Chapter 7 of the Corporations Act 2001 (Cth) requires an entity to hold an AFSL if the entity carries on a business involving the provision of a financial service and/or a financial product.
Financial services are defined in the Act as:
- Providing financial product advice (personal and/or general);
- Dealing in financial products (includes issuing and/or arranging);
- Making a market in financial products;
- Operate a registered scheme;
- Providing a custodial or depository service; or
- Provide a claims handling and settling service.
Classes of financial products are also defined and include:
Financial products are defined as an instrument used to:
- Manage a risk
- Make an investment
- Make a non-cash payment
An entity may apply to be authorised to provide one or more types of financial services, and/or provide one or more financial product class to retail and/or wholesale clients. Financial product/service delineations and boundaries are complex and it is easy to overlook or inaccurately define an aspect of your activities.
If it’s unclear whether you need an AFSL, or which authorisations are appropriate for your business, we suggest you obtain formal legal advice from our legal division (which gives you protection in the event of ASIC scrutiny). There are serious penalties and repercussions for operating without an AFSL or without the correct authorisations.
If you would like to obtain further information or assistance regarding an AFSL for your firm, please contact Sophie Grace directly.