Australian Financial Services Licence

Australian Financial Services Licence (AFSL) is a licence normally required to be held by an Australian business involved in the provision of financial services. An AFSL can be issued to an individual, to a director or employee of an AFSL holder, or an authorised representative of a person who holds an AFSL.[1]

AFSLs are issued by the Australian Securities and Investments Commission (ASIC) under Chapter 7 (section 911A) of the Corporations Act 2001,[2][3] as part of its role as regulator of the financial services industry.

Some wholesale charitable investment fundraisers are exempt from the AFSL licensing requirements. By an instrument in 2002, ASIC granted CIFs certain AFSL exemptions, including exemption from the requirement to hold an AFSL, if the only financial products issued were debentures or managed investment schemes.[4]

Requirement for an AFSL

An AFSL is required for a business that:

  • provides financial product advice to clients,
  • deals in a financial product,
  • makes a market for a financial product,
  • operates a registered scheme,
  • provides a custodial or depository service, or
  • provides traditional trustee company services.

The term "financial product" is defined very broadly and covers facilities through which a person makes a financial investment, manages financial risk or makes non-cash payments. There are also a number of financial products that are currently not regulated as "financial products" such as many credit facilities.

The licensing provisions have extraterritorial effect and capture regulated financial service activities conducted outside Australia, which are intended to or likely to have the effect of including persons in Australia to use those services.

The Corporations Act distinguishes between the provision of products and services to retail clients and wholesale clients, with extensive disclosure requirements when financial services are provided to retail clients.

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References
  1. "AFS Licensing". Australian Securities & Investment Commission. Retrieved 2 October 2018.
  2. CORPORATIONS ACT 2001 - SECT 911A: Need for an Australian financial services licence
  3. "Companies you should not deal with". www.moneysmart.gov.au. 31 August 2016. Retrieved 3 September 2016.
  4. Australian Securities and Investments Commission (ASIC) class order 02/184 – charitable investment schemes fundraising (2002) (repealed)


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