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MFAA Prosper : Mortgage and Finance Brief 10
Legal The certificate is due for lodgement within 45 days of the licence anniversary date -- curiously called the annual compliance date. 'Curiously', as some may cynically choose to infer that this is the only time of the year that they have to comply! The certificate is mostly a re-run of the original licence application with the opportunity to inform ASIC of any changes to your business and your key people. If you are looking to change your key people and/ or responsible managers, they need to pass the same 'fit and proper' person test that they would have in the original application. For responsible managers, there is a non- negotiable requirement that they must have had two years (non-lenders) or five years (for lenders) of trouble-free, relevant industry experience. But apart from key person notifications, the bulk of the remainder of the certificate deals with the 'General Conduct Obligations' of Licensees under §47 of the NCCP Act. Although the questions appear simple enough at face value, there is a lot of implied meaning contained in each question and a lot of mutual dependence between all the questions. Buried deep in these questions is one that really belongs at the front of the section, as everything else depends on it: As at the annual compliance date, did the licensee have a written plan that documented ar rangements and systems for compliance with each of its general conduct obligations? Here's the big danger and, I believe, the ticking time-bomb in the industry: all other questions in this section, if taken at face value and without taking the above question into account, might be dismissed by the Licensee with a "Oh yes, I've got that." When answering a question such as: "Do you have adequate arrangements and systems in place to ensure..?" What this is really asking is: "Do you have written policies and procedures in place around this subject, do you have a systematic process of testing yourself against these policies and are you performing that testing, documenting the results and taking action to fix areas that were found to be non-compliant?" Some of the obligation areas are based on fairly complicated source references. For example, the inter nal and exter nal disputes resolution requirement (your complaints policy) must be based on Australian Standard AS/ISO10002 -- that is the requirement of RG165. But the real missing piece in the industry at the moment -- as we see it -- is in monitoring and testing. The ASIC guidance is quite explicit in saying that an external, independent 'audit' is not necessary but, regardless of whom, someone needs to do it. The result needs to be a demonstrated audit trail that shows that the licensee: • has all the appropriate policies; • has a documented schedule (we recommend quarterly) to test itself against the policies; • documents the testing results; and • takes any necessary actions arising out of the results. Of course, the above also applies to the obligations around the responsible lending process (file audits). However, we have obser ved that the industry seems to have forgotten about the other obligations, which are just as important. With all the noise ASIC is starting to make about enforcement, now is the time to get these practices embedded in your licensee business. • Greg Ashe has been a risk management and compliance professional in the credit industry for over 12 years and is the director of Australia- wide consultancy QED Risk Services, offering a comprehensive range of services to the Credit Licensee community. www.qedrisk.com.au With the first Australian Credit Licences having reached their anniversary dates, it is an appropriate time to address the topic of Annual Compliance Certificates. Words Greg Ashe "Buried deep in these questions is one that really belongs at the front of the section, as everything else depends on it." Annual Compliance Certificates Do you meet the requirements? Mortgage & Finance brief | 57
Mortgage and Finance Brief 09
Mortgage and Finance Brief 11