Compliance by definition is "conformity in fulfilling official requirements". Brokers are well aware of the existence of the regulations set through legislation and the ASIC exist, and they understand that they must be compliant with them. However, It is common for businesses to not be managing their compliance efficiently, or for aspiring or new brokers to be confused by it. This is concerning as it is extremely important to properly understand what compliance is and how to achieve it.
The ASIC & legislators' Regulatory Guides lay out what is required legally of brokers in order to meet the expectations of conduct when you get your Credit Licence.
At QED we find that where a lot of Licensees tend to run into issues is by only focusing on their Responsible Lending Obligations. While these obligations are also important for compliance, they often forget about equally important obligations such as their General Conduct Obligations.
In the context of broking, Compliance is ensuring that as a broker, you are meeting all regulations set by legislators and the ASIC, and fulfilling your obligations as a Credit License holder.
As a consequence of non-compliance an individual can receive a penalty of up to $360,000, and if convicted, up to two years imprisonment.
How To Become Compliant
After understanding the importance of compliance and the consequences of incompliance, you are likely wondering what steps you need to take in order to stay on the ASIC's good side.
Firstly, you need to be able to demonstrate that you have compliance arrangements in place. This involves creating a plan to achieve compliance that is fitting to the size of your business. It is often easiest to achieve this by setting out a compliance checklist. It is also necessary to outline who is in charge of looking after compliance and how often the documented arrangements will take place.
You should also include the measures that will be taken should you find out you are non-compliant with any regulations, to demonstrate that you are fully prepared for all circumstances.
Beyond creating a plan, you must put everything into practice. Without committing to the plans you will not be able to properly document or report on compliance and therefore will be considered incompliant.
Managing compliance can be a time-consuming process, but if you don't spend the time necessary, the penalties can be severe.
However, if you want to make compliance easier there are tools to help speed up the process. QED offers a program called QED CompliFast which helps you identify if you are compliant, and if not, what you need to fix. If any parties, such as the ASIC, are to request evidence of how you're performing with compliance, QED CompliFast becomes that evidence. Essentially, there is an opportunity to take lot of the work out of your hands.
Compliance is all about meeting the requirements expected of you, in order to provide a legal & beneficial service. There is no 'one size fits all', so it is up to you to understand what the best way to manage compliance is for your business. Regardless of how you choose to do it, we suggest you make it a top priority going forward.