AFS licensee obligations

Australian financial services (AFS) licensees 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.

Class order relief or individual relief may be available for some obligations. See Applying for relief – AFS licensees.

You must notify us if you are unable to meet, or have breached, any of these obligations. For more information, see Breach reporting.

On 1 January 2019, Professional standards for financial advisers commenced. AFS licensees have an obligation to ensure their financial advisers comply with these standards. This includes notifying ASIC when financial advisers have complied (or failed to comply) with the standards.

General obligations

AFS licensees have obligations relating to:

  • conduct and disclosure
  • the provision of your financial services
  • the competence, knowledge and skills of your responsible managers
  • the training and competence of your financial advisers and authorised representatives
  • ensuring your financial advisers and authorised representatives comply with the financial services laws
  • compliance, managing conflicts of interest and risk management
  • the adequacy of your financial, technological and human resources, and
  • your dispute resolution and compensation arrangements (if your clients include retail clients).

See Regulatory Guide 104 Licensing: Meeting the general obligations (RG 104) for information about compliance with the general obligations under s912A(1) of the Corporations Act 2001.

Financial obligations

AFS licensees must meet certain financial obligations. These obligations vary depending on the financial products and services you offer.

As a minimum, AFS licensees must meet the following base level financial requirements:

  • The solvency and positive net assets requirement
  • The cash needs requirement
  • The audit requirement.

Some AFS licensees may have to comply with additional requirements that reflect specific business risks.

See Regulatory Guide 166 Licensing: Financial requirements (RG 166) to understand your financial obligations.

Risk management systems

As an AFS licensee, you must have adequate risk management systems in place. Regulatory Guide 104 Licensing: Meeting the general obligations (RG 104) outlines our general guidance for meeting this obligation.

For responsible entities, see Regulatory Guide 259 Risk management systems of responsible entities (RG 259). This guide outlines our expectations for risk management systems at the business and scheme level. It is also relevant for operators of managed discretionary accounts, investor directed portfolio services and unregistered schemes.

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Last updated: 25/06/2023 04:55