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[RG 259] window closing for REs

February 22, 2018

ASIC’s “facilitative window” for RE’s implementation of risk management requirements [RG 259] closes on 27 March 2018. Evolution Trustees supports the additional guidance provided to what was an existing obligation of all AFSL holders.

One of the larger challenges now faced by REs is how they can demonstrate a positive risk management culture that is embraced by Senior Executives and Directors in their decision making.

I suspect many RE’s will be able to demonstrate technical compliance with [RG 259] by having a pile of documents: risk management framework, a risk appetite statement, liquidity risk management policy and risk registers. However I think ASIC’s compliance activities will be focused on reviewing culture, focused on decision making and governance. ASIC will want to see evidence that the guidance contained in [RG 259] has penetrated REs strategic judgements.

ASIC guides the market through publication of its successful scalps. It uses media releases as a deterrence tool. Poor decisions by REs will soon be assessed not only for the decision itself but also by reference to how such a decision was made within the context of a risk management program.

The industry should expect and be ready for a round of notices issued by ASIC to test [RG 259] compliance. It will be interesting to see what messages ASIC gives the market thereafter.


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