ForgetPS 146, it could be PS 164 that will be the big compliance hurdle for financial planning businesses in 2003.
The policy statement, initially released by theAustralian Securities and Investments Commission(ASIC) in late 2001, spells out what organisational capacities financial planning businesses need to meet their licensing requirements under the Financial Services Reform Act (FSRA).
This includes having in place adequate compliance measures, sufficient non-financial resources, organisational expertise and adequate risk management procedures.
ASIC has already indicated it will police compliance with the policy statement with some discretion, allowing smaller planning businesses more leeway than larger more complex organisations.
However, compliance experts are warning that all financial planning businesses, regardless of their size, must now review their procedures to ensure they comply with the policy statement, particularly as the deadline approaches for the transition to the new FSRA licensing regime.
Don Wiggins, an independent compliance consultant, says as part of their ongoing obligations under the FSRA licensing regime, all financial planning businesses must be able to prove they can comply with PS 164.
“PS 164 looks at the whole question of an organisation’s expertise and organisational capacity and risk management to make sure that dealers can identify the risks associated with running a business,” he says.
“It is not enough just to say that you have a compliance manual. It is about having compliance procedures in place that meet the standards.”
Peter Bobbin, a partner with financial planning law firm theArgyle Partnership, says for some financial planning groups this may simply mean formally recording their existing compliance procedures.
“For many dealer groups the issue they have got is that for the first time they will have to properly document the systems they have always had in place but never properly documented,” he says.
For others, it may mean a more wholesale review of their staffing arrangements.
“Fundamentally, PS 164 is about organisational capacity. It is about ensuring that you have the responsible officers, or key persons in place who have the relevant knowledge, skills and experience to meet the obligations of a licensee,” Bobbin says.
Whatever individual planning groups need to do to meet the requirements of PS 164, Wiggins says the policy statement is a wake-up call on the importance of compliance procedures.
“Dealer groups, particularly the smaller ones, that might have seen compliance as something they would have been forced to look at one of these days, will be forced to look at it now,” Wiggins says.
