May 27, 2011 at 7:21 am #2360
Responsible managers of ACLs are required to undertake 20 hours of continuing professional development (CPD) per year. In our experience, it is also common for AFSL holders to require their responsible managers to undertake 10 to 20 hours of CPD per year (although no prescribed minimum number of CPD hours has been set by ASIC). So, if you are a responsible manager of an ACL and an AFSL, does this mean that you need to undertake 40 hours of CPD per year?
It will be of little consolation to such responsible managers that the matter is not clear one way or the other. However, as will become evident, we do not think that a dual responsible manager must complete double the CPD.
Responsible managers exist to demonstrate that the holder of the licence (ACL and/or AFSL) is competent to engage in the credit activities and/or provide the financial services authorised by its licence. To demonstrate such competence to ASIC, the responsible manager must have the necessary qualifications and experience. Competence is an ongoing obligation for licensees, which must be demonstrated at all times.
Responsible managers of AFSLs
ASIC has not specified the minimum number of CPD hours that responsible managers of AFSLs are required to undertake each year. Nor does it outline what activities can be counted towards CPD. What we do know (from ASIC’s Regulatory Guide 105) is that an AFS licensee is required to:
• Maintain and update the knowledge and skills of its responsible managers; and
• Keep records showing the steps it has taken to maintain its organisational competence.
The CPD activities should cover the financial services and products to which the responsible manager’s role relates and also knowledge of the regulatory environment.
Some common examples of CPD activities undertaken by responsible managers of AFSLs are:
• Attending relevant seminars and workshops;
• Having access to adequate resources (Internet and newspapers);
• Subscribing to relevant newsletters; and
• Internal and external training and assessments.
Responsible managers of ACLs
For responsible managers of credit licensees, ASIC has set a minimum of 20 CPD hours per year. It is also a standard condition (number 6 of ASIC’s Pro Forma 224) of every credit licence that CPD activities must:
• Be relevant to the role of the responsible manager with the licensee;
• Include product and industry developments relating to credit; and
• Include compliance training on regulatory requirements applying to credit activities.
Records of the CPD activities must also be maintained. ASIC states (at Regulatory Guide 206.66) that the following activities may count towards CPD:
• Attendance at relevant professional seminars or conferences;
• Preparation time for presenting at relevant professional seminars or conferences;
• Publication of journal articles relevant to the credit industry;
• Viewing DVDs of recent (within the last year) professional seminars or conferences (up to 10 hours per year); and
• Completion of online tutorials and/or quizzes on recent (within the last year) regulatory, technical or professional developments in the industry.
Striking a balance for the dual responsible manager
If, for example, the AFS licensing regime requires responsible managers to complete 20 CPD points, our view is that it does not mean that the dual responsible manager has to complete 40 CPD points.
The challenge for a responsible manager of both an ACL and an AFSL is to find the right combination of CPD activities covering appropriate topics that will allow the responsible manager to demonstrate they are maintaining competence under both regimes.
Here are some tips that will help dual responsible managers strike a balance between meeting their regulatory requirements and the practical difficulties of completing 40 hours of CPD per year.
• Consider the options and the overlap: check out what activities are available from a range of sources. For example, several industry magazines and newsletters will cover regulatory developments under both regimes. Also, the ACL and AFSL regimes impose broadly similar obligations on licensees under section 47 of the National Consumer Credit Protection Act 2009 and section 912A of the Corporations Act 2001. When considering potential CPD topics check for overlap between the obligations. For example, both licensees are required to have risk management systems in place that comply with AS/NZS ISO 31000:2009. Therefore, in our view any CPD activity relating to risk management would count as CPD for both regimes;
• Plan your CPD year carefully and creatively: we recommend that you or your support teams develop a forward-looking training plan which focuses on what you need to do to enhance your relevant knowledge and skills. A training needs analysis is a useful tool to help you target your training. Also, think creatively as to what constitutes training. As mentioned earlier, ASIC has made some suggestions in relation to the ACL CPD activities but this should not limit the range of CPD activities that might be undertaken, particularly in relation to the AFS licence. The actual number of hours of CPD you will need to undertake each year will vary depending on the various CPD options available. However, if you can only undertake a few activities that cover both regimes you may end up completing closer to 40 hours of CPD than 20; and
• Document your activities: this is a clear requirement of both regimes. If you’ve developed your training plan as outlined above, you can add the details to your training plan as you complete each activity. It is fine to have combined CPD training records that cover specific credit related and financial services related CPD.
(This Q&A also featured in the 19 May 2011 edition of Money Management)