RESPONSIBLE MANAGERS – ASIC ASSESSMENT

There is no definition of a responsible manager in the Corporations Act. It is a term developed by ASIC. In ASIC Regulatory Guide 105 the term responsible manager is used to label the person nominated by a licence applicant for the purposes of meeting ASIC’s competencies for licensing. As noted in the Regulatory Guide the term responsible manager was created by ASIC to replace responsible officer.

A Responsible Manager can be a director or an employee or a contractor or an authorized representative of a licence applicant / licensee.

In Regulatory Guide 105 ASIC expects a responsible manager to:

    • be directly responsible for significant day-to-day decisions about the ongoing provision of financial services;
    • have appropriate knowledge and skills for their role in the financial services business; and
    • have the capacity to fulfil the role in the financial services business.

In addition to assessing whether a nominated responsible manager is of good fame and character (for an AFSL) ASIC will carefully review the competencies of the nominated responsible managers and also whether they will be directly responsible for the day-to-day decisions about the financial services business. The competencies are assessed taking into account the formal qualifications and relevant experience of the nominated persons.

This will be further tested where the nominated responsible manager is neither a director nor employee of the Licence applicant.

ASIC may request:

    • an explanation of the role and responsibilities of the nominated responsible manager;
    • a copy of the agreement between the licence applicant and the responsible manager; and
    • copies of key licensing documents such as the compliance manual or risk matrix to determine whether the nominated responsible manager is named in those documents.

Where a nominated responsible manager has other roles as a responsible manager or has other business operations, ASIC will also request an explanation as to how the nominated responsible manager will be able to undertake this role as a responsible manager.

ASIC has not set any rules as the maximum number of roles as a responsible manager but recent comments indicates that ASIC will also take into consideration other roles and responsibilities a person may have which can impact on the time available to the responsible manager to carry out his or her responsible manager roles. It is clear that ASIC will seek explanations from nominated responsible managers about their ability to be directly responsible for significant day-to-day decisions where they have other roles as a responsible manager or operate other businesses.

Applicants for licence will therefore need to be prepared for careful scrutiny by ASIC should they engage external responsible managers to enable them to obtain an AFS Licence. Similar scrutiny will also be undertaken by ASIC when assessing an Australian Credit Licence.