Potential for ASIC investigation of responsible entities
Industry executives have raised the prospect of the Australian Securities and Investments Commission (ASIC) investigating whether responsible entity companies (REs) will be compliant with tough new capital requirements well before the restrictions come into force.
Speaking at a Deloitte breakfast in Melbourne, Minter Ellison partner Tony Dhar said it was possible that ASIC would begin initial investigations of the compliance health of REs at the end of the tax year to determine if they were likely to breach the new requirements. The new requirements will come into force in November 2012.
"If you're thinking you want to put your capital in place by November 1 next year, also think about putting it in place before June 30 so your reported position at that date achieves the new requirements," Dhar said.
ASIC will implement increased net tangible asset requirements at the beginning of November next year. REs will also have to prepare 12-month cash-flow projections to be approved at least quarterly by directors.
In another address, Deloitte partner, Treasury and capital markets, John Kidd warned not to rely on a "risk culture" to avoid rogue trading incidents.
Fund managers need to implement strong control environments to catch out rogue traders, he said.
However, management cannot be left to do an internal review of control protections, because they won't be able to look at the issues subjectively, Kidd said.
Minter Ellison partner of commercial disputes Ross Freeman warned that a lax risk culture, or a culture of non- compliance, can lead to authorities imposing criminal liability on an organisation.
Companies can only give regulators confidence that they can stop future rogue trading if they identify how it was able to happen and fix the problems that led to it, he said.
Recommended for you
Clime’s disposal of advice licensee Madison “needed to happen yesterday”, managing director Michael Baragwanath has told Money Management, as he concludes a severe cost-out period at the business.
As Viola Private Wealth continues on its growth trajectory, the wealth management firm has appointed a seasoned investment professional to be its first chief investment officer.
Financial advisers who wish to implement artificial intelligence in their practices need to undergo a change in their mindset as to how they use technology.
With United Global Capital expected to constitute a substantial portion of CSLR compensation in FY25–26, what has AFCA ruled in its determinations on the company so far?
