Supervision guidelines

Licensees who run a business have a legal obligation to ensure the proper supervision of their business.

It is vital that businesses are properly supervised, particularly as large sums of money and trust accounts may be involved.

Poor supervision can cause distress and financial loss for consumers.

It can also lead to claims of negligence, misleading conduct and fraudulent use of trust money — for which substantial maximum penalties apply.

Licensees who run a business must ensure proper supervision in accordance with the Secretary’s Guidelines for the Proper Supervision of the Business of a Licensee (the supervision guidelines).

The supervision guidelines set out the requirements for proper supervision of a business, including the steps they must take to prevent fraud, under quoting and misrepresentation.

These requirements include:

  • supervision of employees engaged in the business
  • establishment of procedures designed to ensure that the provisions of the Act and Regulation and other relevant laws are complied with, and
  • monitoring employees’ conduct to ensure that those procedures are being followed.

Corporations or individuals who run a business under a Class 2 licence will need to employ a Class 1 licence holder to be the licensee in charge (LIC) of their business.

Visit the licensee in charge page for more information about the requirements relating to LICs.

Failure to comply with the Supervision Guidelines carries a penalty of up to 200 penalty units ($22,000) for a corporation or 100 penalty units ($11,000) in any other case.

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