After helping countless AFS license holders navigate information requests from the corporate regulator, compliance specialist Rhett Das has identified the key ingredient to getting through the ordeal.
“The people that get out of these notices in one piece are the ones that get onto it straight away and start dealing with things immediately,” he says. “And they usually have their house in order.”
The managing director of Integrity Compliance says responding to ASIC in quick time is crucial; procrastinating not only frustrates the regulator but sends a message that the licensee or the entity they license is not on top of their record-keeping.
The majority of practices panic when they receive an information request, Das reckons. However, asking ASIC for an extension to deal with the request is “not a good look”.
“It looks like you haven’t got the information, and unless you’ve got a really good reason why you need an extension ASIC will say – ‘this information should be readily available, why do you need an extension?’”
Das says there has been a recent spike in the number of information notices from ASIC in light of the Hayne royal commission, which has led to historically expensive remediation bills for the major banking institutions. Notices are issued under section 33 of the Corporations Act (2001) and often relate to the obligations of license holders as laid out in section 912.
“We’re seeing an upswing in surveillance [and] enforcement activities, he says. “These notices are becoming more and more common.”
Das explains that the initial request from ASIC generally takes the form of a series of questions, a request for documentation or a combination of the two. “It depends on the nature of it, whether it’s a surveillance exercise or a full-blown investigation,” he adds.
Disclosure and service provision are key areas covered in the requests. He says a common danger is that firms have good compliance now, but uncover poor practice in some of the older files.
“One group assured us they had done all the right things in relation to their FDS and renewal notices, and they had invested a lot of money in [Xplan] threads and their production,” he reveals. “But it’s what they had been doing previous – which wasn’t done in that way – that caused them a few headaches.”
The first response to ASIC is critical, he explains, and gives the regulator an indication of what they’re dealing with. A lot of firms he deals with get this first response wrong, he says. “We try to come in before they snooker themselves, but that doesn’t always happen.”
Das will be speaking in session called “When ASIC comes knocking… how to be prepared” at the Financial Planning Association’s 2019 Professionals Congress in Melbourne on the 28th of November. He’ll be joined onstage by James Cribb, a financial adviser who was banned by ASIC for four years in 2018.
The session won’t be about “verbally bashing” the regulator, Das notes. The point is to bring stories and experiences into the open so people can learn from the mistakes of others.
“As an industry we don’t talk about this stuff enough,” he says.