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The feedback is not overly promising. Two key themes emerged – even though group 1 is reporting and group 2 is scheduled to begin from 1 July this year, the level of preparedness seems low. Secondly and closely related is the reliance on incumbent/generalist audit partners to provide guidance and in some cases solutions to reporting obligations. While your auditors can be a good start – they can tell you the destination – but not how to get there.
In our experience both of these conditions lead to outcomes ranging from temporary derailment through to some pretty suboptimal results and regulatory exposure. Our concerns were reinforced by local sell side firms, with one suggesting the reliance on audit partners was around the 90% level among funds management participants. Its a loose metric but still concerning even if only half true.
While we continue to engage with the market through local partners 1886 Consulting we’ll continue to stress that an ESG or responsible lending stance is a good starting point but it won’t support the reporting obligations without some material work.
This doesn’t have to be prohibitively expensive as were some outcomes in the New Zealand market where reliance on audit partners resulted in costs a multiple of what they should have been in our view – interestingly a number still used by industry bodies to illustrate the costs of what some regard as over regulation.
In this case we'd suggest there is no substitute for practical experience and the pragmatism to right size the response. And it also helps if your regulatory response partners have done it before.
If you are captured under the Australian CRFD and are wondering how to meet your obligations, we’d be delighted to have a chat. And if it’s not us then please talk to someone who knows – these are material obligations that don't lend themselves to fire brigade actions after the event.
The feedback is not overly promising. Two key themes emerged – even though group 1 is reporting and group 2 is scheduled to begin from 1 July this year, the level of preparedness seems low. Secondly and closely related is the reliance on incumbent/generalist audit partners to provide guidance and in some cases solutions to reporting obligations. While your auditors can be a good start – they can tell you the destination – but not how to get there.
In our experience both of these conditions lead to outcomes ranging from temporary derailment through to some pretty suboptimal results and regulatory exposure. Our concerns were reinforced by local sell side firms, with one suggesting the reliance on audit partners was around the 90% level among funds management participants. Its a loose metric but still concerning even if only half true.
While we continue to engage with the market through local partners 1886 Consulting we’ll continue to stress that an ESG or responsible lending stance is a good starting point but it won’t support the reporting obligations without some material work.
This doesn’t have to be prohibitively expensive as were some outcomes in the New Zealand market where reliance on audit partners resulted in costs a multiple of what they should have been in our view – interestingly a number still used by industry bodies to illustrate the costs of what some regard as over regulation.
In this case we'd suggest there is no substitute for practical experience and the pragmatism to right size the response. And it also helps if your regulatory response partners have done it before.
If you are captured under the Australian CRFD and are wondering how to meet your obligations, we’d be delighted to have a chat. And if it’s not us then please talk to someone who knows – these are material obligations that don't lend themselves to fire brigade actions after the event.
