ACL renewal may be a simple process, but it’s more than just “ticking boxes”, Advantedge’s Steve Weston has said.
As the first round of credit licenses comes up for renewal, Weston has told Australian BrokerNews licensees will need to be certain they have the documentation to back up their renewal applications. Though the renewal process is easy, Weston said, ASIC will be carefully scrutinising the claims of licensees.
“I have had feedback from brokers who hold their own licenses to say the renewal process is simple. There’s nothing to it, and if you just tick the boxes, you did right. But ASIC have made it very clear they are going to be reviewing the annual compliance certificates and they will be coming to speak to licence holders to say, ‘You’ve ticked the boxes to say you have these policies and processes in place, have these manuals in place. Show them to me.’ Now that’s where the rubber hits the road,” he said.
With this in mind, licensees will have to regularly review their compliance, Weston commented.
“Unless you’re reviewing your policies and procedures and manuals regularly, it’s not enough to say ‘I’ve ticked the boxes, there’s nothing to it. What are you talking about?’” he said.
Weston predicted that a large portion of the industry may begin to eschew holding as ACL in favour of credit representative status. He argued that status as a credit representative does not diminish the value of broker businesses.
“Initially some quarters of the broking industry were saying if you held your own licence it would mean your business is going to be worth more than if you were a credit rep. That simply isn’t true. The fact is no one I know of, if they’re getting good legal advice, would buy a business’ licence, because they’re buying all the liability. They only want to buy the assets,” Weston said.
Weston pointed to the financial planning industry, contending that as compliance came to bear the majority of financial planners moved toward dealer groups. He forecast that this move could be mirrored in the broking industry as ACL holders move toward becoming credit reps under an aggregator licence.
“If I really, truly understand the obligation of holding a licence and I’m not just ticking boxes, there’s more to it. It’s a much more onerous obligation than we’ve been led to believe,” he said.
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