DEEP DIVE: Responsible Managers; what RG105 requires, for brokers

Picture this: You are a brokerage with an AFSL, but following a retirement, you need to nominate a new Responsible Manager (RM).

It makes sense to choose the next most experienced broker with years of experience, strong technical knowledge and a deep understanding of clients and products.

You know there’s a requirement for the RM to be “competent at the organisation level” but you’re not entirely sure if the person you’re thinking of neatly fits the definition.

How can you confidently meet your obligations under RG105?

What does RG105 actually require?

Regulatory Guide 105, issued by ASIC, sets out how AFS licensees must demonstrate compliance with the organisational competence obligation under section 912A(1)(e) of the Corporations Act.

This obligation requires licensees to maintain the competence to provide the financial services covered by their licence at all times.

In practice, ASIC looks beyond policies and titles into the capability of the people responsible for running the business.

Paul Muir, Managing Director at Compliance Advocacy Solutions, explains how that plays out:

“ASIC assesses licensees’ compliance with this obligation by looking at the knowledge and skills of the people who are directly responsible for significant day-to-day decisions about the ongoing provision of your broking financial services,” he says.

“ASIC refers to these people as the licensees’ ‘responsible managers’, and they are typically senior, experienced people at the brokerage.”

However, importantly RG105 places strong emphasis on governance and documentation.

“Licensees must monitor ongoing compliance with RG105 through robust compliance measures and a tailored monitoring program,” Muir says.

“The organisational competence obligation should be a standing agenda item at the broker’s risk and compliance committee meeting.”

Where did RG105 come from

RG105 is the product of a long evolution in licensing and regulatory oversight. It consolidated and, together with RG 104, replaced earlier guidance, including RG164 and other licensing frameworks that focused more narrowly on capacity and qualifications.

The current version was reissued in June 2022, reflecting a more mature regulatory environment with stronger expectations around governance, documentation, and accountability.

The direction of travel is clear: regulators have moved from assessing whether firms can provide services, to whether they can prove they are doing so competently, every day.

RG105 provides guidance to the AFS Licensee and the nominated Responsible Managers of the licensee, whether that is a broker, insurer, underwriting agency, insurance claims manager or claimant intermediary.

It does not apply to anyone who is not a Responsible Manager.

Common misunderstandings about RG105

While RG105 is now well established, in practice, several misunderstandings persist about how the Responsible Manager obligation is considered and verified by ASIC.

“If I’m experienced and competent, I can be a Responsible Manager”

Experience and skills are essential, but not sufficient. Responsible Managers must also be directly responsible for significant day-to-day decisions about how the licensee provides its financial services.

Muir is clear: “You should only nominate someone as a responsible manager if they are directly responsible for significant day-to-day decisions about the ongoing provision of financial services under your AFS licence and meet the knowledge and skills requirement,” he explains.

Muir says Table 1 in RG 105 (see page 16 at Rg 105.54 ) should be "carefully considered by the Licensee" when considering nominating people as a responsible manager.

“You need to be able to demonstrate that each of your responsible managers has appropriate knowledge and skills for their role in your business," he adds.

"The five options in RG 105 cover what is required.”

“RG105 is about individuals”

Another common misunderstanding is treating RG105 as an individual requirement.

The obligation sits with the licensee, not the individual. That means:

• Responsible Managers must collectively cover all financial services and products
• The business must demonstrate competence as a whole
• Gaps between individuals can create organisational risk and non-compliance

“Once we have our licence, we’re compliant”

RG105 is not a point-in-time requirement. ASIC expects licensees to:

• Review organisational competence regularly
• Maintain and update knowledge and skills
• Keep records demonstrating compliance

Changes to the business such as new products, new staff or new markets should trigger reassessment. This may be overlooked.

“Good decisions speak for themselves”

In practice, they do not. Janelle Howell, Chief Risk Officer at Catholic Church Insurance, highlights a key gap: “Many RMs have a clear understanding of their individual role, but that understanding can benefit from being refreshed to reflect on how it is documented and consistently applied,” she says.

“Without a clear fact base, this can create a risk for the organisation where decisions are made based on experience and/or judgement.” 

Under scrutiny, it is not enough to have made the right call. The licensee must be able to produce documented evidence for how and why decisions.

Importantly, responsible managers must set aside time to perform their role adequately. This is distinct and separate to their usual role as a broker, director or officer of the brokerage.

“Oversight happens naturally”

In many brokerages, oversight is informal. Senior people are aware of issues, decisions are discussed and risks are managed through experience.

But RG105 expects something more structured. Howell explains: “One of the most common gaps is the absence of a structured approach to oversight,” she says.

“Where this translation is not clear, it can create a risk that issues are not identified early or are not escalated appropriately."

Structure creates consistency. Without it, outcomes can depend too heavily on individuals.

What is ASIC is looking for in practice?

RG105 sets out minimum expectations, but how it is applied becomes clearer in practice. ASIC will look for evidence that:

• Responsible Managers meet one of the recognised knowledge and experience pathways
• The RM group collectively covers all financial services and products
• The licensee maintains competence on an ongoing basis
• There are documented processes supporting oversight and decision-making

This is tested through:

• Licence applications and variations
• the brokerages compliance measures and self-monitoring program
• monitoring incidents, breaches and complaints and
• understanding the root cause of these

The focus is not theoretical capability, but whether competence is visible and defensible.

When can issues become reportable?

Failure to meet the organisational competence obligation can escalate quickly.

As Muir notes: “Non-compliance with the organisational competence obligation is a reportable situation to ASIC.”

Depending on the circumstances, a licensee may need to report:

A breach of the obligation or a likely breach.

Regulatory consequences can include:

• Additional licence conditions
• Increased scrutiny
• Suspension or cancellation of the licence
• Banning or disqualifications of individuals who fail to adequately perform their role as a responsible manager especially where their failure has resulted in customer harm or detriment

Beyond regulation, the impact can extend to:

• Inconsistent customer outcomes
• Increased disputes
• Pressure on internal governance

A practical checklist: becoming a Responsible Manager

For brokers stepping into a Responsible Manager role, the question is not just can you do the job, but how will you demonstrate it?

A practical starting point includes:

1. Confirm your role meets the threshold

• Are you directly responsible for significant day-to-day decisions?
• Do you influence how financial services are delivered?
• Do you meet one of the 5 options in RG 105?

2. Map your coverage

• What services and products fall within your remit?
• How does your expertise contribute to the overall RM group in covering all the firm’s financial services?

3. Meet a recognised competency pathway

• Do you satisfy one of the RG105 knowledge and experience options?
• Are your qualifications and experience current and relevant?
• Are you recording your ongoing training in the firm’s training register?

4. Understand your oversight responsibilities

• What activities are you responsible for overseeing?
• What risks sit within those activities?
• How well do you understand the firm’s compliance measures and key controls?
• Are the firms’ compliance measures effective?

5. Build an evidence base

• How are decisions documented?
• What records demonstrate your oversight?
• Can you explain the basis for key decisions impacting the financial services?

6. Establish a regular review rhythm

• Are you reviewing competence quarterly or periodically?
• Are changes in the business reflected in your oversight?

7. Engage with governance structures

• Are you part of risk and compliance discussions?
• Is organisational competence actively monitored?

This is not about creating additional complexity. It is about making competence structured, visible and consistent.

Moving from understanding to application

For many Responsible Managers, the challenge is not understanding the obligations of a responsible manager but applying them in a way that works and will stand the test of external review.

Howell describes the shift: “There has been a clear move towards ongoing capability and professional standards, particularly in how RMs exercise judgement and oversight,” she says.

“This means the focus is less on static credentials and more on how competence is applied in the context of the organisation.”

It includes:

• Translating regulatory expectations into day-to-day activity 
• Identifying and escalating risks early
• Demonstrating how decisions are made Building capability in practice

To support professional AFSL holders, ANZIIF has developed a new course focused on Responsible Managers.

Howell , who contributed to the course as a subject matter expert, explains: “The course is designed to help Responsible Managers in a meaningful and practical way beyond simply understanding RG105, to being able to think about and apply it in a practical, and defensible way,” she says.

“It helps the RM build a structured approach to their role, accountabilities and the evidence basis that sits behind their decisions,” she says.

The course is complemented by a dedicated ANZIIF webpage, providing:

• Clear guidance on RG105 obligations
• Practical tools and frameworks
• Support for building consistent oversight

Together, these resources are designed to help Responsible Managers move from informal knowledge to structured, demonstrable competence.

The reality behind the role Returning to the original question: you are experienced, respected and nominated as a Responsible Manager.

The licence is in place. Will everything be fine? Now that you know compliance doesn’t just depend on your experience, but also what the licensee can clearly demonstrate, what will you check for?

• Your role in decision-making
• Your contribution to organisational competence
• The structure and evidence supporting your oversight

RG105 does not change what good brokers do. It clarifies what must be shown. And for Responsible Managers, that distinction matters.

Own your compliance. Enrol now