5 quick questions:
- Has your business grown since the Responsible Manager (RM) resources were last reviewed?
You'd be surprised at the number of businesses that are not aware of who their RMs are. Resourcing, including organisational competence needs to respond to business growth and development.
Tip: review your compliance resources to determine whether the current RMs are able to adequately oversee the provision of financial services, given the current size of the business.
- Is your RM your CEO (or Senior Executive)?
We see many businesses where the CEO/Managing Director is the RM. Whilst this may be appropriate for a small-scale advisory business, in larger businesses, ASIC implies that the RM position is more suited to middle-management.
- The test: does your RM oversee the day-to-day decisions regarding the provision of financial services in the business?
How do they do this, and where is it documented?
Note: this test is confined to the provision of financial services, not strategic direction, or non-financial services aspects of the business.
- Do you have Key Person risk?
Many licensees have a key person condition on their licence. This person is an RM and a key person. A key person condition means that if the key person was to leave the business, the business is no longer competent and the licensee would have 5 business days to nominate a new and suitable key person, or explain to ASIC why it has not nominated a key person.
These situations, when not planned for, can quickly result in the licensee being in breach of the key person requirement on its licence.
Tip: ASIC may remove key person conditions in certain circumstances - such as appointment of multiple experienced RMs, combined with an application to ASIC for removal of the key person.
- Is your RM undergoing regular training relevant to their role?
If you're unsure of the health of your RM resources, or you'd like to take it a step further, contact us, and we'd be happy to discuss your RM needs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
