Maintaining Organisational Competency

Responsible Manager RG 105

Maintaining Organisational Competency

If you are an AFS licensee, you must maintain the competence to provide the financial services covered by your AFS licence: see s912A(1)(e) of the Corporations Act. ASIC refers to this as the ‘organisational competence obligation’.

Organisational competency is the ability of a licensee to provide the credit services and products for which they have been licensed by ASIC.
Responsible managers are the people on whom the licensee relies to provide the knowledge and skills which comprise its organisational competence.
A licensee is required to comply with its organisational competency obligations on an ongoing basis.

With this in mind, a licensee will need to undertake the following:

ensure there is a written policy that identifies the licensee’s organisational competency position. The policy will say what the licensee determines is necessary to maintain organisational competency and how it will continue to monitor on-going compliance
review its organisational competence on a regular basis and whenever its responsible managers or business activities change
maintain and update the knowledge and skills of its responsible managers
keep records evidencing that reviews of organisational competence occur on a regular basis and that steps are taken to maintain organisational competence.

The concept of “organisational competence” should not be confused with the more general notion of a licensee having competent staff working for the organisation.

Licensees must ensure all people in their employ are competent to perform their respective activities. For example:

a licensee must have competent people managing their finances to ensure the licensee continues to meet the financial adequacy obligations under their licence;
representatives must be competent to engage in the credit activities of the business; and
management need to be competent to make sound decisions to keep the business running.

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Maintaining Organisational Competency

Responsible Manager RG 105