ASIC’s strategic outlook for 2016-17: culture is key

In this blog:

• ASIC’s strategic outlook for 2016-17: culture is key

• Financial Reporting – ASIC Sets 7 Focus Areas

• CompliSpace upcoming Sydney Workshop: 31 August

 

ASIC’s strategic outlook for 2016-17

ASIC has released an outline of its key regulatory priorities for 2016-17. These are:

1. Cyber resilience and technology disruption;
2. Firm culture and conduct; and
3. Handling of confidential information and managing conflicts of interest in research and corporate advisory.

Once again, there is an emphasis on culture and conduct.  ASIC defines culture as a set of shared values and assumptions within an organisation. It represents the ‘unwritten rules’ for how things really work.  If not properly addressed, ASIC reinforces that cultural risk can adversely affect market integrity and investor confidence.

By addressing cultural and conduct-related issues “from the top”, positive cultural values will cascade down to the rest of the organisation and translate into actual business practices. This will ensure:

• staff accountability;
• effective communication and challenge;
• recruitment, training and rewards; and
• governance and controls.

For 2016-2017, ASIC will integrate cultural indicators into its risk-based surveillance in order to better understand how culture drives conduct. In the past ASIC has incorporated many individual elements of culture into its surveillances, including remuneration, breach reporting, and complaints handling. Currently ASIC is undertaking a review of attitudes to conduct risk, sound remuneration policies, management of confidential information and conflicts of interest, and supervisory frameworks and risk management.

At the beginning of the year the regulator reissued a questionnaire to its investment bank stakeholders and market participants to gauge their approach to conduct risk. While it saw a shift in focus at the board level of organisations, it is believed that there is still a long way to go in terms of changing behaviours.

In line with their ongoing work on culture and conduct, ASIC has said:

“We will also consider how conflicts of interest are managed across a range of business lines, including financial advice, research, corporate advisory, sales and trading.”

This will be an additional area of focus for 2016-2017, as highlighted in our previous blog post.

Financial Reporting: ASIC Sets 7 Focus Areas

While end-of-year financial reports have been filed and the 30 June deadline is fast receding into the financial past, it is always good to note some of ASIC’s key reporting requirements come next financial year – which always rears its head sooner than we think!

Based on the 31 December review, ASIC released its key focus areas for the financial reports of listed entities and other entities of public interest for 30 June 2016. The focus areas highlighted significant problems which arose in the previous review and importantly called on directors to increase the “realism and clarity” of their end-of-year financial reports. This includes adopting:

• realistic valuations for asset values;
• appropriate accounting policies; and
• better communication of information.

In response to previous findings, ASIC Commissioner John Price has said: “The largest number of our findings continue to relate to impairment of non-financial assets and inappropriate accounting treatments. Directors and auditors should continue to focus on values of assets and accounting policy choices in preparing their 30 June 2016 financial reports.”

For more information see 16-174MR ASIC calls on directors to apply realism and clarity to financial reports and 16-205MR ASIC review of 31 December 2015 financial reports.  

CompliSpace Responsible Manager Training Workshop: Sydney

CompliSpace is running High Impact Training for Financial Services Executives On-The-Go on Wednesday 31 August 2016.

If you are an AFS license holder, you must ensure that your responsible managers and representatives receive ongoing training. Our interactive, “on-the-go” workshops are designed to keep you up-to-date with the latest industry changes, real life case studies and exercises and fast-track the practical development of new knowledge and skills.

Training is delivered in an interactive workshop environment providing attendees with:

•  a simple framework for understanding your core AFSL obligations;
• practical guidance on current regulatory issues and trends; and
• CPD points for attendees.

Refer to our website for more information and to register.

How CompliSpace can help

Australian Financial Services Licence holders are inundated with a raft of corporate governance obligations and an ever-growing compliance burden, which can easily distract focus away from core business activities.

CompliSpace delivers industry specific web-based policies, programs and procedures that can be quickly tailored and configured to suit an organisation’s needs and are kept up-to-date with legal and regulatory changes by our team of specialists.

Our team of compliance professionals and lawyers combine extensive expertise with practical technology-enabled solutions to simplify the complexity of the regulatory environment and allow our clients to focus on allocating resources toward improving financial performance.

Please contact James Cozens to discuss your AFSL requirements further.

This blog is a guide to keep readers updated with the latest information. It is not intended as legal advice or as advice that should be relied on by readers. The information contained in this blog may have been updated since its posting, or it may not apply in all circumstances. If you require specific or legal advice, please contact us on (02) 9299 6105 and we will be happy to assist.