RG 105 Explained: Organisational Competence and Responsible Manager Options

ASIC Regulatory Guide 105 (RG 105) sets out how ASIC assesses whether an AFSL applicant or licensee has adequate organisational competence. Understanding RG 105 is essential for anyone applying for a licence, adding authorisations, or ensuring ongoing compliance. This guide explains the key principles and your Responsible Manager options.

What Is RG 105?

ASIC Regulatory Guide 105 explains how ASIC assesses organisational competence when deciding whether to grant or vary an Australian Financial Services Licence. The guide sets out the standards ASIC applies to ensure that licensees have:

• Competent and adequate human resources, including Responsible Managers
• Adequate technological and financial resources
• Effective risk management systems
• Appropriate training and supervision arrangements

RG 105 is not just relevant during the licence application process. ASIC expects licensees to maintain organisational competence throughout the life of the licence. Failure to do so can lead to licence conditions, enforceable undertakings, or even licence cancellation.

The Core Elements of Organisational Competence

ASIC's assessment of organisational competence focuses on whether your business has the capacity to meet its legal obligations and deliver financial services competently and ethically. The core elements are:

1. Adequate Human Resources

Your AFSL must have enough people with the right skills, knowledge and authority to carry out the business. This includes:

• Responsible Managers who are accountable for key areas of the licence
• Authorised representatives and advisers with appropriate training and competence
• Support staff who understand their role in the compliance framework

ASIC will assess whether the proposed Responsible Managers have relevant experience, qualifications, and an understanding of their duties. For smaller or startup AFSLs, ASIC may scrutinise whether one or two Responsible Managers have sufficient capacity to oversee all areas of the business.

2. Adequate Technology and Financial Resources

You must have systems, technology, and financial capacity to run the business and meet compliance obligations. This includes:

• Record-keeping and data management systems
• Client communication and disclosure tools
• Financial resources to maintain operations and meet regulatory obligations

ASIC expects licensees to demonstrate that they can sustain these resources over time, not just at the point of application.

3. Effective Risk Management

Your business must have processes to identify, assess, monitor, and manage compliance and operational risks. ASIC looks for evidence that risk management is embedded in day-to-day operations, not just a document on file.

This includes having clear escalation paths, regular risk reviews, and systems to identify potential breaches before they become significant issues. Responsible Managers play a key role in overseeing these risk management frameworks.

4. Supervision, Training and Competence

Licensees must have arrangements to ensure that representatives and staff understand their obligations and are supervised effectively. ASIC expects:

• Documented supervision policies and evidence that supervision is occurring
• Ongoing training and competence assessments for representatives
• Clear accountability for supervision activities

For more on what Responsible Managers are expected to oversee, see our guide on what a Responsible Manager does.

Responsible Manager Requirements Under RG 105

One of the most important aspects of RG 105 is the requirement to have Responsible Managers who are accountable for key areas of your AFSL. Every AFSL must nominate at least one Responsible Manager, and depending on the size and complexity of your business, you may need more.

Who Can Be a Responsible Manager?

ASIC expects Responsible Managers to have:

• Direct responsibility for significant day-to-day decisions about the ongoing provision of financial services (or, for some small-scale, heavily automated businesses, provide sign-off on the financial services provided)
• Appropriate knowledge and skills demonstrated through one of five options set out in RG 105 (see below)
• Sufficient time and capacity to discharge their duties effectively
• Fit and proper status under ASIC's requirements

RG 105 does not prescribe specific formal qualifications for Responsible Managers. Instead, ASIC provides five options for demonstrating appropriate knowledge and skills, ranging from widely adopted industry standards to individual assessments or written submissions. Many licensees use structured training to evidence that Responsible Managers understand their obligations and ASIC's expectations.

Internal vs External Responsible Managers

You have options when appointing Responsible Managers:

Internal Responsible Managers

Most AFSLs nominate internal directors, senior managers, or compliance officers as Responsible Managers. This approach gives you direct control and ensures that the person responsible has day-to-day involvement in the business.

Advantages: Direct involvement, better alignment with business operations, lower ongoing cost.

Considerations: The nominated person must have the time, competence, and authority to fulfil the role. ASIC may scrutinise whether one person holding multiple roles has sufficient capacity.

External Responsible Managers

Some licensees engage external consultants or compliance firms to act as Responsible Managers. RG 105 acknowledges that responsible managers do not need to be 'officers' of the body corporate, and external arrangements can work where they genuinely satisfy ASIC's requirements.

Advantages: Access to specialist knowledge and experience, particularly useful during the early stages of holding a licence.

Considerations: ASIC expects Responsible Managers to have direct responsibility for significant day-to-day decisions about financial services and enough time available to fulfil their responsibilities. Before nominating an external person, you need to consider their overall business commitments, including whether they are already acting as a Responsible Manager for other licensees. The external Responsible Manager must be genuinely integrated into your financial services business—not just a name on the licence.

Hybrid Models

Some licensees use a combination of internal and external Responsible Managers. For example, an internal director may oversee operations and supervision, while an external compliance consultant handles breach reporting and regulatory liaison.

This approach can work well but requires clear accountability and coordination between Responsible Managers.

How Many Responsible Managers Do You Need?

RG 105 states that the number of Responsible Managers you need depends on the nature, scale and complexity of your business. ASIC expects licensees will nominate at least two Responsible Managers, although in some cases ASIC may accept one Responsible Manager—for example, when you operate a one-person advisory business or when your main business is not the provision of financial services.

Factors that can affect who you nominate and how many you need include:

• The financial services and products you provide
• The number of representatives who provide financial services on your behalf
• The size, structure and diversity of your operations
• The number of investors you have
• Whether your main business is the provision of financial services
• Any conflicts of interest that may arise as a result of other positions held by the Responsible Manager(s)

If you operate a large business, you will usually only need to nominate a subset of the people who can be Responsible Managers. If you are a smaller business, you may need to nominate everyone who can be a Responsible Manager.

Ongoing Obligations: Maintaining Organisational Competence

RG 105 is not just about getting your licence—it's about maintaining competence throughout the life of the licence. ASIC expects you to:

• Monitor changes in your business: If your business grows, adds new products, or changes structure, reassess whether your Responsible Managers and resources remain adequate
• Review and update systems regularly: Ensure that governance frameworks, supervision arrangements, and risk management processes remain effective
• Provide ongoing training: Keep Responsible Managers and representatives up to date with regulatory changes and compliance obligations
• Prepare for ASIC reviews: ASIC may conduct surveillance or reviews to assess whether you continue to meet organisational competence standards

If ASIC finds that organisational competence has declined, it can impose additional licence conditions, require you to appoint additional Responsible Managers, or in serious cases, suspend or cancel your licence.

Common Pitfalls and How to Avoid Them

1. Nominating Responsible Managers Without Sufficient Capacity

One of the most common issues ASIC identifies is Responsible Managers who are stretched too thin—holding multiple roles, running other businesses, or lacking sufficient time to discharge their duties. Be realistic about capacity when nominating Responsible Managers.

2. Relying on Documentation Alone

Having comprehensive policies and procedures is important, but ASIC expects to see evidence that systems are actually working in practice. Maintain records of supervision activities, risk reviews, training, and governance meetings.

3. Not Staying Current with Regulatory Changes

ASIC's expectations evolve over time. Responsible Managers need to stay informed about regulatory updates, new guidance, and emerging compliance issues. Regular training and professional development help demonstrate ongoing competence.

How Training Supports RG 105 Compliance

Structured training is one way to demonstrate that Responsible Managers understand their duties and ASIC's expectations. The Clearwise AFSL Bootcamp is designed for Responsible Managers, compliance officers, and AFSL licensees who want practical, ASIC-aligned training that covers:

• AFSL obligations and Responsible Manager duties
• Building and maintaining governance frameworks
• Supervision, monitoring, and delegation
• Breach reporting under RG 78
• Disclosure, complaints, and preparing for ASIC reviews

The course is self-paced, delivered online, and includes CPD certificates to document completion—useful for evidencing ongoing competence.

Further Reading

• What Does a Responsible Manager Do?
• Breach Reporting Under RG 78: A Practical Guide for AFSL Holders
• ASIC RG 105: Licensing – Organisational Competence
• ASIC: Applying for and Managing an AFS Licence