There are key requirements required for applying for and obtaining an Australian Financial Services Licence (AFSL). If you decide to obtain an AFSL, it is critical that you understand the key requirements. These requirements are detailed in section 912A of the Corporations Act and are also discussed in the ASIC Regulatory Guide 104.
What is an AFSL?
An AFSL is required to conduct a financial services business. It is a legal licence that enables the operation and activities of Australian financial service businesses. A business may be exempt from the requirement to hold an AFSL depending on certain circumstances.
How is an AFSL obtained?
AFSLs are provided by the Australian Securities and Investment Commission (ASIC). A business must lodge an application for an AFSL to ASIC who will assess the application. It is important to ensure your application contains the correct information and complies with all necessary requirements.
What are the key requirements?
AFS licensees must comply with the general obligations under section 912A of the Corporations Act.
AFSL applicants must be able to demonstrate in their licence application that they can comply with these legislative requirements. As an AFS licensee or licence applicant, you are responsible for deciding how to comply with the general obligations.
If you are an AFS licensee, you have general obligations requiring you to:
- Do all things necessary to ensure that the financial services covered by your licence are provided efficiently, honestly and fairly.
- Have adequate arrangements in place for managing conflicts of interest.
- Comply with the conditions on your licence.
- Comply with the financial services laws.
- Take reasonable steps to ensure that your representatives comply with the financial services laws.
- If you are also the operator of an Australian passport fund, comply with the law of each host economy for the fund.
- Comply with the ASIC protocol in relation to prospective representatives who will act as financial advisers or mortgage brokers.
- Have adequate financial, technological and human resources to provide the financial services covered by your licence and to carry out supervisory arrangements.
- Maintain the competence to provide the financial services covered by your licence.
- Ensure that your representatives are adequately trained and competent to provide those financial services.
- Have a dispute resolution system if you provide financial services to retail clients.
- Establish and maintain adequate risk management systems.
Key Takeaways
An AFSL is required to conduct a financial services business. There are a range of key requirements required for applying for and obtaining an AFSL. If you decide to obtain an AFSL, it is critical that you understand the key requirements. Therefore, it is best to speak with a lawyer if you need to obtain an AFSL.
Should you require further legal advice please contact OpenLegal by filling in the form on this page or calling 1300 337 997.
Alana is a legal intern at OpenLegal whilst studying a Bachelor of Laws at Macquarie University. Alana’s key areas of interest include commercial law and property law.
Phil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.
