Why Financial Advisors Need AFS licence

What's an Australian financial services licence?

An Australian financial services licence authorizes licensees to:

• Offer financial product advice to customers;
• Deal in the financial product;
• Make a market for the financial product;
• Operate an authorized scheme;
• Offer a custodial or even depository service;
• Provide standard trustee company solutions.

An Australian financial services licence is needed to conduct a financial services company.

ASIC assesses applications for AFS licences included in the role of asic.gov.au as regulator on the financial services industry. Whenever assess a license application asic.gov.au think about if the applicant:

• Is capable of carrying on the type of financial services business specified by the application;
• Has sufficient financial resources to keep the suggested business - unless regulated through the Australian Prudential Regulation Authority (APRA); and
• Can fulfill the other obligations of the AFS licensee.

Consumers must be aware how the licensing process is a point-in-time assessment from the licensee, not of their owners or employees. Holding an AFS licence doesn't give a guarantee for the probity or quality of the licensee's solutions.

ASIC should grant a licence if your business shows it may meet basic standards like training, compliance, insurance as well as dispute resolution. The business accounts for maintaining these standards.

Do you want an AFS licence?

If you wish to run a financial services business, you typically have to be authorized under an AFS licence.

An AFS licence authorizes both you and your representatives to offer financial services to clients.

You provide financial services in case you:

• Offer financial product advice to customers for instance, giving a suggestion to clients or the general public regarding which financial product they need to purchase.
• Deal within a financial product, for instance, selling or buying shares on behalf of a client or even issuing interests in the managed investment scheme.
• Make a market for any financial product, for instance, in which you regularly quote prices where people can buy or even sell financial products.
• Operate an authorized managed investment scheme. ASIC is also needed to register managed investment schemes that exist to retail clients.
• Provide a custodial or even depository service, for instance, holding a financial product, or even a beneficial interest in a financial product in trust for the customer or
• Provide standard trustee company services, for instance, preparing estate administration functions.

Financial products include items like shares, bonds, superannuation, passions in managed investment schemes, life insurance, basic insurance, derivatives as well as margin lending facilities.

Based on your needs, you might be exempt from the requirement to hold an Australian financial services licence or else you may provide financial services within the limited AFS licence. You may even choose to provide financial services being an authorized representative of an AFS licensee.

Resource - medium.com/@afsllicence