AFS Licence for financial service providers

AFS Licence for financial service providers

By Christine Hopper

Why an AFS Licence for financial service providers

Anyone who provides financial advice to retail customers must hold an Australian Financial Services (AFS) Licence or be an Authorized Representative of a business that holds an AFS Licence.

ASIC issues AFS Licences to financial services businesses that show that they have the necessary skills and resources to operate in their chosen areas of financial advice, financial product provider, markets or trustee service.  Each AFS Licence defines the types of product that the AFS Licensee may deal in and/or provide advice about.  Please be aware that the licensing process is includes a one-off assessment of the potential licensee by ASIC, but not of its owners or employees.

AFS Licence holders must operate their businesses honestly and report any ‘mistakes’
to ASIC.

AFS Licence for financial service providers

AFS Licence for financial service providers

Be aware that holding an AFS Licence does not provide a guarantee of the probity or quality of the AFS Licensee’s services.  An AFS Licence does not mean that ASIC endorses the company, financial product or advice or that investors cannot incur a loss from dealing with it. 

Authorized Representatives of AFS Licensees

Your local financial planner, general insurance broker and financial adviser must hold an AFS Licence or be an authorized representative of a financial services business that holds an AFS Licence.  That AFS Licensee could be part of one of the major Australian banking groups, a large stock-broking and funds management firm, an insurance company or a small financial advisory business.  Many other types of financial service businesses also have AFS Licences.

Financial Care Services is an independent financial advisory business and
holds AFS Licence number 299570.

The AFS Licence holder is responsible for ensuring that all of its authorized representatives are adequately trained and that they comply with the law
about providing financial advice.

Checking ASIC Registers AFS Licence holders

You can check the ASIC lists of AFS Licensees and see the names of the auditors.
The ASIC listings also show which External Dispute Resolution program covers that
AFS Licensee.

The ASIC website contains a register of the Authorized Representatives of the AFS Licence holders.  So you could check the register to see that your financial adviser is licensed and which AFS Licensee is responsible for your adviser.

You can search the Professional Registers at ASIC for the detail of AFS Licensees.

https://connectonline.asic.gov.au/RegistrySearch/faces/landing/ProfessionalRegisters.jspx?_adf.ctrl-state=1afxcqrxe1_4

The ASIC website also includes a list of former financial advisers who have been banned from being authorized representatives or having any part in managing any financial advice or financial market business.

AFS Licence holders’ Approved Product List

Your adviser must only recommend financial products that are

• on the Approved Product List of the financial services business that authorizes him, and

• appropriate for your needs and objectives.

As from July 2013, all financial advice must put the client’s interests first.  This means that your adviser cannot be paid ‘upfront commissions’ for selling you more financial products.

Each AFS Licence holder decides on its own Approved Product List.  The Approved Product List can only contain financial products of the types that are included on the relevant AFS License.

Major financial services groups could have several hundred financial products on their Approved Product Lists and be authorized to trade in listed securities.  An Approved Product List could include managed funds, life insurance contracts or margin lending facilities provided by other financial services businesses and/or the financial products of this AFS Licensee.

In contrast, the Approved Product List of a sponsor of agribusiness managed funds might be limited to a few forestry and horticulture funds managed by that AFS Licensee.  You could ask your financial adviser what types of financial products are on his AFS Licensee’s Approved Product List.

Summary AFS Licence for your financial service provider

In summary an AFS Licence is required to conduct a financial services business.
Thus anyone who wants to provide financial product advice to clients must operate
under an AFS Licence.

Hint: before you engage a financial adviser be sure to look for the
AFS Licensee name and number, and be comfortable that the
individual adviser is an Authorised Representative of the AFS Licensee.

These Financial Postings are written by Christine Hopper who is the director and an Authorized Representative (number 252529) of Financial Care Services AFS Licence number 299570.

Financial Care Services is an independently owned financial advisory service.  Clients of Financial Care Services are charged fees based on the complexity of their situations and the extent of the written advice required.  The fee for a Statement of Advice is agreed in advance; Financial Care Services does not accept commissions in respect of client investments.   Any payments from investment managers are credited to the client’s fee account at Financial Care Services.

If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial issues please contact Christine at Financial Care Services (03) 9808 0338.

Financial Care Services – call (03) 9808 0338
Disclaimer: The information contained in this website is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility.

Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations.
© 2013 Financial Care Services Pty Ltd. All rights reserved.

To make an appointment for professional advice, call Financial Care Services  (03) 9808 0338