Financial Counselling Agencies – Relief from AFSL and ACL requirements available in some circumstances

Financial counselling relief exists under certain circumstances.

As these services have been in high demand during the COVID-19 pandemic, the relief effectively ensures adequate access to financial counselling services for consumers. Such services are provided predominantly for the purpose of assisting individuals or small businesses (with less than 100 employees) who are in financial difficulty to resolve their problems.

Financial counselling is a free, confidential and independent service provided by financial counselling agencies which are generally community-based, non-government organisations funded by government or community welfare organisations.

AFS Licensing, Conduct and Disclosure Relief

Relief applies where:

  • the financial service is provided to a client as part of the financial counselling service;
  • no fees, charges or remuneration is payable by or on behalf of the client to, or for the benefit of, the financial counselling agency; and
  • each person providing the financial counselling is a member of a financial counselling association and has undertaken the appropriate training.

To be eligible for AFS Licensing relief, the financial counselling agency must not carry on or otherwise participate in a financial services business which involves the provision of a financial service, other than those services listed in the Instrument.

The applicable instrument (Instrument) provides that a financial counselling agency is exempt from complying with the licensing, conduct and disclosure obligations under the Corporations Act 2001 in respect of the provision of the following services:

  • financial product advice in relation to any of the following:
    • deposit products;
    • non-cash payment facilities;
    • insurance products;
    • Retirement Savings Account products;
    • superannuation products;
  • financial product advice to the effect that the client should or may dispose of any of the following:
    • securities;
    • an interest in a managed investment scheme;
    • debentures, stocks or bonds issued by a government.

Credit Licensing Relief

Financial counselling services are on the list of services that are exempt from holding an Australian Credit Licence. Specifically, where the financial counselling agency engages in a credit activity as part of the provision of the financial counselling service, it will not require licensing.

The conditions applicable to financial counselling services that rely on this exemption are set out in the Regulation 20(5) of the NCCP Regulations. The key conditions which must be met in order to rely on the relief are:

  • no fees, charges or remuneration is payable to, or for the benefit of, the financial counselling agency (or its representatives or associates) in relation to the credit activity or other aspect of the provision of the financial counselling service; and
  • the agency must ensure that each person who provides the credit activity is a member of a financial counselling association and undertaken appropriate training and has adequate skills and knowledge to provide the service.

To be eligible for credit licensing relief, the financial counselling agency and its representatives must not engage in any credit activities, other than those services listed in the Regulation 20(5) of the NCCP Regulations.

The  ASIC Credit (Financial Counselling Agencies) Instrument 2017/793 continues the relief provided for rural financial counselling services, which contains the same conditions as outlined above.

Background

In 2017, based on the feedback from community sector service providers supporting the proposals outlined in Consultation Paper 282: Remaking ASIC class orders on financial counselling licensing relief, ASIC reinstated the existing class orders – Class Order [CO 03/1063] Licensing relief for financial counselling agencies in ASIC Corporations (Financial Counselling Agencies) Instrument 2017/792 and Class Order [CO 11/926] Credit licensing exemptions for NGOs (non-government organisations) providing credit assistance to consumers and ASIC Credit (Financial Counselling Agencies) Instrument 2015/992, in ASIC Credit (Financial Counselling agencies) Instrument 2017/793.

The relief instruments facilitate the continued operation of financial and rural financial counselling services and ensure these services are independent and free from conflict.

If you would like to know more on other licensing exemptions, please contact us.

Further Reading

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