What is a Responsible Manager?
A Responsible Manager is one of ASIC’s marvellous creations. As such, a Responsible Manager is not defined in legislation – a person will be deemed a Responsible Manager if they are nominated and meet the necessary qualification and experience requirements set out by ASIC in RG 105 and RG 206. In essence, a Responsible Manager is a key individual within a business that ASIC looks at to ensure that the licensee is “competent” to provide its financial services (in the case of an AFSL) or credit activities (in the case of an ACL).
Who gets the gig?
Responsible Managers can be employees, middle management, directors, CEOs or third party contractors who can meet the ‘fit and proper’ person test, and who have the requisite knowledge and skill. Regardless of their capacity, Responsible Managers must be directly involved in overseeing the provision of financial services or credit activities – it isn’t enough to be appointed as a Responsible Manager and remain outside the business without playing a clear oversight function.
What is involved in the role?
A Responsible Manager’s role is one of competence. Generally, Responsible Managers will oversee the provision of financial services or credit activities and manage the provision of financial services and credit activities. Despite common belief, they are not legally “responsible” for everything that goes on by virtue of their appointment Responsible Managers. They will only be liable if they also meet the definition of Officer or Director in the Corporations Act. ASIC also expects Responsible Managers to play an active role in fostering compliance culture in the industry – which means being a key player in the business’ compliance arrangements.
What are the obligations of a Responsible Manager?
A licence holder must maintain the competence to provide financial services and/or engage in credit activities. This means that Responsible Managers must keep their knowledge and skills up-to-date. All Responsible Managers should complete a minimum of 20 CPD hours each year, which includes but not limited to regulatory training, subscribing to and reading relevant newsletters, internal and external training and assessments etc. Besides the odd requirement set out by ASIC, a Responsible Manager’s obligations stem from their employment or consultancy contract, rather than legislation.
A Responsible Manager is:
- a nominated person within a business who has the skills and knowledge required by ASIC;
- looked at to assess organisational competency;
- a fit and proper person;
- directly involved in significant day-to-day decisions that affect the business;
- directly involved in overseeing the provision of financial services or engaging in credit activities; and
- an active player in fostering compliance culture in the business and industry.
A Responsible Manager is not:
- legally responsible for the business; or
- an Officer or Director, unless they also meet the definition of Officer or Director in the Corporations Act (in which case they will be personally liable for certain breaches of the Corporations Act).
This article sets out more about what it means to be a Responsible Manager.