AFSL: Mandatory Requirement And Follow-Up In Financial Services

An AFSL (Australian Financial Services License) is a must to anyone who enrols themselves in financial services. It is an authorization that clarifies that one’s business complies with the rules set by the Australian jurisdiction, thus making it official and authentic.

It is a mandatory requirement that every business owner should possess. Questions like who needs an AFSL and the following AFSL compliance will be answered in this article.  

The ASIC (which is Australian Securities and Investments Commission) is responsible for producing an AFSL. As mentioned earlier, anyone enrolled in financial services requires an AFSL.

However, the definition of offering a financial service includes a variety of factors like managing, dealing with, or administrating property/products in Australia. The government of Australia proposes various categories of financial services listed on their official ASIC webpage.

Each kind of financial service will require a selective authorization/license. This AFSL will provide one or more authorizations based on the financial service a business operates. One needs to be very clear of the complete intensity of their business before applying for an AFSL because if that is unknown, they might miss applying for all the required authorizations.

There will be pressing penalties for a company that is found to be operating without an AFSL. Hence, it is necessary to check if one comes under the category of obtaining an AFSL, and if one does, they need to apply immediately. 

AFSL Compliance is a list of regulations that a company needs to withhold once they are licensed. If a firm does not follow up with the compliance policies and obligations set up by the government of Australia, ASIC has the authority to cancel its license. Some of the obligations are: 

Financial obligations: need to follow the financial services that the business has applied for authorization and obtained the AFSL.  

General obligations: ensuring that the products/services provided by the business are ethically efficiently handled. 

Risk obligations: should process a well-functioning risk management system that can identify and eject any possible threats to the business. 

Compliance obligations: should follow conditions stated during AFSL authorization.

HR obligations: ensuring a good team of representatives are present to effectuate the business. 

Conflict of interest obligations: to include a quick dispute resolution system. 

Who is an RM? 

An RM is an acronym short for “Responsible Manager.” Each business would have one person who took this role, responsible for ensuring that the license is still in holding. This position should be covered by a person who essentially understands several types of financial services and their granted authorizations.

Appointing an RM to handle the responsibility and monitor day-to-day decisions and functions of the business. A company should inform ASIC upon hiring a Responsible Manager. 

Fortunately enough, there are various groups of compliance service providers who cater to the individual needs of each business. These compliance professionals are updated with the generated laws of the ASIC, who can provide recommendations that can uplift the business wholly.  

Licensees can find it incredibly hard to concentrate on their business while satisfying the obligations produced by the law. Hiring compliance services can rid the added burden of following up on compliance requirements.

These services assist the company with a regular review on AFSL compliance, reaching out about the alterations or additions in the regulations, or a monitoring and reporting process to one’s board of directors – depending on the business owner’s preference and needs.

In addition, they understand that each company is tailored on an individual aspect and thus needs special attention and care. 

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