Conflict management

Before we can grant you a credit licence, you must demonstrate that you have arrangements in place to ensure that your clients will not be disadvantaged by any conflicts of interest that arise in relation to your credit activities.

For more information on what we think is required for conflicts management arrangements to be adequate, see Section D of RG 205. Your arrangements should be appropriate to the nature, scale and complexity of your business.

You will be asked to confirm that you have, or will have from the date your licence starts (if it is granted), adequate conflicts management arrangements and systems.

If you indicate that you will not, from the date your licence starts (if it is granted), have arrangements and systems to ensure clients will not be disadvantaged by conflicts of interest that may arise wholly or partly in relation to your credit activities, you will not be able to continue with the application because you would not meet the minimum requirements to be granted a credit licence.

Outsourcing

You will also be asked whether any functions of your business will be outsourced when you engage in credit activities. If you answer ‘yes’, you will be asked to select the types of functions that will be outsourced.

You should only answer ‘yes’ to this question if you will be outsourcing parts of your business that relate to the provision of credit activities.

If you outsource your functions as a credit licensee to other entities, you will still be responsible for complying with all of your licensee obligations in relation to those functions. For example, if you outsource the training of your representatives, you will still be responsible for ensuring that your representatives are competent and adequately trained.

If you outsource any of your functions as a credit licensee, we expect that you will have appropriate processes in place to ensure that you:

  • have taken due skill and care in choosing a suitable service provider;

  • will monitor their ongoing performance; and

  • can deal effectively with any breaches of the outsourcing agreement or actions that lead, or might lead, to a breach of your licensee obligations.

If you intend to outsource any of your functions as a credit licensee, you will also need to provide some information in the ‘Summary business description’ about who will perform these functions and in what location. For more information on the ‘Summary business description’, see Section E.


This information comes from Regulatory Guide 204.

Last updated: 20/10/2014 12:00