Are you Providing Sufficient Notice to Clients Regarding Authorised Representatives or Credit Representatives Leaving?

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AFSL holders have the responsibility to provide sufficient notice to clients that an Authorised Representative has ceased being authorised under its Australian Financial Services Licence (AFSL). The case of Casaclang v WealthSure Pty Ltd[1] suggests the most effective way to do this is by way of publication on the licensee’s website.

In the case against WealthSure Pty Ltd (Wealthsure), the Court found that WealthSure had failed to provide effective notice regarding the cessation of an Authorised Representative as there was no publication on the licensee’s website.

Although the WealthSure case does not specifically deal with Credit Representatives ceasing to be authorised under an Australian Credit Licence (ACL) holder, Sophie Grace considers the same procedures should be followed.

In light of this case, AFSL and ACL holders are encouraged to review their processes and procedures for ceasing Authorised or Credit Representatives to ensure adequate disclosure is made to all clients. It is clear from the WealthSure case that merely ceasing an Authorised or Credit Representative by notifying ASIC is insufficient and that public notification must be made.

AFSL holders should also consider:

  • Requiring the Authorised or Credit Representative to issue a statement on its own website that it is no longer authorised by your AFSL or ACL; and
  • Including this requirement in an agreement between the Authorised or Credit Representative and the AFSL or ACL holder to ensure it is enforced upon termination.

Sophie Grace can assist with the review of your Authorised Representatives or Credit Representatives processes and procedures as well as assist in preparing any legal Agreements as required.

For any assistance, please contact Sophie Grace.

[1] [2015] FCA 761

About The Author

Sarah Murray

Sarah works with the Compliance Team with a particular focus on compliance and legal services. Sarah works with the Legal Team providing ongoing assistance in drafting and reviewing documentation as well as legal research. Sarah assists clients with AFSL and ACL applications, variations and also assists in the implementation of compliance reviews. She provides ongoing compliance support in the form of compliance program implementation and reviews.

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