Who Uses an AFSL?

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Who Uses an AFSL?

February 19, 2022         Lauren Hanna

An Australian Financial Service Licence (AFSL) allows you to conduct a financial services business. Under the Corporations Act 2001 (Cth) you are required to use an AFSL if you are a business that provides financial services and financial products

If you are required to use an AFSL then you must have it from the first day you begin your financial services business. 

What is a Financial Product?

Section 763A of the Corporations Act 2001 (Cth) gives a definition of a financial product. It is when you:

  • Make a financial investment 
  • Manage a financial risk 
  • Make a non-cash payment 

Some examples of financial products are:

  • shares;
  • bonds; 
  • derivatives;
  • interests in managed investment schemes;
  • general insurance; 
  • life insurance; and
  • superannuation. 

What are Financial Services?

Section 766A of the Corporations Act 2001 (Cth) provides a list of what financial services are. It can be any of the following:

  • Giving financial product advice 
    • This is when you make a recommendation or give your opinion in order to influence a person who is making a decision regarding a specific financial product. 
  • Dealing in a financial product
    • This is when you acquire, issue, vary or dispose of a financial product. 
  • Making a market for a financial product
    • This is when you regularly state the prices for which you will acquire or dispose of financial products and other people can reasonably expect to regularly carry out those transactions at the stated prices. 
  • Operating a registered scheme
    • This is when you run a registered managed investment scheme which is when investors contribute money that is pooled together to reap financial benefits. 
  • Providing a custodial or depository service 
    • This is when you provide this service to a person who has a financial product in a trust for or on behalf of another person. 
  • Providing a crowd-funding service
    • This is when you publish a CSF offer document for securities of a company on your website and applications can be made to the company according to the offer. 
  • Providing a claims handling and settling service 
    • This is when you do any of the specific activities listed in the Corporations Act 2001 (Cth) relating to claims for insurance products. Some of these activities include providing recommendations about a claim, helping or representing someone in making a claim, and offering to settle a claim. 
  • Providing a superannuation trustee service 
    • This is when you run a registrable superannuation entity as a trustee.

Conclusion

It is very important that you know whether you require an AFSL or not as operating without one is a serious offence and has consequences. If you are unsure whether you require an AFSL it is best to seek legal advice. For more information contact 1300 337 997 or fill out the form on this page. 

About Lauren Hanna

Lauren is studying a Bachelor of Law and a Bachelor of Business at UTS. She is interested in commercial law, finance and banking law, and property law.