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On 14 June 2013, ASIC released information sheet 179 to assist people applying for a limited Australian financial services (AFS) licence. The limited AFS licence won't be limited to accountants. However, at this stage the guidance is most interesting for accountants wishing to take advantage of transitional rules which operate from 1 July 2013 to 30 June 2016, mainly because the application process is less onerous.
The information sheet contains guidance about ASIC's licensing application process, and the required information which all applicants must lodge to support their application. The guidance details how the regime will apply to those who hold a limited AFS licence.
Stephanie Bower and Julian SmithWhilst any person can apply for the new limited AFS licence, recognised accountants[1] who apply between 1 July 2013 and 20 June 2016 can take advantage of the transitional arrangements.
Under the transitional arrangements, where an applicant's responsible managers are recognised accountants, lower evidentiary requirements apply in relation to ASIC's assessment of the applicant's organisational competence: the 'organisational competence' concept is discussed below.
Specifically, an applicant would only need to satisfy the 'knowledge' requirements in respect of its responsible managers (for example, details of relevant training and qualifications), and would not be required to demonstrate 'experience' (for example, with business references, which would ordinarily be required).
However, applicants who are granted a limited AFS licence under the transitional arrangements will be subject to an additional licence condition that , if requested by ASIC within 3 years of the grant of the licence, the licensee must provide further evidence that:
These developments are important for those accountants who currently rely on specific exemptions available under financial services laws from the need to hold an AFS licence. The exemption which we expect is most commonly relied on by many accountants, allowing them to advise clients about acquiring or disposing of an interest in a SMSF, will not be available after 1 July 2016.
If an accountant or accounting firm considers that advising on SMSFs:
then those accountants or firms should seriously consider their strategy for meeting client needs beyond 1 July 2016.
Limited AFS licences will cover the range of financial services that licensees provide for specific types of financial products. It will also specify the types of clients licensees can provide those services to.
ASIC has summarised the possible authorisations for a limited AFS licence as follows:
Services |
Products |
Clients |
Provide financial product advice |
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Provide financial product advice that is 'class of product' advice |
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|
Arrange for a person to deal in a financial product, including applying for, acquiring, varying issuing or disposing or financial products on behalf of another |
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All applicants will be required to submit an application form, and accompanying 'core proofs' which explain how the applicant satisfies particular aspects of the licensing requirements.
We have summarised below, in general terms, what is required of accountant applicants:
Cleardocs offers a Limited AFS Licence Application package that simplifies the process of applying for a limited AFS licence.
Limited AFS licensees will be required to lodge an annual compliance certificate. At the date of publishing of this article, ASIC has not yet released the form of, or required content for, the relevant compliance certificate.
The compliance certificate is in lieu of the requirement that applies to non-limited AFS licensees to lodge annual auditor's reports.
Limited AFS licensees must comply with the conduct and disclosure obligations that apply to providers of financial product advice.
For example, licensees will be required to comply with the best interests duty and related obligations, and to provide clients with a Statement of Advice, where required.
Licensees will also be required to comply with the general licensing obligations under the Corporations Act 2001. What a licensee will be required to do to meet its obligations under the Corporations Act 2001 will depend on factors such as the nature of its business, the services it provides to its clients and the products it is advising on. You should seek advice on this if you are in doubt as to your obligations under the legislation.
Licensees must comply with any special conditions set out in its licence certificate. In addition, licensees will be subject to the conditions contained in regulation 7.6.04 of the Corporations Regulations 2001, which are imposed on all AFS licensees.
Cleardocs offers a Limited AFS Licence Application package that simplifies the process of applying for a limited AFS licence.
The relevant legislation is set out in regulations which amend the existing Corporations Regulations 2001 (Cth). This is the subject of a separate ClearLaw article which you can view here.
For more information, contact Maddocks on (03) 9288 0555 and ask to speak to a member of the Commercial team.
You can read earlier Clearlaw articles concerning companies here.
[1] A 'recognised accountant' is a person who: holds a Certificate of Public Practice issued by the Institute of Chartered Accountants; or holds a Public Practice Certificate issued by CPA Australia Ltd or the Institute of Public Accountants.
Qualifications: LLB, Deakin University, BA (Political Science), Monash University
Paul is a Special Counsel in Maddocks Government and Not-for-Profit Commercial team. He specialises in:
Paul is Maddocks' main authority in relation to the Personal Property Securities Act 2009.
He has an in-depth understanding of the government sector, as his experience prior to Maddocks includes 13 years with the Victorian Department of Justice.
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