Compliance standards in the Australian financial planning market have developed significantly over the past 20 years – partly through industry development of financial planning as a profession, but predominantly through increased legislation and regulatory oversight (notably the licensing requirements of the amended Corpora tions Act 2001).

When I was first involved in developing a generic compliance handbook for financial planning in 1994 (as an employee of the Financial Planning Association), the world was a different place. The compliance focus was on templates, operational requirements, complaints handling and systems. Agents and “proper authorities” operated in dif ferent regimes but were usually the same people. Banks were barely interested in anything else but selling loans.

Part of the evolution has been the development of compliance programs to ensure that the increas ing standards demanded by consumers and the regulators are met. In short, they focus on enhanced disclosure (culminating in informed consent by the customer) and professional needs-based advice.

However, there is no doubt that 2009 will be a difficult year, with the flight to cash and consumers demanding more stringent protection due to the current global financial crisis. With the current situation there will be calls for more regulation and tougher controls in the market.

The Australian model of principle-based financial services regulation has served both the industry and consumers well. It provides sufficient certainty as to the standards that are required, but permits flexibility in application to the size and complexity of the individual business. Notwith standing the evolution of the current regulatory regime, it is clear that financial planners should prepare for the fact that further changes may occur. To future- proof your business, you should take time to evaluate your current compliance program to ensure that it is sufficiently flexible and robust for whatever changes may occur – either directly by the Australian regulators or indirectly by interna tional government action.


The key determinant as to whether your compliance program will succeed is your approach to compliance. Do you only have a program in place to satisfy your licence conditions, or is it an integral part of your practice? In other words, is your business focused on doing the right thing by your customer and providing a thoroughly professional service? If you have the right mindset, then you need to critically evaluate whether your compliance program is part of the fabric or DNA of your busi ness or just bolted onto the end. As a final step you need to honestly determine how you know if your compliance programs are working – is there suf ficient training, verifications or audits conducted?

The accompanying 10-point checklist may be a helpful start in evaluating the health of your compliance program for whatever comes our way in 2009.

It is during difficult times that ethical, efficient and effective businesses survive. While we may not be able to predict the global outcomes tomorrow, a compliance health check performed now – and addressed – will strongly enhance your ability to be better prepared for whatever the future holds.

Compliance program evaluation checklist

1. Compliance mindset – do you frequently discuss the role of compliance in your practice and what the standard will be in 2-3 years’ time?

2. Is the compliance program developed around a robust framework, such as the Australian Compliance Standard (AS-3806)?

3. Are all compliance policies and procedures documented, regularly updated and easily accessible to all authorised representatives?

4. Do you provide a mixture of compliance awareness, communication and training on a regular (scheduled) basis, using a mix of media?

5. Have you engaged a compliance professional to develop and manage your compliance program? Does that person hold an Australian Compliance Institute (ACI) professional accreditation? Are they provided with sufficient resources to properly undertake their role, including ongoing professional development?

6. Do you have an open and transparent reporting and escalation program for breaches and complaints, resulting in good news travelling fast, but bad news going faster?

7. Does your complaint handling program focus on both the structure of the program (for example, time of response) and effectiveness (for example, quality of response)?

8. Do you conduct root cause analysis to determine systemic issues arising from complaints and other operational failures and take action?

9. What is the structure of your monitoring program? Do you have a mixture of early warning signals as well as post advice audits?

10. Is your initial representative screening and consequence management process (for example, discipline program) sufficiently robust?

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