What is an AFSL?

An Australian Financial Services Licence (AFSL) is a licence issued by the Australian Securities and Investments Commission (ASIC) that allows a company or organisation to provide financial services to clients. 

This can include a wide range of services such as:

  • Providing financial advice to clients, including advice on investment products, superannuation, and insurance.
  • Dealing in a financial product, such as buying and selling shares or derivatives on behalf of clients.
  • Making a market for a financial product, such as trading shares or derivatives on behalf of clients.
  • Operating registered schemes, such as managed funds or superannuation funds.
  • Providing traditional trustee company services, such as acting as a trustee for trusts, estates and other securities.

To obtain an AFSL, a company must meet certain requirements and comply with certain regulations, such as having sufficient capital and insurance, and maintaining proper records and reporting. As an AFSL holder, you have a general obligation to provide efficient, honest and fair financial services. You must comply with the conditions of your AFS licence and the Corporations Act 2001.

What is an ACL?

An Australian Credit Licence (ACL) is a licence issued by ASIC that allows a company or organization to engage in credit activities, such as:

  • Providing credit assistance, such as helping clients apply for a loan or mortgage.
  • Brokering credit, such as arranging loans or mortgages on behalf of clients.
  • Providing credit advice, such as giving advice on the best type of loan or mortgage for a client’s needs.

Credit activities include providing credit assistance, brokering credit, and providing credit advice. For example, a mortgage broker would need an ACL, but the bank providing the mortgage would need an AFSL.

To obtain an ACL, a company must also meet certain requirements such as training and compliance and be able to demonstrate its ability to conduct the credit activity and how it will engage in good credit practice.

You have general conduct obligations that include:

  • acting efficiently honestly and fairly
  • being competent to engage in credit activities, and ensuring your representatives are competent and
  • being able to ensure your clients are not disadvantaged by an conflicts of interest that you or your representatives may have in relation to your credit activities
  • ensuring you and your representatives comply with the credit legislation
  • having appropriate dispute resolution systems (including both internal systems and being a member of an external dispute resolution scheme) 
  • having appropriate compensation arrangements in place (which for some will include holding professional indemnity insurance) 
  • having adequate resources (including financial, technological and human resources) and risk management systems
  • having appropriate arrangements and systems to ensure compliance.

The applicable legislation is the National Consumer Credit Protection Act 2009 and the National Credit Code. The credit legislation also contains more specific obligations and requirements, including:

  • the responsible lending requirements (ascertaining and verify a consumer’s financial situation and assessing whether the credit contract is not unsuitable) 
  • requirements in the National Credit Code dealing with precontractual disclosure and conduct in relation to the terms of credit contracts and consumer leases
  • maintaining trust accounts (if you hold money on behalf of another person while providing a credit service).

The above list, however, is not an exhaustive list of your obligations. 

In summary, AFSL allows the holder to provide financial services, including credit services, while ACL allows the holder to engage in credit activities only.

An Authorised Representative (AR) of an AFSL is a person or entity that is authorised by an AFSL holder to provide financial services on their behalf. The AR must be appointed by the AFSL holder in writing and must meet certain requirements, such as having the necessary qualifications and experience to provide the financial services offered. The AR must also comply with the conditions of the AFSL and with all applicable laws and regulations. They essentially act as an agent of the licensee, providing financial services under the licensee’s AFSL and conducting responsibilities on behalf of that licensee.

If you’re receiving either credit or financial advice, you need to ensure that the company or person is authorised and properly licensed to provide the advice. 

We’ve represented clients who have encountered problems when they’ve been dealing with an unauthorised or unqualified professional and have lost a significant amount of money as a result.

Check the Registers

You can check if a company or organisation holds an Australian Financial Services Licence (AFSL) by searching the Financial Advisers Register on the Australian Securities and Investments Commission (ASIC) website.

To check if a company or organization holds an AFSL, follow these steps:

  1. Go to the ASIC website: https://www.asic.gov.au/
  2. Click on “View All Registers” on the top right menu
  3. Under “Financial Advisers”, click on “Financial Advisers Register”
  4. Search for the company or organisation using the name or Australian Company Number (ACN)
  5. The search results will provide information about the company or organisation, including whether it holds an AFSL and the scope of the licence.

It’s important to note that the Financial Advisers Register only includes information about companies and organisations that hold an AFSL for providing financial advice and related services, not for credit services.

If you want to check if someone holds an Australian Credit Licence (ACL), you can look it up on the National Credit Licence Register, which is also available on the ASIC website. You can search by the name of the company or individual, or the credit licence number. The register will show you the type of credit activities the licensee is authorised to conduct, the expiry date of the licence, and other related information.

Contact Us Now

If you’ve received poor professional advice from an adviser, or you’re looking to obtain an AFSL or ACL in order to provide advice to clients and consumers, please contact us at info@lawquarter.com.au or call us on (02) 8318 5962

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