AFSL Responsible Manager Training: A Guide to Compliance & Best Practice

Introduction

For most responsible managers (RM), ongoing training feels like just another box to tick, but in 2026, it may serve as a shield against potential liability. The Australian Securities and Investments Commission (ASIC) expects an AFS licensee to comply with its organisational competence obligation under Section 912A(1) of the Corporations Act 2001 (Cth), and maintaining and updating RM knowledge and skills is a core part of the same.

This article explains the organisational competence obligation under Section 912A(1)(e) of the Corporations Act 2001 (Cth), ASIC’s RM-related expectations in Regulatory Guide (RG) 105, and suggests practical tips to help a licensee document its compliance measures.

Interactive Tool: Check If Your RM Training & Records Are Compliant

The Legal Foundations for Responsible Manager Training

Section 912A of the Corporations Act 2001 (Cth)

The legal basis for organisational competence stems from the Corporations Act 2001 (Cth). Under Section 912A(1)(e), holders of an AFSL have a legal duty to maintain the competence required to provide the financial services their licence authorises.

This core requirement requires licensees to:

• Appoint RMs who possess the necessary knowledge and skills to effectively manage the financial services business; and
• Uphold an ongoing duty to maintain this competence at all times, rather than treating it as a one-time assessment.

ASIC Regulatory Guide 105

ASIC assesses a licensee’s compliance with the organisational competence obligation through the framework detailed in RG 105. This guide explains that ASIC’s assessment focuses on the knowledge and skills of the people nominated to manage the financial services business, who are referred to as RMs.

RG 105 provides regulatory guidance on the competence and training requirements for these roles and outlines how ASIC applies the law. Consequently, ASIC expects licensees to have robust measures in place to maintain organisational competence, which includes:

• regularly reviewing organisational competence and reviewing it whenever RMs or business activities change: RG 105.10(a);
• maintaining and updating RM knowledge and skills: RG 105.10(b); and
• keeping records of reviews and steps taken to maintain competence: RG 105.10(c)–RG 105.11.

Initial Training for New Responsible Managers

Navigating the Five Competency Pathways

To be nominated as an RM, an individual must demonstrate they have the appropriate knowledge and skills for the role. ASIC outlines five distinct pathways for this in RG 105. Each option requires a combination of qualifications or training (the knowledge component) and practical experience (the skills component).

A prospective RM must satisfy one of the following options:

• Option 1: Industry or APRA Standard: This involves meeting a widely adopted and relevant industry standard or a standard set by the Australian Prudential Regulation Authority (APRA). This must be combined with at least three years of relevant experience gained over the past five years.
• Option 2: Individual Assessment: This pathway requires an individual to be assessed by an authorised assessor as having knowledge equivalent to a diploma, along with five years of relevant experience over the past eight years. It is generally suited to experienced RMs without formal qualifications.
• Option 3: University Degree and Short Industry Course: A candidate can rely on holding a university degree in a relevant discipline, such as commerce or economics, supplemented by a relevant short industry course. This must be paired with three years of relevant experience over the past five years.
• Option 4: Industry-Specific Qualification: This option requires holding a relevant industry-specific or product-specific qualification that is equivalent to a diploma or higher, such as a Diploma of Financial Services. The candidate must also have three years of relevant experience over the past five years. The required qualification must be relevant to the RM’s actual role and the financial services or products for which the licensee relies on that RM.
• Option 5: Other Demonstration of Knowledge and Skills: If the other options are not suitable, a written submission can be made to ASIC. This submission must detail the RM’s qualifications, credentials, and relevant experience over the past 10 years to argue why they possess the appropriate knowledge and skills for the role.

Tailoring Education for Licence Authorisations

The qualifications and experience of your nominated RMs must be directly relevant to the financial services and products your AFSL authorises. Therefore, your RMs must, collectively, have the appropriate knowledge and skills to cover every financial service and product covered by the AFSL.

This requirement ensures genuine organisational competence across all business activities. For instance, if a licensee is authorised to provide advice on both life insurance and general insurance products, it could meet this obligation by having the following:

• One RM with expertise in life insurance and another with expertise in general insurance.
• A single RM competent in advising on both product types, while another covers the dealing aspects of the business.

For businesses that operate a registered managed investment scheme or a corporate collective investment vehicle (CCIV), there are specific requirements. RG 105.41 requires the nominated RMs’ collective knowledge and skills to cover both the operation of the scheme or CCIV and the relevant kind of scheme or type of CCIV assets. RG 105.74–RG 105.77 gives further guidance on relevant asset-specialist knowledge and qualifications. This supports oversight of both the financial service and the underlying assets.

Ongoing Training & CPD Requirements

Overcoming the Set & Forget Mentality

Achieving the status of an RM is not the final step in the compliance journey; it is the beginning. As established under Section 912A(1)(e), the core obligation for an AFSL holder is to maintain organisational competence at all times, not just establish it once. Therefore, this requires a continuous commitment to training and development.

As detailed in RG 105.10, ASIC expects the licensee’s compliance measures to maintain and update its RMs’ knowledge and skills. It also expects regular reviews and reviews whenever the RMs or business activities change. Training should be tailored to the RM’s role, the authorisations for which the licensee relies on that RM, identified knowledge gaps and regulatory change. This commitment to continuous professional development (CPD) is a fundamental part of demonstrating organisational competency.

Appropriate development activities can include:

• structured training sessions;
• documented briefings on relevant legislative or regulatory changes;
• workshops or scenario testing tied to the licensee’s services and products;
• supervised review of incidents, complaints, or breaches; and
• relevant webinars, conferences or technical reading.

Navigating the 2026 Conflicts of Interest Update

The evolving regulatory landscape provides a clear example of why a “set and forget” approach is risky. ASIC issued the updated RG 181 on 16 December 2025, which introduced critical updates to guidance concerning conflicts of interest and changed the expectations for how RMs must oversee this core obligation.

Section 912A(1)(aa) of the Corporations Act 2001 (Cth) requires an AFS licensee to have adequate arrangements for managing conflicts of interest that may arise in relation to activities undertaken by the licensee or its representatives in providing financial services as part of their financial services businesses. It does not require all conflicts to be eliminated, but that conflicts must be adequately and effectively managed.

A licensee should, therefore, assess the updated guide, document whether its conflicts framework or RM knowledge needs to change, and provide targeted training where a genuine gap is identified. This scenario highlights how quickly an RM’s knowledge can become outdated. Relying on qualifications or training completed before such a significant regulatory shift creates a compliance gap.

Building a Training Plan & Evidence Register

Creating an Evidence Register Aligned with ASIC’s Expectations

To demonstrate compliance, documentation matters. Section 912A(1)(e) of the Corporation Act 2001 (Cth) does not expressly mandate an RM training register. However, RG 105.10(c) states that ASIC expects licensees to keep records showing that they have reviewed organisational competence and the steps taken to maintain it, while RG 105.11 explains that documentation helps show compliance.

A central evidence register is therefore a practical method of meeting ASIC’s evidentiary expectation. It may capture:

• RM name;
• date of activity;
• training provider or facilitator;
• topic or course title;
• type of activity;
• duration, where useful;
• evidence of completion or participation;
• relevance to the RM’s role and the licensee’s authorisations;
• knowledge gap or regulatory change addressed;
• outcome, action item or policy/process change; and
• date for follow-up review.

As a best practice, the register should not be limited to attendance certificates. It should also record competence-mapping reviews, changes to authorisations or business activities, changes in RM responsibilities, identified gaps, and the steps taken in response.

Using Records During an ASIC Audit

A well-maintained training plan and evidence register are indispensable tools during an ASIC audit or surveillance visit. RG 105.14 states that, if ASIC conducts a surveillance visit, it may check ongoing compliance with the organisational competence obligation, including the licensee’s measures for ensuring compliance. ASIC may also require information or assistance under Section 912C of the Corporations Act 2001 (Cth).

These records can show that the board and senior management treat organisational competence as an active governance responsibility rather than an afterthought. They can also demonstrate that:

• RM coverage has been mapped to each authorised service and product;
• competence was reviewed when the business or RMs changed;
• relevant knowledge gaps were identified and addressed; and
• the licensee retained evidence of the review and remedial steps.

This systematic approach helps protect the firm by showing a culture of compliance and provides evidence of organisational competence.

Penalties & Consequences for Non-Compliance

Regulatory Risks & The Cost of Stagnation

Failing to maintain organisational competence through ongoing training can expose an AFSL holder and its RMs to severe regulatory consequences. Violation of Section 912A(1)(e) is a civil penalty provision by operation of Section 912A(5A) of the Corporations Act 2001 (Cth). Further, a court may impose a pecuniary penalty under Section 1317G.

ASIC may also:

• impose, vary or revoke licence conditions under Section 914A(1) of the Corporations Act 2001 (Cth); and
• after offering the licensee an opportunity to appear or be represented at a hearing, suspend or cancel the AFS licence.

Further, ASIC may also issue a personal banning order against an RM if it finds that the RM is:

• not fit and proper;
• not adequately trained or competent to provide financial services;
• has not complied with financial services law;
• is likely to contravene financial services law; or
• was involved in another person’s contravention.

Beyond direct regulatory action, a failure to invest in training can harm business operations and reputation. Untrained RMs may struggle to oversee financial services effectively. As a result, this can lead to operational inefficiencies, an increased risk of compliance breaches, and a loss of trust with clients and stakeholders.

Lessons from the Schroeder & Lanterne Cases

Two ASIC enforcement actions, as seen in Schroeder and Australian Securities and Investments Commission [2021] AATA 3519 and ASIC v Lanterne Fund Services Pty Ltd [2024] FCA 353, illustrate the consequences of a poor compliance culture.

In Schroeder [2021] AATA 3519, the Administrative Appeals Tribunal found that Mr Schroeder was not fit and proper, had been involved in contraventions of financial services laws, was not adequately trained or competent to manage the provision of financial services. Further, he was likely to be involved in future contraventions. The Tribunal criticised a culture that prioritised business growth over compliance.

ASIC v Lanterne involved a “licensee for hire” model with hundreds of authorised representatives but only one full-time RM. The Federal Court found several contraventions including:

• Failure to maintain organisational competence, including by having an inadequate number of RMs, inadequate RM expertise and time commitment, and inadequate processes for ensuring that RMs were appropriately qualified; and
• Failure to ensure that its representatives were adequately trained and competent.

Both cases demonstrate that when a firm’s culture neglects compliance and training, ASIC may impose serious penalties.

Conclusion

Maintaining organisational competence through continuous, documented training is a non-negotiable legal duty for AFSL holders under the Corporations Act 2001 (Cth). A proactive approach to professional development, including keeping up with regulatory changes like the 2026 conflicts of interest update and maintaining a detailed evidence register, is the most effective shield against severe penalties such as lifetime bans.

To ensure your RMs are equipped to meet these ongoing obligations, it is vital to have expert guidance. The AFSL lawyers at Click Legal deliver high-level institutional expertise on a fixed-fee basis, helping you build and maintain an AFSL compliance framework. Contact us today to learn how our ongoing support can protect your AFS licensee and its RMs from liability.

Frequently Asked Questions