ASIC does not define or certify a “defensible” compliance framework. However, a compliance framework is more likely to be considered defensible when an AFS licensee can demonstrate that its governance, controls and compliance systems operate effectively in practice. The framework should be proportionate to the business, evidence-based and capable of demonstrating ongoing compliance with licence obligations.
Expanded Answer
ASIC expects AFS licensees to maintain adequate governance, resources and compliance arrangements that enable them to meet their obligations under the Corporations Act. A defensible compliance framework is one that can demonstrate, through contemporaneous evidence, how the licensee identifies regulatory obligations, manages compliance risks, monitors control effectiveness and responds when issues arise. Policies alone are not sufficient. The framework should show that compliance is actively managed and regularly reviewed.
A defensible framework typically includes documented governance arrangements, an obligations register, risk assessments, compliance policies and procedures, supervision processes, compliance monitoring, advice file reviews, breach and incident management, complaints handling, remediation, training, recordkeeping and independent assurance. The components should operate together and produce reliable evidence of decision-making, oversight and continuous improvement.
Key characteristics:
- Proportionate to the nature, scale and complexity of the business.
- Supported by documented governance, controls and compliance evidence.
- Regularly reviewed and updated following regulatory or business changes.
- Demonstrates that identified issues are investigated, escalated and remediated.
- Produces evidence that compliance decisions are informed, documented and monitored.
A compliance framework becomes difficult to defend when controls exist only on paper, responsibilities are unclear, recurring issues are not addressed or records cannot demonstrate how compliance decisions were made. A framework is judged by how it performs in practice, not by the number of policies it contains. For further guidance, see What does a defensible compliance framework look like for AFSL and credit licensees?.
Why it matters
A defensible compliance framework helps an AFS licensee demonstrate effective governance during ASIC surveillance, investigations and other regulatory engagement. Strong evidence of active oversight and continuous improvement can reduce regulatory risk and support more efficient responses to compliance issues.
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Practical guidance
- Review whether compliance controls produce documented evidence rather than relying on policy statements alone.
- Verify that governance, supervision and compliance monitoring operate consistently across the business.
- Assess whether recurring issues lead to timely escalation, remediation and continuous improvement.
Further reading
What does a defensible compliance framework look like for AFSL and credit licensees?
Who is accountable for AFSL compliance?
From samples to signals: a smarter approach to AFSL surveillance