ASIC expects Australian Financial Services Licensees and Australian Credit Licensees to supervise representatives through a documented, risk-based framework. Supervision applies whenever representatives provide financial services or credit activities under the licence. The framework should combine competency controls, monitoring, file reviews, complaints, incidents, escalation and remediation rather than relying on periodic reviews alone.
Expanded Answer
A licensee should take reasonable steps to ensure its representatives comply with applicable financial services or credit laws. The supervision framework should reflect the nature, scale and complexity of the business, the activities performed by each representative and the potential risk to clients. The licensee remains accountable even where supervision activities are outsourced.
Practical supervision should include appointment checks, defined authority limits, induction, competency assessment, ongoing training, representative risk profiling, file or transaction reviews, complaints analysis, incident and breach monitoring, supervision meetings and management reporting. The frequency and intensity of monitoring should increase for new representatives, complex activities, recurring review failures, serious complaints or other elevated risk indicators.
Key expectations:
- Assess each representative’s competence, authority and risk profile before and during appointment.
- Monitor conduct using several evidence sources rather than relying on file reviews alone.
- Escalate identified concerns, complete corrective action and verify that remediation is effective.
- Retain records demonstrating supervision activities, decisions, findings and outcomes.
Why it matters
Effective supervision helps identify misconduct, poor advice, unsuitable credit assistance and systemic control failures before client harm increases. Weak or undocumented supervision may expose the licensee to ASIC scrutiny, remediation costs, reportable situations and enforcement action.
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Practical guidance
- Assign each representative a documented risk profile, supervision plan and responsible supervisor.
- Combine file reviews with complaints, incidents, breaches, training results and client-outcome data.
- Escalate material findings promptly and verify that corrective actions change conduct or reduce risk.
Further reading
How to supervise authorised representatives: A practical guide for AFSL licensees
How licensees can ensure adviser compliance without micromanaging
A practical guide to high-level credit file reviews for Australian Credit Licensees