Compliance certificates to prove pitfall

by Adam Smith11 Apr 2012

A compliance expert has warned the industry that many brokers may have gotten their Annual Compliance Certificates wrong, just as ASIC begins a round of contacting brokers to check on their compliance.

The regulator has said it will contact "some" ACL holders to verify the information lodged in the Compliance Certificates, and will be "assessing and discussing" the results of its check-up with the licence holders involved.

However, QED Risk managing director Greg Ashe said brokers may be missing the point in filling out the certificates.

“Everyone has been going on and on about responsible lending over the last 18 months, which is fair enough because it is the highest risk activity; however, the compliance certificate does not specifically mention responsible lending," he explained.

"What they're signing off on is that they have systems and policies in place to ensure compliance, and that they're regularly testing those policies and documenting the results, and that if they find they're out of compliance they have a plan in place to get themselves back in compliance,” he said.

Ashe said if brokers answer yes to the general question of having a compliance program in place, they have acknowledged that the regulator can scrutinise this and ask for documented proof.

“It's more concerned with the general obligations. Do you have a working compliance program in place? You have a set of obligations. What internal controls do you have inside your business to help comply with those obligations, and what testing are you doing of those controls?” he said.

Most brokers will have no documentation to support the claim that they have a compliance program in place, Ashe claimed.

“Our experience is that outside the big financial institutions in broker land, a good 90% of brokers are doing nothing in compliance outside of responsible lending. They're doing nothing to cover off their general obligations, which is what ASIC is talking about,” he said.

Ashe warned that the consequences of claiming a compliance program and having none could be severe.  

“Probably at the very least having to spend at least several thousand dollars on an ASIC certified compliance auditor to come and put your company under the microscope for six to nine months, or fines going into five figures," Ahse said.

"Depending on how bad it is, and I don't think too many brokers can go really wrong, but depending on how bad they stuff up they can be looking at serious enforcement action,” he said.

Related stories:

ASIC launches compliance check-up


  • by John 11/04/2012 10:36:26 AM

    Amazing grab for business Greg, scare tactics to force brokers to look at companioes such as yours to protect themselves.

  • by qedrisk 11/04/2012 11:08:21 AM

    Given the amount of free advice I hand out, John, I think that's a pretty unfair comment. ASIC are the ones with the scary message, I've just spent the past 2 years trying to explain to brokers what it all means. Don't ever let anyone tell you that you have to use a "company like mine". Do it yourself if you're so inclined but please don't stuff it up!

  • by BHL 11/04/2012 12:06:20 PM

    I have to say Greg does give out a huge amount of free advice, & regularly attends PD days with Aggregators. In regard to scare tactics, he's not even in the same league as a certain self-appointed guru from a certain solicitors firm, who is always grabbing for headlines.....