ASIC expects AFS licensees to maintain compliance frameworks that are effective, documented and appropriate for the nature, scale and complexity of their business. A compliance framework is defensible when it consistently identifies regulatory obligations, manages compliance risks, monitors control effectiveness and provides evidence that issues are detected and remediated.
Expanded Answer
A defensible compliance framework is more than a collection of policies. It is an integrated system of governance, risk management, controls, monitoring, reporting and continuous improvement that enables an AFS licensee to meet its ongoing obligations under the Corporations Act. ASIC assesses whether compliance systems operate effectively in practice, with clear accountability, documented processes and reliable evidence to support compliance decisions.
A defensible framework assigns ownership for regulatory obligations, maintains current compliance policies and registers, implements risk-based monitoring, documents incidents and breaches, and reports meaningful compliance information to responsible managers and senior leadership. It also includes staff training, periodic assurance activities and governance processes that ensure deficiencies are identified, escalated and remediated promptly.
Key characteristics:
- Compliance obligations are documented and assigned to accountable owners.
- Controls are regularly monitored and independently reviewed.
- Findings are remediated and used to strengthen the compliance framework over time.
Why it matters
A defensible compliance framework helps demonstrate that compliance failures are identified, managed and corrected before they become systemic issues. Strong governance and documented evidence reduce regulatory exposure and support effective oversight by responsible managers and ASIC.
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Practical guidance
- Map every regulatory obligation to a documented control, owner and review process.
- Monitor compliance controls regularly and record findings, remediation actions and outcomes.
- Review the framework periodically to ensure it remains effective as regulatory expectations and business risks evolve.
Further reading
What does a defensible compliance framework look like for AFSL and credit licensees?