AFS Licensees

The Australian Financial Service License is necessary for you to carry out any financial service business in the country. The only instances where these licenses may not be required is when you only act as an authorised representative of someone who has the licence or you are exempted from such licensing requirement.

Do You Need AFC License?

This license is strictly for those that provide financial service, so you have to ask yourself whether or not your business offers these services. You can determine whether you provide financial services if you do any of the following:

  • Provide advice and recommendations to people about financial products
  • Deal in one financial product or another. For instance, trading shares for clients issuing interests to people in an investment scheme.
  • Operate a managed investment scheme registered under ASIC
  • Created a market for financial products. For instance, regularly quoting prices for financial products.
  • Serve a traditional trustee company. For instance, an estate management company.
  • Provide depository or custodial services. For instance, holding financial product or the beneficial interest therein on trust for the client.

Financial products generally include shares, superannuation, bonds, insurance, managed investment scheme’s interest, margin lending facilities, and derivatives.

How to Apply for AFC License

You can get an AFC License online though ASIC eLicensing system. This system tailors the application process to the business and allows you to save the draft and resume the process any time before submitting.

Upon submission, ASIC would consider certain things. These include:

  • Your competence to operate the financial service business in the application
  • Whether your financial resources are enough to run the business
  • Whether you can meet all the AFS licensee’s obligations which include training, dispute resolution, insurance, and compliance.

You are expected to lodge physical proofs of all information you provide online as soon as you submit the online application.

Obligations as an AFS licensee

Licensees generally have an obligation to provide honest, fair, and efficient financial services in line with the license as well as the Corporation Act 2001. The obligations of a licensee include;

General obligations which cover the manner in which the financial service is provided, the training of authorised representative and financial managers to ensure they are competent, the compliance of representatives and financial advisers with the relevant laws, risk management, management of conflicts of interests, the sufficiency of technological, human, and financial resources, etc.

Financial obligations which are different and depend on the financial products and services. There is also enhanced financial obligations which apply to licensees such as responsible entity, a company providing traditional trustee services, a business providing margin lending facilities, a dealer in foreign exchange, company providing depository or custodial services, operators of investor-directed portfolio services, and issuer of retail OTC derivative.

An AFS licensee is also required to put a proper risk management system in place as well as join the Australian Financial Complaints Authority, which helps in resolving complaints that could not be resolved internally.

There are also other rules guiding notification regarding changes made by an AFS licensee. You are free to cancel your license or vary if there is a need for such.