Introduction
The Financial Services Licence of Australia (AFSL) regime regulates the provision of financial services to wholesale and retail clients. An AFSL can be suspended or revoked if you don’t comply with your licence’s obligations. It’s a criminal offence to fail your afsl compliance licence conditions, with penalties for individuals and corporations.
Regulates the provision of financial services.
Exactly a century after the building of the local government in 1901, the Corporations Act 2001 was passed and the Australian Securities and Investments Commission (ASIC) was established in Sydney to regulate the provision of financial services to wholesale and retail clients.
An AFSL is a Financial Services Licence of Australia issued by ASIC and is required for most financial services. It is issued to individuals or companies that provide financial services and is granted nationally.
Failing to comply with your AFSL licence conditions with penalties is a criminal offence. The penalties are set out in the Corporations Act 2001 and apply to directors and individuals.
It can be suspended or revoked.
Having an AFSL is not a right but a privilege that can be revoked if you don’t comply with the licence’s obligations.
If a registered person contravenes any condition of their Australian financial services (AFS) licence, ASIC may suspend their AFS licence for up to six months or revoke it altogether.
In determining whether to suspend or revoke the licence, ASIC must consider all relevant matters, including whether there’s been any previous breach by the holder of the AFS licence.
Have an audit arrangement.
It would help if you had an audit arrangement in place. The auditor should understand the compliance issues relevant in the financial services sector and be able to provide a comprehensive report on the outcomes of their audits. The auditor should also be able to help you implement recommendations where appropriate.
A good auditor can help!
The importance of afsl compliance should never be underestimated. An unlicensed entity can face significant fines, so ensuring that your financial services business fully complies with all relevant regulations is vital.
Look for an auditor who can help you ensure your AFSL compliance with a team with extensive experience providing independent audits for firms in the financial services sector. They must understand the risks these companies face and how best to monitor them without intruding on their day-to-day operations.
The auditors should also keep up-to-date with new developments and any regulatory changes or legal precedents introduced through legislation like APRA’s Prudential Standard APS 222: Supervisory Framework: Reviewing Competence and Compliance (APS 222).
The auditor must be independent.
Your auditor must be independent of you and cannot be involved in any part of the activity being audited. Auditors must confirm that they have no conflict of interest with the organisation or any other organisation related, such as a subsidiary company or another branch office.
If there is a potential for an independence issue, an auditor may be required to disclose this information. The most common way for an auditor’s independence to be compromised is if they are associated with the organisation by owning shares in it or being employed directly or indirectly.
Conclusion
It’s important to know that if you don’t comply with the AFSL and keep it up to date, it can result in heavy fines and penalties. However, it’s not always easy for companies to stay on top of the changes in legislation due to their busy schedules and the fact that there are so many different requirements. Appoint an auditor to can help you with your AFSL compliances.
