that you satisfy are able to meet your regulatory obligations.

We already have a library of over 300 policies, procedures and registers that satisfy regulator requirements and have passed scrutiny by due diligence groups, retail research houses and some of Australia’s largest institutional superannuation managers. These we modify to suit the contractual obligations / requirements of your business / clients.

We are able to integrate policies and procedures across teams within your company. For example, portfolio management, operations, compliance, business development, IT, human resources and supporting functions.

This ensures that the directors / trustees / senior management can have a high degree of confidence that the company is complying with requirements of regulators, client contracts, service providers, industry bodies (e.g. AFCA, PRI, AFMA, FSC), relevant laws, investment scheme constitutions and Australian Standards.

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