08 December 2006
ASIC has released two draft policy statements updating PS 164, namely:
on 23 November 2006. Comments are sought by 28 February 2007. Please click here for a link to them.
In these two papers, ASIC follows its previous practice of encouraging licensees to use the AS 3806 as a guide when designing and assessing the effectiveness of AFSL Holders compliance measures. However, in the discussion paper the AS 3806 2006 version not the earlier 1998 version is referenced.
The Australian Standard on Compliance AS 3806-2006 version was released in March this year and resulted from a detailed consultative process involving numerous submissions from industry and regulators alike (including input from ASIC).
In our view, most AFSL holders would need to significantly upgrade their compliance measures to meet the new standard. That being said, some existing superior compliance programs would be able to meet the new standard with only minor "tweaking".
In the draft discussion papers, ASIC also encourages the use of the IOSCO principles (Compliance Function at Market Intermediaries).
Of course, ASIC does not mandate the use of AS 3806-2006 or IOSCO principles and acknowledges that each business needs to take into account its specific compliance risks and its nature, scale and complexity.
ASIC asks for feedback on the proposal to reference the new AS 3806 and the IOSCO principles and in particular queries if there are any practical issues raised by this.
We are of the view that it is preferable to allow a transitional period of 2 years to enable AFSL Holders to upgrade their compliance programs to meet the new standards. Of course, organisations who wish to transition early should be free to do so.
If you would wish further information on the implications of these proposals for your organisation, or any assistance with the preparation of submissions to ASIC on these matters, please contact any of the following members of our Financial Services Team:
