Misleading information provided by Australian Financial Services Licensees (AFS Licensees) in their marketing and promotional material has been a long running concern for the Australian Securities and Investments Commission (ASIC), particularly in relation to the financial services being provided to retail clients.
Instances where AFS Licensees provide misleading information on their website in relation to the financial services they are authorised to provide can result in an ASIC investigation and in some cases, the cancellation or suspension of the AFSL.
For example, many Chinese entities have purchased AFSLs which they proceed to use as a regulatory reference on their website which promotes MT4 platforms and other margin FX and CFD brokerage services. ASIC’s view is that if you don’t have an AFSL to run an FX brokerage, you cannot run a website which says you do, regardless of the location of the clients you are targeting.
Our experience is that there may be agents in China who are selling AFSLs representing that they can offer MT4 platforms when in fact they cannot, leading to confusion and disappointment when ASIC gets in touch with them to make significant edits to the website.
This can also lead to problems down the road for all involved when disgruntled customers seek compensation or account withdrawals in Australia when their underlying provider is actually an operator in China.
ASIC published a media release on 10 March 2016 entitled “16-067MR FXAsia updates website disclosure to clarify the services it may offer” which is demonstrative of ASIC’s stance when it comes to misleading or unclear information in relation to the financial services being provided by the AFS Licensee.
Sophie is the director of both Sophie Grace Legal Pty Ltd and Sophie Grace Pty Ltd. Sophie has worked with some of Australia’s largest financial services organisations in compliance, legal and operational roles. She has also worked with small businesses to provide tailored solutions with a strong understanding of business practicalities as well as obligations to regulators.