ASIC issues new risk management guidance

Released yesterday, ASIC said its new Regulatory Guide 259 Risk Management systems of responsible entities provides additional guidance to responsible entities on how to comply with the Corporations Act 2001 when maintaining risk management systems.

ASIC said although responsible entities, as AFSL holders, have an ongoing obligation under section 912A(1)(h) of the Corporations Act to have adequate risk management systems, there has been no detailed guidance on what is required for responsible entities to comply with this obligation until now.

“There have been a number of collapses of responsible entities which resulted in significant losses to investors and where we consider inadequate risk management systems to have played a role,” ASIC said.

The guide outlines ASIC’s expectations for responsible entities to have overarching risk management systems in place as well as processes for identifying, assessing and managing risks and includes some additional good practice guidance.

“Our intention is to take a constructive and facilitative approach to any breaches of the guidance for a period of 12 months from today, if a responsible entity can show that it is taking steps to bring its risk management system into compliance with the guidance,” ASIC said.

The release of RG 259 follows consultations conducted by ASIC in the form of Consultation Paper 263 Risk management systems of responsible entities: Further proposals and Consultation Paper 204 Risk management systems of responsible entities, as well as informal consultations with industry stakeholders, ASIC said.

Written by Staff Reporter

Last Updated: 27 March 2017

Published: 28 March 2017