How to Comply With Your Australian Credit Licence (ACL) Responsible Manager CPD Obligations 

Introduction

Maintaining compliance is a critical responsibility for any Responsible Manager operating under an Australian Credit Licence (ACL). The National Consumer Credit Protection Act 2009 (Cth) mandates that Australian credit licensees ensure their Responsible Managers possess the necessary training and competence, which is fundamental to upholding the integrity of all Australian credit activities.

This guide is designed to assist ACL holders and their ACL Responsible Managers in navigating their ongoing obligations, with a particular focus on the Continuing Professional Development (CPD) requirements detailed in Australian Securities and Investments Commission’s (ASIC) Regulatory Guide 206 (RG 206). Adhering to these training requirements is vital for every ACL responsible manager to demonstrate sustained organisational competence and ensure compliance with the regulatory framework governing the Australian credit industry.

Understanding Your “Continuing Professional Development” (CPD) Obligations 

The Mandatory 20-Hour Annual Continuing Professional Development Training Requirement for Responsible Managers

For ACL holders, ensuring your responsible manager meets their CPD obligations is a critical aspect of compliance. RG 206 clearly outlines these training requirements.

Specifically, responsible managers must:

• Undertake at least 20 hours of CPD per year
• Maintain current knowledge and skills relevant to their role in the evolving credit industry

This 20-hour minimum is not merely a suggestion but a formal requirement often stipulated as a condition of the ACL itself. This means each responsible manager of the licensee must complete this training in each calendar year.

Several sources, including industry guidance and ASIC own publications, consistently reiterate this 20-hour annual CPD training benchmark for any ACL responsible manager.

Why Fulfilling Continuing Professional Development Obligations is Vital for Your Australian Credit Licence Compliance

Meeting CPD obligations is fundamental for maintaining your ACL and ensuring overall organisational competence. If you hold an ACL, you must maintain your organisation’s competence to engage in the credit activities authorised by your ACL.

This obligation serves as a cornerstone of the regulatory framework under the National Consumer Credit Protection Act 2009 (Cth).

Failure to ensure your ACL responsible manager completes the required CPD can have serious consequences:

• ASIC has the authority to take administrative action if they believe an Australian credit licensee is not complying with its obligations.
• Such actions could include suspending or cancelling your ACL or imposing additional conditions.
• The obligation to maintain competence is a civil penalty provision under the National Consumer Credit Protection Act 2009 (Cth).
• Non-compliance can lead to significant financial penalties for the Australian credit licensee.

It is therefore essential that every responsible manager diligently fulfils their CPD requirements to safeguard the licence and avoid these repercussions.

Qualifying Continuing Professional Development Activities for Your Responsible Manager

ASIC’s Approved Continuing Professional Development Activities for Responsible Managers Under Regulatory Guide 206

To assist your ACL responsible manager in meeting their annual 20-hour CPD obligation, RG 206 outlines several types of appropriate activities. These are designed to ensure that responsible managers maintain and enhance their competence in relation to the credit activities authorised by your ACL.

It is important for Australian credit licensees to ensure that the chosen CPD is relevant to the responsible manager’s role. Qualifying CPD activities for a responsible manager may include:

• Attendance at relevant professional seminars or conferences: Participating in industry events that provide updates on credit-related matters and compliance.
• Preparation time for presenting at relevant professional seminars or conferences: Time spent developing content for presentations contributes to CPD.
• Publication of journal articles relevant to the credit industry: Sharing expertise through written contributions to industry publications.
• Viewing videos or DVDs of recent professional seminars or conferences: This is acceptable for up to a maximum of 10 hours per year, provided the material is current (within the last year).
• Completion of online tutorials and/or quizzes: Engaging with online learning modules that cover recent regulatory, technical, or professional developments in the credit industry.
• Internal training on systems, procedures, and policies: Training specific to your organisation’s operations can count, although ASIC notes that activities in this category should not constitute the majority of the CPD hours.

It is worth noting that this list is not exhaustive, and other types of activities may also be appropriate. However, ASIC generally does not regard private study as adequate for meeting CPD requirements, unless it involves audio or visual material specifically designed for that purpose.

Ensuring Continuing Professional Development Covers Product Industry Regulatory Compliance & Risk Management Developments

When selecting CPD activities for your ACL responsible manager, it is crucial to ensure the content is relevant and addresses key areas of development within the credit landscape. The training undertaken must support the responsible manager in competently performing their duties and maintaining compliance for the ACL.

CPD for a responsible manager should encompass:

• Product and industry developments related to credit: This ensures your responsible manager stays informed about new credit products, market trends, and shifts within the industry.
• Compliance training: This is a critical component and must include updates on new regulatory requirements under the credit regime. For instance, compliance training would need to cover the responsible lending obligations as outlined in Chapter 3 of the National Consumer Credit Protection Act 2009 (Cth).
• Risk management: Activities that enhance understanding and skills in risk management are also valuable, as effective risk management is fundamental to the obligations of an ACL holder.

By ensuring that CPD training covers these essential areas, Australian credit licensees can support their responsible managers in maintaining the necessary knowledge and skills to navigate the evolving credit environment and uphold compliance standards. This focus on relevant and comprehensive training is vital for the ongoing competence of your ACL responsible manager.

Effectively Planning & Documenting Your Responsible Manager’s Continuing Professional Development Training

Developing an Annual Continuing Professional Development Training Plan for Your Responsible Manager

To ensure your ACL Responsible Manager meets their ongoing obligations, it is advisable to implement a structured approach to their CPD. ASIC guidance suggests that Responsible Managers should prepare a training plan at least annually, subject to the approval of the ACL holder.

A well-crafted training plan helps the Responsible Manager focus on relevant areas for development. The plan should clearly outline how the individual will:

• Develop and maintain knowledge and skills: This involves identifying the specific competencies appropriate to their roles and responsibilities within the Australian credit framework.
• Update their knowledge and skills: The plan needs to address how the Responsible Manager will stay current with continual changes, particularly in areas such as:
  • Legislative updates
  • Credit industry trends
  • New regulatory requirements
  • Evolving market practices
• Set objectives: Clear objectives should be established, detailing the desired changes in knowledge, skills, and/or performance that the Responsible Manager aims to achieve by the end of the training year. These objectives help in measuring the effectiveness of the CPD activities undertaken.

Key Records Australian Credit Licensees Must Keep for Continuing Professional Development Compliance

Maintaining accurate and comprehensive records of all CPD activities undertaken by your ACL Responsible Manager is a critical aspect of compliance. The requirement to undertake at least 20 hours of CPD per year will be set out in a licence condition.

This condition also mandates that Australian credit licensees keep a record of the CPD activities undertaken by their responsible managers each year. This record-keeping obligation requires that “a record of the continuing professional development activities undertaken by each responsible manager is maintained for each calendar year in which they perform the role of responsible manager for the licensee.”

Failure to maintain these records can lead to scrutiny during ASIC surveillance and potential non-compliance findings. Therefore, to ensure your ACL compliance, licensees should record the following details for all completed CPD activities for each Responsible Manager:

• Training type: Specify the nature of the CPD activity, such as:
  • Publications
  • Conference attendance
  • In-house training sessions
  • Online tutorials
  • Professional seminar viewings
• Training area: Indicate the subject matter covered by the training, including:
  • General credit knowledge
  • Ethics
  • Specific compliance topics (like responsible lending)
  • Updates on industry and regulatory developments
• Date and duration: Record the exact date(s) the CPD activity was undertaken and the duration, typically in hours, to track progress towards the annual 20-hour minimum.
• Name of the training provider: Document the organisation or individual that delivered the training, which helps in verifying the credibility and relevance of the CPD activity.

Systematically documenting these details for your ACL Responsible Manager will help demonstrate adherence to the training requirements and support your ongoing commitment to maintaining competence within your Australian credit operations.

Demonstrating Commitment to Ongoing Australian Credit Licence Responsible Manager Competence Through Continuing Professional Development

Proactive Continuing Professional Development Engagement Showing Commitment to Future Compliance for Your Australian Credit Licence

Demonstrating a commitment to CPD from the very beginning of your ACL journey is a significant indicator of your dedication to ongoing compliance. If you are applying for an ACL, you must be able to show ASIC that you can comply with the organisational competence obligation from the moment your licence is granted and on an ongoing basis.

Presenting a clear plan for your ACL responsible manager’s CPD at the application stage signals a proactive approach to meeting these regulatory expectations. This early engagement with CPD obligations shows that your organisation and its proposed ACL responsible manager understand the importance of maintaining the required knowledge and skills.

Furthermore, it assures regulators that you are prepared to invest in the necessary training requirements to uphold the standards of the Australian credit industry. Such foresight can be a positive factor in the assessment of your overall suitability to hold an ACL.

How Consistent Continuing Professional Development Upholds Your Obligations as an Australian Credit Licence Holder

Consistently ensuring your ACL responsible manager undertakes relevant CPD is a cornerstone of fulfilling your obligations as an ACL holder. If you hold an ACL, you must maintain your organisation’s competence to engage in the credit activities authorised by your ACL.

ASIC expects that your measures for complying with the organisational competence obligation will include maintaining and updating the qualifications and experience of your responsible managers. This specifically requires ensuring your responsible managers undertake at least 20 hours of CPD per year.

This ongoing commitment to CPD helps your ACL responsible manager stay abreast of:

• Evolving product landscapes in the Australian credit market
• Changes to industry best practices
• Updates to regulatory requirements and compliance standards

By fostering a culture of continuous learning and development for your ACL responsible manager, you are actively working to ensure that your credit activities are conducted efficiently, honestly, and fairly. Consequently, this diligence in training is fundamental for every ACL responsible manager to demonstrate sustained organisational competence and uphold the integrity of your ACL.

Conclusion

Meeting the ongoing CPD obligations, including the annual 20-hour requirement detailed in RG 206, is crucial for ACL Responsible Managers. This involves understanding qualifying activities, diligent planning and documentation of training, and consistently demonstrating commitment to maintain organisational competence and uphold ACL compliance.

This commitment to CPD is fundamental for every ACL responsible manager. For expert assistance in navigating your ACL Responsible Manager CPD requirements and ensuring your ACL compliance, contact AFSL House today to leverage our specialised financial services law expertise and achieve regulatory confidence.

Frequently Asked Questions for Australian Credit Licensees