Meet the AFSL Compliance and Ensure the License.
Introduction
In finance, there are many things one needs to be aware of. One such thing is the licensing requirements for various financial services providers. To provide services as a financial adviser or other professionals, it is mandatory to have a Financial Services Licence of Australia (AFSL) license issued by the Australian Securities and Investments Commission (ASIC).
Getting an AFSL ensures that their business meets all legal requirements and regulations. AFSL compliance is required when one wants to be a financial service provider (FSP) in Australia or offer advice to clients on their investments.
Are you thinking of starting a new business?
If you are considering starting a new business, consider becoming an AFSL. Becoming an AFSL is not easy and will take time and effort.
When someone refers to “financial services,” they mean advice that helps clients make decisions about their money and investments. ASIC must license a financial service provider (FSP) before providing these services to retail clients.
What are the types of licenses available?
There are three main financial services licenses:
- AFSL (Financial Services Licence of Australia)
- FSP (Financial Service Provider)
- IFS License (Investment Fund Manager).
Who is eligible to apply for the license?
To apply for a license, you must be:
- An Australian citizen; or
- A permanent resident of Australia and have been so for at least two years; or
- A temporary resident of Australia who has been living in Australia for at least five years.
The applicant must be at least 18 years of age and have a good reputation and understanding of the financial services industry, its regulatory requirements, and the business and its operations.
The applicant must also be considered a fit and proper person by ASIC. This means that he must not have any criminal convictions (including being convicted of an offence under the Corporations Act 2001) related to dishonesty, fraud or theft.
The applicant should also not have breached any other financial services laws in Australia within ten years of the application date.
AFSL Act and the critical compliance requirements.
The AFSL Act, passed by the Australian Parliament in 2012, governs all financial services licensees from retail to wholesale. The AFSL Act is a federal law regulating Australia’s financial services industry and has been enforced by The Australian Securities and Investments Commission.
ASIC implements its functions under the Financial Services Regulation Act of 1998, which is part of Schedule 1 of the Corporations Act 2001 (Cth).
When is an AFSL Licence required to be obtained?
The Australian Securities and Investments Commission (ASIC) issues a license Financial Services Licence of Australia (AFSL) under the AFSL Act. The Financial Services Licence of Australia (AFSL) is required to be obtained if:
- The applicant provides financial services as a representative of a licensee; or
- Operates a business that sells or promotes products or offers advice on products but does not hold itself out as being able to give personal advice on those products.
In Australia, the term “financial service provider” includes:
- credit representatives;
- financial advisers; and
- securities dealers.
Conclusion
Knowing the most important aspects of Financial Services Licence of Australia compliance and understanding the essential requirements is critical. Suppose you are planning on starting a new financial services business; in that case, you should contact an AFSL compliance service provider at least six months before your launch date so that they can assist you with any questions regarding AFSL compliance to ensure smooth sailing through this entire process.
