Australian Financial Services Licence
Following statutory changes in 2016, accountants are legally required to hold an AFSL to provide any financial advice, particularly for dealings of self-managed superannuation funds such as the common provision of an investment strategy template.
[11] FFSPs are now required from 1 April 2020 to apply for an AFSL to provide any financial product or advice given they have registered their business as "a foreign company in Australia under Division 2 of Part 5B.2 of the Corporations Act 2001".
[12] Exemptions are currently available for FFSPs who are given leniency in holding an AFSL to conduct financial services in Australia until granted a licence before 31 March 2022 provided they are regulated in a country that ASIC approves including the UK and USA.
[18] This structure will ensure organisational competence and risk management proving to ASIC that the applicant's business has staff with appropriate qualifications and experience to conduct financial services with integrity to consumers.
[15] ASIC will then assess the credentials of these responsible managers against 5 of the criteria found in regulatory Guide RG105 including having 3+ years’ experience in service under their licence.
[15] From 8 February 2020, following changes brought up in the Annual Australian Financial System Inquiry, ASIC requires all new applicants and existing AFSL holders and its related staff to cohere to the new "fit and proper person" test to minimise licensee misconduct and prove they can competently provide their services.
ASIC emphasizes compliance under the AFSL and Corporations Act 2001 to protect consumers against harmful practices and uphold the confidence and integrity of the financial service industry.
[28] In the scenario where a licensee enters liquidation and appoints external administration, ASIC is required to cancel or temporarily suspend the business's licence to provide financial services as part of its authoritative role in the Corporations Act 2001.
[31] Along with fines and imprisonment, businesses will be susceptible to enforcement action including banning orders if they fail to obtain a licence or comply with ASIC standards under the Corporations Act 2001.
[10] If an AFS business such as an accountant were to be unlicensed, it is still prudent that they should still provide assistance to the consumers by recommending that they obtain advice from a financial adviser who is licensed and qualified to do so.
[9] A valuation report should also be given, detailing that the financial advisor or company holds a valid AFSL to ensure consumer confidence is upheld.
[34] Consumers however should always proceed with caution and acknowledge that a licensee has been provided a licence, but this does not guarantee financial returns or that company's ability to ethical and quality services.
