Limited AFSLs – A Year On

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It has been a little over a year since the transitional arrangements for accountants providing advice to their clients on SMSFs ended. The limited Australian Financial Services (AFS) Licence regime is now in full swing with 787 limited AFS Licenses being granted by ASIC as at 30 June 2017.

During 2016-2017, ASIC visited 20 limited AFS Licence holders to discuss and promote compliance with their obligations. The results of these visits highlighted a number of areas of concern for limited AFS Licence holders and ASIC have indicated they will provide further educational resources around ongoing compliance and client engagement.

Many limited AFS Licence holders felt a great deal of uncertainty surrounding their compliance obligations, including the resources required to establish robust procedures and monitoring systems. Limited AFS licensees are subject to largely the same compliance obligations as other AFS Licence holders.  A thorough compliance program which is tailored to the business being operated is essential to ensure limited AFS Licensees have compliance procedures which are easily implemented and all employees are aware of their obligations under the law.

ASIC’s Financial Adviser Register has also been flagged as an area of concern.  Nearly half of the limited AFS licensees ASIC visited had not updated the register with the appropriate adviser information.  Limited AFS Licence holders should ensure they are familiar with the register and the information which is required to be uploaded.

ASIC Connect is the facility for uploading the required information and limited AFS Licence holders will need to complete a standard form to enter the relevant information. ASIC has indicated their intention to contact limited AFS licensees who have no advisers recorded on the register to remind them of their obligations.  Any limited AFS Licensees who haven’t complied with this requirement to date should also consider their breach reporting obligations and whether such a breach is significant and therefore reportable to ASIC.

ASIC has also noted that many limited AFS licensees were unsure of the documents which are to be provided to clients when giving advice about SMSFs. Limited AFS Licence holders are required to provide clients with a statement of advice, Financial Services Guide and various other legal documents to comply with the disclosure obligations in the Corporations Act.

For most limited AFS licensees, ongoing compliance with the various obligations under the legislation and ASIC’s Regulatory Guides is a new concept. Limited AFS Licence holders should ensure they are aware of the relevant obligations to ensure breaches of the law are limited and a robust compliance framework is in place.

Need more information or assistance?

Sophie Grace can assist limited AFS Licence holders in relation to their ongoing compliance obligations and disclosure requirements. Please contact us to discuss further.

About The Author

Alicia Pevely

Alicia works across both Sophie Grace Pty Ltd and Sophie Grace Legal Pty Ltd with a particular focus on compliance and legal services. She manages the licensing and compliance aspects of the business. She is responsible for AFSL and ACL applications, variations and assists the compliance team in the implementation of compliance reviews. She provides ongoing compliance support and assists with the preparation of legal advice, commercial agreements and disclosure documents. 

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