If you are conducting financial services in Australia you are required to have a current Australian Financial Services Licence (AFSL or AFS Licence). The Australian Securities & Investments Commission (ASIC) is the body which governs Australia’s financial services industry and issues AFSLs.
Services which require an AFSL include:
- Providing financial product advice (whether this advice is personal or general advice);
- Dealing in financial products, which includes issuing and arranging to issue a financial product;
- Making a market in financial products;
- Operating a registered scheme; and
- Providing custodial or depository services.
The jurisdiction of the licensing regime in Australia is broad. If you provide services from Australia (even if your clients are all overseas – with few exemptions) or to clients located in Australia (regardless of where you are based – with few exemptions), you will need an AFS Licence. This concept and the available exemptions is articulated very concisely in ASIC’s Regulatory Guide 121 titled ‘Doing financial services business in Australia’.
ASIC has released information recently in relation to enforcement action they have taken against companies who provide financial services without an AFSL. Given the strict penalties contained in the Corporations Act for providing financial services without a licence, it is important to consider your business operations and whether they constitute the provision of financial services.
An AFSL will allow you to provide the financial services listed above in a range of financial products whether it be to retail and/or wholesale clients. Sophie Grace can help you determine whether you need an AFSL and the authorisations you require to operate your intended business. This is the first step to applying for your AFSL.
There are a number of other factors to consider, including:
- Do you have a suitable Responsible Manager (RM)? Your application will rely on the experience and qualifications of your RM. They will need to have appropriate skills and experience in each of the financial products and authorisations you are seeking on your AFSL.
- Do you have adequate capital? ASIC will require proof of you current financial situation to ensure you have adequate resources to meet your obligations as an AFSL holder.
- Can you explain your business operations in a clear way to ASIC? The documents submitted to ASIC must describe your business to ASIC including the financial services you intend to provide, outline the various people who will provide the services and show that you understand the obligations of being a licence holder.
- Further factors to consider are included in our blog article 5 Tips To Obtain Your Australian Financial Services Licence.
If you have questions about whether you need an AFSL and how to get one, contact Sophie Grace today.
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.