How AFSLs can reduce advisers' compliance frustrations
ASIC chair Joe Longo has told compliance professionals they need an “attitude of compliance” beyond written policies while a consultancy has detailed how this can be achieved in financial services.
In a speech to the Australian Compliance Institute annual conference, Longo said there is a critically important role for compliance professionals particularly as ASIC ramps up its enforcement activity in areas such as artificial intelligence, greenwashing, and data analytics.
Compliance professionals have a unique role within companies in being first to spot the risks and propose how to manage them before they become problems, he said. However, good compliance goes beyond written policies and processes into a building a culture of trust and integrity.
He said: “What’s needed is an attitude of compliance, based on a curious mind that asks the right questions. Questions like What are our obligations? What are the risks? How can we manage them? What systems and controls should be in place to ensure we meet our obligations? Is what we are doing both legal and ethical? How can we make sure they’re being followed? Do I have an open line to the board? Am I keeping them informed?”
Reflecting on this, compliance consultancy Assured Support said the challenge for compliance staff in an advice firm is to achieve all this without disrupting or distracting other staff from their roles or preventing them from serving clients effectively.
Earlier this year, Money Management wrote how compliance staff at AFSLs are feeling burnt out and overwhelmed by their responsibilities and feel underappreciated by their colleagues who expect them to always be on top of ever-changing regulation.
The majority of advice practices have between one and five compliance staff, according to data from compliance firm Holley Nethercote. Even for businesses with more than 100 employees and representatives, over three-quarters have 15 or less compliance staff.
Assured Support’s Jason Holt, who specialises in working with licensees, said the best compliance professionals articulate their expectations, communicate clearly, and ensure advisers understand their obligations. This could include using a compliance handbook, regular training sessions, and open communication channels.
Building a culture of accountability via self-assessment or peer reviews can empower advisers to take responsibility for their own compliance and reduce the need for intervention by compliance staff or the licensee.
Finally, targeting support to an adviser’s risk profile and experience rather than applying a blanket approach to the whole firm can also ensure resources are appropriately distributed and prevent senior advisers from feeling scrutinised. This can be implemented via performance-based oversight, personalised coaching, or targeted audits rather than broad oversight checks.
Holt said: “The key is balancing oversight and independence – ensuring regulatory obligations are met without descending into micromanagement. Advisers are professionals, and excessive oversight can stifle their creativity, leading to frustration and a decline in morale.
“By setting clear expectations, fostering a culture of accountability, leveraging technology, and offering targeted support, you can create an environment where compliance is second nature – without overpowering supervision.”
AUTHOR
Laura Dew
Recommended for you
Tribeca Investment Partners has made a distribution hire from Australian Ethical in a newly-created role focused on the national intermediary market.
Asset managers may be urged to diversify their product ranges, but investment executives have warned any M&A deal should avoid simply filling gaps and instead consider long-term value creation.
Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equity firm.
Fund managers are entering 2025 with the most bullish sentiment since August 2021 and record high allocations to US equities, thanks to the incoming Trump administration.
