ASIC issues an AFSL, or Australian Financial Services Licence, a legal document (Australian Securities and Investments Commission). Complying with the requirements of an Australian Financial Services Licence (AFSL) is made easier with the help of an AFSL responsible manager who knows about compliance. A Financial Services Licence (AFSL) is required for all financial service businesses in Australia unless they have a particular justification, such as a restricted licence or an exemption from the law.
Any financial services company should be familiar with the fundamentals of AFSL.
An application for an AFSL must be submitted to the Australian Securities and Investments Commission, together with the necessary supporting documentation. Under the Chapter 7 of the Corporations Act 2001, the ASIC awards an AFSL after assessing the following.
Assessments to award an AFSL
- To be eligible for an AFSL, an applicant must be competent in carrying out the stated business. It is also essential actually that the applicant has the requisite financial means to carry on the company. As an AFS licensee, the applicant must also satisfy the additional duties, such as training and AFSL compliance, that are required. Maintaining these standards is also expected of them. In addition, they should have the proper risk management procedures in place and the ability to adhere to all applicable laws and regulations. The applicant should have access to properly educated financial service agents to ensure compliance with HR standards. An Australian Financial Services Licence is given if the applicant can achieve all of these requirements. To be clear, this licence does not guarantee the quality of the business’s products or services.
- As a result of having an Australian Financial Services Licence, a firm can give financial advice to its customers and assist them in financial planning. Financial products can be traded, and a market can be established using this method. Any AFSL responsible manager and its firm can provide custodial and trustee company services. In addition, they are permitted to run a licensing scheme. AFS licences are necessary by law for any business that provides financial advice or products, notably those in the accounting industry.
- As soon as an AFS-licensed firm recruits new financial advisors or loses a member of its staff, they must notify ASIC of this change. If the employee’s name, credentials, or the items they recommend are altered, they must also update their information.
- The Australian Securities and Investments Commission, , which actually is the ASIC, has the power to sanction and penalise any company that violates the terms of their licence or provides financial services and planning to customers without a licence. If an AFSL holder is shown to be incompetent regularly, the ASIC can revoke their licence. This is being done to ensure the safety of customers and the integrity of the financial services industry. The ASIC has the authority to revoke or suspend a company’s licence in the event of its liquidation.
- The ASIC, which is the Australian Securities and Investments Commission, actually does not endorse any business or product because it has an AFS licence (ASIC). The company should not suggest that ASIC endorses it or its services by using the ASIC logo or any other means of displaying its association with ASIC. Businesses who make this implication risk being fined. Businesses having an AFS licence should also ensure that they only offer the services listed in their licence since doing so might result in the licence being revoked.