ASIC expects AFS licensees to retain full responsibility for compliance obligations, even where paraplanning is outsourced. Advisers and licensees may use outsourced paraplanning for support, but they must ensure the advice remains compliant, appropriate, and properly reviewed before it is provided to the client.
Expanded Answer
ASIC’s position is that outsourcing does not transfer regulatory responsibility. The AFS licensee remains accountable for ensuring that all advice complies with legal obligations, including those relating to best interests, appropriateness, and accurate documentation. Outsourced paraplanners may assist in preparing advice documents, but they do not assume responsibility for the quality or compliance of the advice.
In practice, this means advisers must review and take ownership of all advice prepared by paraplanners before it is provided to the client. Licensees should conduct due diligence on outsourced providers, establish clear service agreements, and implement controls such as file reviews, quality assurance processes, and ongoing monitoring. The advice must reflect the adviser’s judgment, not just the paraplanner’s output.
Regulatory scrutiny increases when advisers rely on paraplanning without adequate oversight, or when errors in outsourced work lead to inappropriate advice. ASIC focuses on whether the licensee’s compliance systems ensure quality and accountability across all advice, regardless of who prepared it. Weak oversight of outsourced functions is a common contributor to systemic failures, as highlighted in who is accountable for AFSL compliance and a practical guide to high-level file reviews for licensees and advisers.
Why it matters
Assuming outsourced paraplanning transfers responsibility can lead to compliance failures, breach reporting, and client harm. Regulators hold the licensee accountable for all advice provided, regardless of outsourcing arrangements.
Practical guidance
- Review and approve all paraplanned advice to ensure it meets legal and licensee standards before delivery
- Conduct due diligence and ongoing monitoring of outsourced paraplanning providers
- Implement quality assurance and file review controls to detect and correct issues in outsourced work
Further reading
Who is accountable for AFSL compliance
A practical guide to high-level file reviews for licensees and advisers