An AFSL holder demonstrates organisational competence through its capacity to provide every financial service covered by its licence competently and on an ongoing basis.
Responsible Managers are central to ASIC’s assessment. They are not the whole framework.
A licensee also needs documented measures for maintaining Responsible Manager knowledge, reviewing competence when its people or business activities change, managing key-person dependencies, monitoring capability and escalating material competence concerns through governance channels.
The practical question is not simply whether suitable Responsible Managers have been nominated.
It is whether the licensee can demonstrate that the organisation remains capable of providing its authorised services when people leave, products change, the business grows or operational weaknesses emerge.
What is RG 105?
ASIC Regulatory Guide 105, AFS licensing: Organisational competence, explains how ASIC assesses compliance with the organisational competence obligation in section 912A(1)(e) of the Corporations Act 2001.
That provision requires an AFSL holder to maintain the competence necessary to provide the financial services covered by its licence.
AFSL applicants must demonstrate that they will be able to comply with the obligation from the time the licence is granted. Existing licensees must maintain organisational competence for as long as they continue to provide the authorised services.
RG 105 focuses heavily on Responsible Managers because ASIC assesses organisational competence by examining the knowledge and skills of the people who manage the financial services business.
At a minimum, a licensee should have Responsible Managers who:
- are directly responsible for significant day-to-day decisions about the ongoing provision of financial services;
- collectively possess the knowledge and skills needed to cover all financial services and products; and
- individually satisfy one of the five options in RG 105 for demonstrating appropriate knowledge and skills.
These are ASIC’s minimum expectations. They are not a complete operating model for organisational competence. A licensee must also maintain documented measures for reviewing competence, updating Responsible Manager knowledge and preserving organisational capability as its people and business activities change.
What does organisational competence mean?
Organisational competence is the licensee’s continuing capacity to provide the financial services covered by its AFSL.
It involves more than technical knowledge.
A competent organisation should be able to:
- understand its licence authorisations;
- provide the authorised services correctly;
- identify the laws applying to those services;
- manage its financial products and client groups;
- make appropriate operational and compliance decisions;
- supervise representatives;
- identify and respond to emerging risks;
- maintain adequate systems and resources; and
- continue operating competently when people or business activities change.
The obligation exists at the organisational level.
This is distinct from the separate obligation in section 912A(1)(f) to ensure that representatives are adequately trained and competent to provide financial services. RG 105 addresses the organisation’s management competence. Representative competence concerns the people who actually provide services on the licensee’s behalf.
The two obligations are connected.
A licensee may have technically competent advisers or representatives but lack adequate management capability. It may also have experienced Responsible Managers while failing to ensure that its representatives can competently perform their roles.
A defensible framework must address both.
Organisational competence also interacts with the separate obligation to have adequate financial, technological and human resources. A shortage of personnel, management time or operational capacity may affect both obligations. However, the inquiries are not identical.
Organisational competence focuses on whether the people managing the financial services business have the necessary knowledge and skills.
The resources obligation considers whether the licensee has sufficient resources to provide and supervise its services effectively.
You may have an organisational competence gap if: one Responsible Manager uniquely covers a material authorisation; the business has changed without a documented competence review; governance reports list qualifications but not capability gaps; or recurring operational failures are not being assessed as possible management-capability indicators.
Why are Responsible Managers alone insufficient?
Responsible Managers provide ASIC with an identifiable basis for assessing the knowledge and skills of the people managing the financial services business.
Their appointment does not, by itself, prove that organisational competence is being maintained.
A licensee can nominate suitably experienced Responsible Managers and still have material weaknesses in:
- decision-making;
- succession planning;
- management capacity;
- representative supervision;
- product knowledge;
- regulatory change;
- training;
- operational systems;
- record keeping;
- outsourcing oversight; or
- governance reporting.
Responsible Manager competence is an input into organisational competence. It is not the entire outcome.
Knowledge can become outdated
Financial services laws, products and distribution models change.
A Responsible Manager who satisfied RG 105 when the licence was granted may not remain competent if the business later:
- adds new products;
- enters a new market;
- changes its advice model;
- appoints a large representative network;
- adopts automated decision-making;
- begins servicing different client groups;
- outsources important functions; or
- materially changes its operations.
Qualifications and experience may support an RG 105 assessment, but they don’t remove the need to test whether the Responsible Manager’s knowledge, involvement and authority remain relevant to the licensee’s current services and products.
Responsibility may exist only on paper
A person may have appropriate qualifications and experience but lack real authority, involvement or access to information.
A Responsible Manager should be directly responsible for significant day-to-day decisions about the ongoing provision of financial services.
A consultant who attends occasional meetings, a director removed from operations or a former executive retained primarily for their credentials may not provide the management coverage the licensee assumes.
One person may represent a material dependency
A licensee that relies heavily on one or two individuals can satisfy ASIC’s initial competence assessment while remaining exposed to substantial key-person risk.
ASIC states that it will generally impose a key-person condition where an AFSL holder is heavily dependent on the competence of one or two Responsible Managers.
The departure, incapacity or banning of a key person can place the licence at immediate risk.
On 11 December 2025, ASIC announced that it had suspended MW Planning Pty Ltd’s AFSL after the licensee failed to appoint a new Responsible Manager following the banning of its existing Responsible Manager. ASIC found that the licensee was not meeting its organisational competence and human resources obligations. ASIC also identified failures involving financial reporting and reporting obligations. ASIC subsequently recorded that it cancelled MW Planning’s AFSL with effect from 4 May 2026 after the licensee failed to rectify the issues that caused the suspension.
Individual knowledge does not ensure organisational implementation
A Responsible Manager may understand the law while the organisation lacks the processes needed to apply that knowledge consistently.
For example, the Responsible Manager may understand breach reporting, but the licensee may still have:
- weak incident capture;
- poorly defined escalation triggers;
- no reliable assessment workflow;
- incomplete records;
- inadequate management reporting; or
- unresolved corrective actions.
Organisational competence depends on whether the licensee can translate knowledge and experience into consistent decisions, effective controls and repeatable business practices.
What evidence does ASIC expect?
ASIC assesses organisational competence by examining the Responsible Managers nominated by the licensee and the relationship between their experience and the licence authorisations.
The evidence required will depend on the pathway relied on under RG 105.
It can include:
- curriculum vitae;
- qualifications;
- academic transcripts;
- industry training;
- professional development records;
- position descriptions;
- employment references;
- organisational charts;
- explanations of prior responsibilities;
- details of products and services managed;
- evidence of decision-making authority; and
- written submissions demonstrating relevant knowledge and skills.
The Responsible Managers must collectively cover all financial services and products included in the licence authorisations. ASIC will consider whether their knowledge and skills correspond to the authorisations sought or held.
For an existing licensee, the relevant evidence should extend beyond the original application documents.
The licensee should retain records showing that it has:
- regularly reviewed organisational competence;
- reassessed competence when Responsible Managers changed;
- considered competence before adding products or services;
- maintained and updated Responsible Manager knowledge;
- addressed gaps;
- managed key-person risk; and
- taken steps to preserve competence during organisational change.
RG 105 states that licensees should review organisational competence regularly and whenever Responsible Managers or business activities change. It also expects licensees to keep records of those reviews and the steps taken to maintain competence.
Documentation matters because an undocumented competence process is difficult to distinguish from no process at all.
How should licence authorisations be mapped to competence?
A licensee should maintain a current competence map linking each AFSL authorisation to the people and organisational capability supporting it.
The map should identify:
- each authorised financial service;
- each financial product category;
- the client types covered;
- the Responsible Manager or Managers providing coverage;
- the experience supporting that coverage;
- relevant qualifications and training;
- other internal subject-matter experts;
- material outsourced dependencies;
- identified competence gaps; and
- succession arrangements.
The map should record both primary and secondary coverage. Where no credible secondary coverage exists, the dependency should be classified, assigned an owner and connected to a succession or activity-restriction plan.
This process often reveals gaps hidden by broad Responsible Manager descriptions.
For example, a licensee may have several Responsible Managers with general financial advice experience but limited practical experience in:
- derivatives;
- claims handling;
- custodial services;
- managed investment schemes;
- margin lending;
- securities dealing;
- product issuance; or
- complex insurance products.
The fact that a Responsible Manager works for the licensee does not mean that they cover every authorisation.
Coverage should be tested at the level of the actual financial services and products.
How should licensees manage succession planning?
Succession planning is an essential component of organisational competence.
Changes to Responsible Managers must be notified to ASIC through the ASIC Regulatory Portal within 10 business days of the change occurring. A licensee should also review its licence conditions because a key-person condition or other specific condition may impose additional requirements or practical constraints.
Notification alone does not address the underlying risk.
A licensee should know in advance how it will maintain competence if a Responsible Manager:
- resigns;
- retires;
- becomes seriously ill;
- takes extended leave;
- is dismissed;
- loses relevant professional standing;
- becomes subject to regulatory action;
- ceases to satisfy a licence condition; or
- can no longer devote sufficient time to the role.
A practical succession plan should identify:
- critical Responsible Managers;
- the authorisations each person covers;
- areas of unique expertise;
- potential internal successors;
- development required by those successors;
- external recruitment options;
- interim decision-making arrangements;
- regulatory notification requirements;
- key-person licence conditions; and
- any activities that may need to be restricted.
Succession planning should not begin after the resignation is received.
Where one person provides unique coverage for a material authorisation, the licensee should treat that dependency as a governance risk.
The licensee must also examine the precise wording of its AFSL conditions. Where a Responsible Manager is named as a key person, their departure may have consequences beyond the general notification requirement. Depending on the condition, the licensee may need to replace the person, obtain ASIC’s agreement, restrict affected activities or demonstrate that it is no longer materially dependent on that individual.
What training should Responsible Managers complete?
Responsible Manager training should be relevant to the services they manage and the decisions they make.
Generic annual compliance training is not enough.
A Responsible Manager development plan may need to cover:
- changes to financial services laws;
- developments affecting licence authorisations;
- emerging ASIC expectations;
- product changes;
- representative conduct;
- complaints and AFCA decisions;
- reportable situations;
- conflicts of interest;
- design and distribution obligations;
- advice standards;
- cyber and operational risk;
- regulatory technology;
- outsourcing;
- governance; and
- significant court and enforcement outcomes.
Training should address identified competence needs rather than merely record attendance.
The licensee should consider:
- what each Responsible Manager needs to know;
- how the need was identified;
- whether the training was completed;
- whether understanding was assessed;
- how learning was applied; and
- whether further development is required.
Formal courses may be appropriate in some cases. Other competence development can include:
- structured regulatory briefings;
- technical workshops;
- case discussions;
- supervised experience;
- mentoring;
- peer review;
- participation in governance forums;
- involvement in incident investigations; and
- targeted product training.
The objective is maintained capability, not accumulated training hours.
How should organisational competence be monitored?
Organisational competence should be monitored as an ongoing risk, but operational failures don’t automatically constitute a breach of the organisational competence obligation.
They may, however, provide evidence that the people managing the financial services business lack the knowledge, authority, capacity or systems required to discharge their responsibilities effectively. Recurring or systemic failures should therefore trigger an assessment of whether the issue reflects a broader management-capability gap.
A licensee should not wait for a Responsible Manager change or ASIC enquiry before testing whether the framework remains adequate.
Monitoring should consider both individual capability and organisational performance.
Individual indicators
Relevant indicators may include:
- current role and decision-making responsibility;
- time allocated to the financial services business;
- recency of relevant experience;
- professional development;
- product knowledge;
- regulatory knowledge;
- participation in governance;
- performance of assigned responsibilities;
- conflicts or competing commitments;
- periods of extended absence; and
- regulatory, disciplinary or fit and proper concerns.
Organisational indicator
The licensee should also consider whether weaknesses in business performance suggest a competence problem.
These may include:
- repeated compliance failures;
- recurring advice defects;
- poor product governance;
- delayed breach assessments;
- persistent complaints;
- weak incident escalation;
- inadequate representative supervision;
- unresolved audit findings;
- frequent procedural errors;
- deterioration in record keeping;
- ineffective remediation;
- high staff turnover; or
- decisions made without appropriate technical input.
Indicators should be assessed in combination. A single complaint or procedural error may not indicate a competence failure, but recurring issues, ineffective remediation or multiple control weaknesses may justify a broader capability review.
These issues may not prove that organisational competence has failed.
They should prompt the licensee to ask whether the organisation has the knowledge, authority, capacity and systems required to manage its services effectively.
Event-based reviews
A competence review should also be triggered when the licensee:
- seeks a licence variation;
- introduces a new product;
- changes its client proposition;
- acquires or merges with another business;
- appoints a new representative cohort;
- enters a new market;
- changes its operating model;
- implements material technology;
- outsources a significant function;
- restructures management; or
- loses a Responsible Manager.
Competence should be considered before the change is implemented.
The review should also test whether the Responsible Manager’s capacity remains realistic. A person may retain appropriate knowledge and skills but cease to provide effective coverage because the business has grown, their responsibilities have expanded, or the number and complexity of decisions requiring their involvement have increased. Headcount growth, representative numbers, product expansion, complaint volumes and significant projects should therefore be considered when assessing whether existing management coverage remains credible.
What should governance reporting include?
Boards and senior management need more than a list of Responsible Managers and their qualifications.
Governance reporting should provide a view of whether the licensee’s competence remains sufficient for its current and planned business.
Useful reporting may include:
- current Responsible Manager coverage;
- gaps against licence authorisations;
- key-person dependencies;
- Responsible Manager changes;
- succession readiness;
- overdue training;
- significant business changes;
- emerging competence risks;
- evidence of deteriorating controls;
- reliance on external expertise;
- actions required to address gaps; and
- management’s overall assessment of organisational competence.
The report should explain the implications of the information.
For example:
- Does a departing Responsible Manager leave an authorisation uncovered?
- Is the business entering an area where management has limited experience?
- Is one Responsible Manager carrying an unrealistic number of responsibilities?
- Are repeated operational failures evidence of insufficient management capability?
- Is external technical advice being used appropriately, or is the business dependent on advisers to understand its core obligations?
- Can internal successors assume responsibility when required?
The governing body should be able to challenge management’s conclusions and require action where competence is uncertain.
A statement that “all Responsible Managers remain competent” has limited value without supporting evidence.
Can competence be outsourced?
A licensee may use external expertise to support its operations.
It cannot outsource the obligation to maintain organisational competence.
External specialists can assist with:
- legal interpretation;
- compliance advice;
- product expertise;
- technical reviews;
- training;
- internal audit;
- licence applications;
- governance assessments; and
- specialist operational functions.
The licensee must still retain sufficient internal capability to:
- understand the advice received;
- assess its relevance;
- make decisions;
- oversee implementation;
- identify when further advice is needed; and
- remain accountable for the regulated business.
An external consultant should not become a substitute for competent management.
A Responsible Manager doesn’t need to be an employee merely because they provide services under an external or consulting arrangement. However, the arrangement must be substantive. Except where RG 105 permits modified involvement for certain small-scale, heavily automated businesses, the person must genuinely be directly responsible for significant day-to-day decisions about the ongoing provision of financial services. The licensee should be able to demonstrate their authority, availability, access to information, time commitment and practical involvement.
What is a practical organisational competence framework?
RG 105 does not prescribe a single competence framework or require every control described below in every business. The appropriate measures depend on the nature, scale and complexity of the licensee. The following framework translates ASIC’s minimum expectations into a practical governance model that can be adapted to the licensee’s authorisations, business model and risk profile.
A practical framework should operate across five connected elements.
Define the competence requirement
The licensee should map the competence needed to manage:
- every AFSL authorisation;
- each financial product;
- each client group;
- the business model;
- representative arrangements;
- material legal obligations;
- operational risks; and
- planned changes.
This establishes what the organisation needs to know and be capable of doing.
Identify competence coverage
The licensee should identify:
- Responsible Managers;
- executives;
- operational managers;
- compliance personnel;
- product specialists;
- external experts; and
- potential successors.
Each person’s role should be clear.
Responsible Managers remain central, but the broader organisational capability should also be visible.
Assess adequacy
The licensee should test whether:
- all authorisations are covered;
- experience remains relevant and current;
- Responsible Managers have real authority;
- time commitments are realistic;
- key-person dependencies are acceptable;
- the organisation has adequate systems and resources;
- business changes have created gaps; and
- succession arrangements are credible.
The assessment should produce a documented conclusion. The conclusion should identify the evidence considered, any limitations or assumptions, the authorisations tested, the decision-maker and the date on which reassessment will occur.
Maintain and develop competence
Actions may include:
- training;
- mentoring;
- recruitment;
- role redesign;
- supervised experience;
- external technical support;
- additional Responsible Managers;
- better information flows;
- improved management systems; or
- restricting activities until competence is established.
Each action should have an owner, due date and completion evidence.
Monitor and report
The framework should establish:
- periodic competence reviews;
- event-based triggers;
- indicators of declining capability;
- reporting to senior management and the board;
- escalation requirements;
- records of decisions; and
- confirmation that identified gaps have been resolved.
This creates an ongoing governance process rather than an annual administrative exercise.
What evidence should a licensee retain?
A defensible evidence set may include:
- an AFSL authorisation and competence map;
- Responsible Manager assessment records;
- RG 105 pathway assessments;
- qualifications and experience records;
- current position descriptions;
- organisational charts;
- governance delegations;
- meeting minutes;
- training plans and completion evidence;
- regulatory briefing records;
- succession plans;
- key-person risk assessments;
- periodic competence reviews;
- change-impact assessments;
- licence variation assessments;
- external expert agreements;
- board and management reports;
- corrective action records; and
- ASIC notifications.
The evidence should show more than the existence of documents.
A defensible competence framework should distinguish, and appropriately connect, organisational competence under section 912A(1)(e) with representative training and competence under section 912A(1)(f). It should demonstrate that the licensee:
- considered its competence;
- reached a reasoned conclusion;
- identified gaps;
- took action;
- monitored completion; and
- reassessed whether the action was effective.
What commonly goes wrong?
Common organisational competence failures include:
Treating RG 105 as an application requirement
The original competence assessment is retained in the licensing file but is not revisited as the business changes.
Assuming Responsible Managers cover everything
Broad experience descriptions are used without mapping knowledge and skills to specific financial services and products.
Relying on nominal appointments
Individuals are nominated despite having limited authority, involvement or availability.
Ignoring key-person risk
The business depends on one person without a credible successor or contingency plan.
Confusing representative competence with organisational competence
The licensee focuses on adviser training but does not test the competence of the people managing the regulated business.
Counting training rather than assessing capability
Professional development records are maintained without considering whether learning needs have been addressed.
Failing to connect conduct failures to competence
Repeated complaints, breaches and review failures are treated as isolated compliance problems rather than possible evidence of management capability gaps.
Reviewing competence after a change
New services, products or technologies are introduced before the licensee determines whether it has the capability to manage them.
Providing weak governance reporting
The board is told who the Responsible Managers are but not whether the organisation remains competent.
What should licensees do in practice?
AFSL holders should conduct a structured organisational competence review at least periodically and whenever there is a material change.
The review should answer:
- What services and products are currently authorised?
- What knowledge and management capability does each authorisation require?
- Which Responsible Managers provide that coverage?
- Is their experience current, relevant and supported by evidence?
- Are they genuinely making significant day-to-day decisions?
- Are there gaps, overlaps or excessive dependencies?
- What business changes are planned?
- Does the organisation have adequate people, systems and external support?
- What evidence indicates that capability is being maintained?
- What action is required?
The conclusion should be reported to the governing body and supported by evidence.
How does Assured Support help?
Assured Support helps AFSL applicants and existing licensees establish defensible organisational competence frameworks.
Our work includes:
- RG 105 assessments;
- Responsible Manager assessments;
- competence and authorisation mapping;
- licence application support;
- licence variation assessments;
- key-person risk analysis;
- succession planning;
- Responsible Manager governance;
- competence monitoring frameworks;
- board reporting;
- training and development planning; and
- assessment of whether competence arrangements remain effective.
Organisational competence should be demonstrable before a resignation, licence variation or regulatory enquiry tests it.
Start by mapping each AFSL authorisation to current Responsible Manager coverage, decision authority, succession arrangements and supporting evidence. Where the review identifies gaps, assign corrective actions and monitor them through to verified completion.
Assured Support can help assess whether your Responsible Manager and organisational capability arrangements remain defensible.
Talk with an expert about assessing and strengthening your organisational competence framework.
This article provides general information and professional education. It is not legal advice.
Further reading
Frequently Asked Questions
No. Experienced Responsible Managers are central to ASIC’s assessment, but their appointment is only part of the evidence that an AFSL holder maintains organisational competence.
ASIC expects nominated Responsible Managers to have direct responsibility for significant day-to-day decisions, collectively cover all relevant financial services and products, and individually satisfy an accepted knowledge-and-skills pathway. ASIC also expects the licensee to maintain measures that preserve competence over time, including regular reviews, change-triggered assessments, knowledge maintenance and supporting records.
The practical distinction is between possessing expertise and consistently applying it. A qualified Responsible Manager may still be ineffective if they lack authority, receive incomplete information, have insufficient time or are not involved when material decisions are made.
A licensee should therefore test both formal suitability and operational effectiveness. Useful evidence includes delegations, decision records, meeting attendance, escalation activity, time commitments and examples showing how the Responsible Manager influenced services, products, controls and corrective action.
An AFSL holder should review organisational competence regularly and whenever its Responsible Managers or business activities change. ASIC also expects the licensee to ensure that competence will be maintained before implementing material changes such as expanding its services or products or replacing a Responsible Manager.
This means a calendar-based annual review is unlikely to be sufficient on its own. Event-based assessment should be built into change governance for licence variations, acquisitions, new products, new client groups, material outsourcing, technology implementations, management restructures and significant growth in representative numbers.
The review should identify what new knowledge, authority, capacity or systems the change requires; who provides that capability; whether their experience is sufficiently current and relevant; and what must occur before implementation.
A documented “no material impact” conclusion can be appropriate, but it should record the change considered, the authorisations affected, the evidence reviewed and the person accountable for the decision. A tick-box stating that competence was “considered” provides little protection if the reasoning cannot be reconstructed.
The board should receive an evidence-based assessment of whether the licensee’s capability remains adequate for its current and planned financial services—not merely a list of Responsible Managers and their qualifications.
A useful report should map Responsible Manager coverage to AFSL authorisations, identify unique dependencies, record recent and proposed business changes, describe capability gaps, and show the status of succession, development and remediation actions. It should also highlight operational indicators that may call the competence conclusion into question, such as recurring advice defects, delayed breach assessments, weak supervision, unresolved audit findings or decisions made without appropriate technical input.
The governing body should be able to see the basis for management’s conclusion and challenge its assumptions. For example: Is an authorisation dependent on one person? Is that person genuinely involved? Has a new product outgrown management’s experience? Are failures occurring despite completed training?
Minutes should capture significant challenges, decisions, action owners and due dates. That evidence demonstrates active governance rather than passive receipt of a reassuring statement.
Key-person risk becomes material when the departure, incapacity or loss of one individual would leave an authorisation, product or critical decision-making function without credible coverage.
ASIC states that it will generally impose a key-person condition where a licensee is heavily dependent on one or two Responsible Managers. Its action concerning MW Planning also illustrates the regulatory consequences that can follow where a banned Responsible Manager is not replaced and organisational competence is not restored.
A practical assessment should identify every authorisation uniquely covered by one person, the decisions only that person can make, the information or relationships concentrated with them, and the time needed to establish a suitable replacement.
The licensee should then test whether an internal successor is genuinely capable, whether interim restrictions would be needed, and whether recruitment lead times make the contingency unrealistic.
A succession document naming an aspirational replacement is not enough. The evidence should show development activity, supervised experience, readiness assessment, interim authority and a defined regulatory-notification process.
Technology can strengthen competence monitoring and evidence, but it cannot replace the knowledge, authority and judgement required to manage an AFSL business.
A well-designed system can map authorisations to Responsible Managers, trigger reviews when roles or products change, record training and attestations, track succession actions, preserve decision evidence and escalate overdue remediation. These functions reduce reliance on memory and make governance reporting more reliable.
The risk is assuming that recorded completion proves capability. A system may show that training occurred without showing whether the Responsible Manager understood or applied it. It may record an annual review while overlooking a material business change that occurred months earlier.
Technology controls should therefore be paired with accountable human decisions. Reviewers should assess the quality of the evidence, challenge broad coverage claims and investigate whether operational performance contradicts the recorded conclusion.
For heavily automated businesses, RG 105 contains specific conditions governing reduced Responsible Manager involvement, including monitoring, defined sign-off and involvement when material changes or adverse outcomes arise.
