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21-174MR MyBudget applies for AFS licence following ASIC investigation
Following ASIC’s recent investigation into MyBudget Pty Ltd’s (MyBudget) operating model, MyBudget has applied for an Australian financial services (AFS) licence.
MyBudget, a company providing personal budgeting services, has never held an AFS licence and was not authorised to provide financial services. MyBudget holds an Australian credit licence and is a member of AFCA.
MyBudget’s business involves developing a budget plan to assist clients to meet their financial objectives and goals. Once the budget is developed, MyBudget offers a service to manage the budget on the client’s behalf. MyBudget’s service involves the client depositing their income into a MyBudget account, from which MyBudget then facilitates the distribution of funds in accordance with the budget plan.
In May 2020, MyBudget was subject to a ransomware incident, which caused a system outage. The outage left MyBudget’s 13,000 clients unable to access their online account for at least seven days, meaning clients were unable to view their account balance and clients did not know whether automated payments had been made.
MyBudget was still able to process client payments manually, although some clients faced significant delays and difficulties reaching MyBudget through the phone line.
ASIC subsequently commenced an investigation into MyBudget to consider whether it was operating a financial services business without holding an AFS licence.
ASIC was particularly concerned about unlicensed financial services conduct by an entity providing debt management services during the COVID-19 pandemic, when more consumers may face financial hardship and seek budgetary and related assistance.
ASIC has formed the view that MyBudget is providing services to its clients via a non-cash payment facility, which would require the company to hold an AFS licence.
MyBudget has now applied for an AFS licence and ASIC is currently assessing this application.
AFS licence holders are subject to specific obligations designed to safeguard the interests of consumers. Some of these obligations include:
- having adequate systems in place to provide financial services (including in relation to privacy and cyber security);
- maintaining an AFCA membership;
- ensuring that its staff are well-trained and competent to provide financial services;
- reporting any breaches or likely breaches of licensee obligations to ASIC so that ASIC may act swiftly to minimise consumer harm; and
- assisting ASIC in carrying out its functions and providing ASIC with additional oversight of the business and the industry generally.
In response to the COVID-19 pandemic’s impact on the financial system and the potential for harm that this has created, ASIC has implemented a set of pandemic-related enforcement priorities that guide our response to suspected misconduct.
In August 2021, the Australian Financial Services licence was granted to MyBudget.