The ‘Standard Conditions for Authorised Financial Advisers’ requires that all AFAs must notify the Regulator within five business days of any significant matter arising concerning the AFA’s authorisation or financial adviser activities. Your ABS will be an evolving document as you, or your employer’s business evolves, so have processes in place to review it regularly.
Your ABS must be prepared and be accurate at the time you apply for authorisation. Your ABS must be absolutely truthful. It is not a public document but it is recommended you prepare your ABS on the assumption that one day, regulations may require you to provide it to your clients. Therefore, when working through the template, constantly ask yourself if you would feel comfortable with the content being made available to your clients. If the answer is no, then think seriously about potentially changing the way you do business.
Tips for preparing an ABS
- The document belongs to the AFA, not the company. It should clearly outline how the AFA operates within the company.
- It is constantly evolving so use version control so changes can be easily tracked.
- Follow the Strategi ABS template and guidance notes that can be supplied separately to the Best Practice manual. The Regulator has also published an ‘AFA Adviser Business Statement Guide’ that Strategi recommends an adviser review at least annually.
- The template is just that - a template. It should be modified to reflect how the adviser operates. If a process is going to change, then document how things operate now and then document what the change is going to be, when it will occur and how.
- Keep the ABS as short as possible. This can be achieved by having a company operations manual that contains the detail on the various policies that are referred to in the ABS. However, the ABS needs to contain enough information so the Regulator can clearly understand how the adviser operates.
- Have a monthly bring up process that requires the ABS to be reviewed to identify if any changes need to be made. The Regulator expects you to review your ABS at least annually, even where there has been no material change to the business.
- A nominated person in the business should have a KPI to maintain the ABS.
- There should be consistency amongst ABS if there are multiple AFAs within a business.
ABS for AFAs within a QFE
An AFA is legally responsible for his/her ABS. If the AFA works within a QFE, then it is likely that the QFE will have provided a detailed ABS template for the AFA. However, the AFA must check the ABS and customise the template to reflect the way he/she operates. The AFA is also legally responsible for ensuring the ABS remains current and correct. The AFA must ensure the ABS reflects the business and compliance arrangements and any changes therein, incluiding any changes to the requirements of the Act and the Code. If the ABS does not reflect legal practices, regulation, The Code and Standard Conditions of Authorisation for AFAs, then the AFA must take action to resolve the issues immediately. In this situation, there may be a potential conflict between the adviser’s employment arrangements and their AFA obligations. At the end of the day, the rule of law must prevail.
How Strategi can help?
Strategi has developed an adviser ABS template and comprehensive guidance notes which are available on request. We also offer an optional ABS review and sign off service, to ensure that your ABS complies with the latest ABS guide issued by the Regulator.
Prices:
- ABS review - $450.00 + GST, per adviser (conditions apply) - this includes the ABS template and guidance notes. We can also negotiate group/corporate rates.
- ABS template and guidance notes only (without the review process) - $185.00 + GST.
Please contact Strategi to enquire about this service.
