Entire Act

4. CORE PRINCIPLES

4.1. Application

4.1.1. Application of the Principles for Authorised Persons

The Principles for Authorised Persons set out in Section 4.2 apply to Authorised Persons in respect of Regulated Activities and Market Activities.

4.1.2. Application of the Principles for Approved Individuals and Designated Individuals

The Principles for Approved Individuals and Designated Individuals set out in Section 4.3 apply to Approved Individuals and Designated Individuals in respect of Controlled Functions and Designated Functions.

4.2. Principles for Authorised Persons

4.2.1. Principle 1 ‐ Integrity

An Authorised Person must observe high standards of integrity and fair dealing.

4.2.2. Principle 2 ‐ Due skill, care and diligence

In conducting its business activities, an Authorised Person must act with due skill, care and diligence.

4.2.3. Principle 3 ‐ Management

An Authorised Person must ensure that its affairs are managed effectively and responsibly by its senior management.

4.2.4. Principle 4 ‐ Systems and controls

An Authorised Person must have adequate systems and controls to ensure, as far as is reasonably practical, that it complies with all relevant Regulations and Rules.

4.2.5. Principle 5 ‐ Resources

An Authorised Person must maintain and be able to demonstrate the existence of adequate resources to conduct and manage its affairs. These include adequate financial and system resources as well as adequate and competent human resources.

4.2.6. Principle 6 ‐ Market conduct

An Authorised Person must observe proper standards of conduct in financial markets.

4.2.7. Principle 7 ‐ Information and interests

An Authorised Person must pay due regard to the interests of its Clients and communicate information to them in a way which is clear, fair and not misleading.

4.2.8. Principle 8 ‐ Conflicts of interest

An Authorised Person must take all reasonable steps to ensure that conflicts of interest between itself and its Clients, between its Employees and Clients and between one Client and another are identified and then prevented or managed, or disclosed, in such a way that the interests of a Client are not adversely affected.

4.2.9. Principle 9 ‐ Suitability

An Authorised Person must take reasonable care to ensure the suitability of its Advice and discretionary decisions for Clients who are entitled to rely upon its judgment.

4.2.10. Principle 10 ‐ Client assets and money

Where an Authorised Person has control of or is otherwise responsible for assets or money belonging to a Client which it is required to safeguard, it must arrange proper protection for them in accordance with the responsibility it has accepted.

4.2.11. Principle 11 ‐ Relations with the AFSA

An Authorised Person must deal with the AFSA in an open and co‐operative manner and keep the AFSA promptly informed of significant events or anything else relating to the Authorised Person of which the AFSA would reasonably expect to be notified.

4.2.12. Principle 12 ‐ Compliance with high standards of corporate governance

An Authorised Person must have a corporate governance framework as appropriate to the nature, scale and complexity of its business and structure, which is adequate to promote the sound and prudent management and oversight of the Authorised Person's business and to protect the interests of its Clients and stakeholders.

4.2.13. Principle 13 ‐ Remuneration practices

An Authorised Person must have a Remuneration structure and strategies which are well aligned with the long-term interests of the Authorised Person, and are appropriate to the nature, scale and complexity of its business.

4.3. Principles for Approved Individuals and Designated Individuals

4.3.1. Principle 1 ‐ Integrity

Each Approved Individual and Designated Individual must observe high standards of integrity and fair dealing in carrying out every Controlled Function or Designated Function.

4.3.2. Principle 2 ‐ Due skill, care and diligence

Each Approved Individual and Designated Individual must act with due skill, care and diligence in carrying out every Controlled Function or Designated Function.

4.3.3. Principle 3 ‐ Market conduct

Each Approved Individual and Designated Individual must observe proper standards of conduct in financial markets in carrying out every Controlled Function or Designated Function.

4.3.4. Principle 4 ‐ Relations with the AFSA

Each Approved Individual and Designated Individual must deal with the AFSA in an open and co‐operative manner and must disclose appropriately any information of which the AFSA would reasonably be expected to be notified.

4.3.5. Principle 5 ‐ Management, systems and control

Each Approved Individual and Designated Individual who has significant responsibility must take reasonable care to ensure that the business of the Authorised Person for which he is responsible is organised so that it can be managed and controlled effectively.

4.3.6. Principle 6 ‐ Compliance

Each Approved Individual and Designated Individual who has significant responsibility must take reasonable care to ensure that the business of the Authorised Person for which he is responsible complies with any Regulations or Rules.