Section 912A of the Corporations Act 2001 (Cth) (the Act) is the key source of an Australian financial services licensee (AFSL)'s general obligations regarding its provision of financial services. Under this section of the Act, an AFSL must meet 11 compliance obligations including to:

• do all things necessary to ensure its financial services are provided efficiently, honestly and fairly
• comply with the financial services laws
• have risk management systems
• have arrangements for managing conflicts of interest​
• have a dispute resolution system (if it provides services to retail clients).

An AFSL’s failure to meet those obligations can have serious consequences, including the cancellation of its right to provide financial services, monetary penalties and reputational damage - as Westpac experienced earlier this year.

In April Westpac was penalised $113 million after multiple legal actions brought by the Australian Securities and Investments Commission (ASIC). ASIC initiated proceedings against Westpac in the Federal Court for six different matters, including “Fees for no service – deceased customers” and “deregistered company accounts”. In four of those six matters, ASIC alleged, and the Court found, that Westpac failed to ensure that its financial services were provided efficiently, honestly and fairly - in breach of section 912A(1)(a).

In response to the Federal Court’s finding against ASIC, ASIC Deputy Chair Sarah Court stated that:

”Consumer harm caused by systems failures is unacceptable. Financial institutions must invest in systems that allow them to meet their obligations to customers. ASIC expects the industry to do this work quickly and efficiently. Consumers are entitled to be confident that the compliance systems of the financial services firms they trust with their financial security are up to standard”.

Despite Westpac’s large size (or perhaps because of it) and the assumption that any observer would make that the bank’s access to extensive and expensive resources should prevent such ‘systems failures’ from happening, the fact that Westpac is in the media for its costly breaches of the Act demonstrates the importance of every AFSL - regardless of their size - investing in efficient solutions to help them to implement governance, risk and compliance (GRC) systems to meet their AFSL compliance obligations.

While financial technology or ‘FinTech’ has transformed how consumers can access financial services, by allowing people to use their phones and computers to pay bills and transfer funds, regulatory technology or ‘RegTech’ also has the capacity to transform how AFSLs operate internally so that their customers remain confident in the institution providing their ‘FinTech’. In other words, if an AFSL adopts a RegTech option to help it to operate its compliance systems more efficiently and transparently internally, it will then have more resources available to dedicate to the provision of ”efficient, honest and fair” financial services externally.

CompliSpace has a suite of RegTech products that AFSLs can combine or use separately. Our products are cost effective and easy to use ‘software solutions’ that will ease an AFSL’s compliance and regulatory burdens while also enabling them to take a proactive approach to compliance. Our products are built on the four pillars of ‘Policy, Learning, Assurance and Reporting’ which together help firms to achieve a ‘Policy to Culture’ approach.

Greg Chard, Head of Compliance, Legal & Risk Change at Axi explained how CompliSpace's Assurance product has helped Axi:

“Assurance has delivered many benefits to Axi including centralising compliance records, ensuring that we have an automated way to verify that key obligations are being met and automation of workflows through online compliance forms. 

One of the key enhancements to the Assurance product over the last year means now having the ability to integrate our registers with Microsoft PowerBI, improving the speed of the transfer of relevant information to key stakeholders.  With a single dashboard, stakeholders can see the state of play of tasks, registers and checklists.  The dashboards focus attention on key trends or actions required so appropriate responses can be made in a timely manner.”

According to Chard, Axi also benefits from Assurance’s flexibility:

“At Axi, our primary purpose for implementing Assurance was to centralise our global compliance and risk records onto a single platform.  The business soon found non-GRC uses for Assurance as well and we have been able to open up the system to users to meet those needs.  Unlike many GRC systems, which have out-of-the-box modules configured to meet a specific purpose, Assurance provides flexibility on which problems it can solve.”