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10-12AD Margin lending licensing commences
Issuers and advisers of margin lending facilities will be able to apply for an Australian Financial Services licence (AFSL), or a variation to an existing licence, from today, 1 February 2010 until 30 June 2010.
Existing margin lenders and advisers on margin loans must apply to ASIC for an AFSL authorisation within this timeframe if they intend to continue to provide a margin lending financial service after the application period closes on 30 June 2010. Industry participants who fail to do so will have to cease providing such services.
This follows the passage of the Corporations Legislation Amendment (Financial Modernisation) Act late last year which provides for the regulation of margin lending facilities. Amongst other things, the Act requires:
- issuers and advisers of margin lending facilities to be licensed by ASIC under an AFSL;
- advisers to only provide advice that is appropriate to the client's individual circumstances;
- margin lenders to meet new responsible lending requirements;
- consumers to have access to external dispute resolution services; and
- clarity around responsibility for notifying clients in the case of a margin call.
The new conduct and disclosure requirements for issuers and advisers of margin lending facilities, and the new responsible lending and margin call notification requirements, will take effect from 1 January 2011.
View a detailed timeline of the changes to margin lending regulation.
ASIC Commissioner, Dr Peter Boxall, encouraged industry participants to consider if they are captured by the new requirements.
‘ASIC has released updated policy and regulatory guidance to assist issuers and advisers of margin lending facilities comply with their new requirements. It is important people consider their situation early on and make any necessary changes to ensure they can continue carrying on business after 30 June 2010.’
The same licensing, conduct and disclosure requirements that currently apply to financial services will apply to providers and financial advisers in relation to margin lending facilities. The changes are part of the Government's plan to regulate credit nationally.
ASIC has updated its relevant Regulatory Guides on financial services and products to incorporate guidance relevant to margin lending facilities and to licensees that provide financial services in relation to margin lending facilities. Copies of regulatory guides are available from the ASIC website at www.asic.gov.au/rg.
Issuers and advisers of margin lending facilities, or any other entities seeking to become licensed to issue or advise on margin lending facilities can contact ASIC’s Infoline on 1300 300 630 or email email@example.com. To complete your online application go to www.asic.gov.au/afslicensing.
Further information about the reforms to the regulation of margin lending facilities is available from ASIC’s website at www.asic.gov.au/credit.