Your AFS licence obligations explained
Your AFS licence obligations are explained in our regulatory documents.
|AFS licensee requirement/obligation||Regulatory guide|
|Financial requirements (e.g. solvency and cash)||Regulatory Guide 166 Licensing: Financial requirements (RG 166)|
|Responsible managers (qualifications and experience)||Regulatory Guide 105 Licensing: Organisational competence (RG 105)|
|Monitoring, supervising and training your representatives (including authorised representatives)||Regulatory Guide 104 Licensing: Meeting the general obligations (RG 104)
Regulatory Guide 146 Licensing: Training of financial product advisers (RG 146)
|Compliance and risk management||Regulatory Guide 104 Licensing: Meeting the general obligations (RG 104)
Regulatory Guide 259 Risk management systems of responsible entities (RG 259)
|Technological and human resources||Regulatory Guide 104 Licensing: Meeting the general obligations (RG 104)|
|Managing conflicts of interest||Regulatory Guide 181 Licensing: Managing conflicts of interest (RG 181)|
|Dispute resolution (internal and external)||Regulatory Guide 165 Licensing: Internal and external dispute resolution (RG 165)|
|Compensation and insurance arrangements||Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees (RG 126)|
|Compensation arrangements (security bonds and professional indemnity insurance)||Regulatory Guide 167 Licensing: Discretionary powers and transition (RG 167)|
|Conduct and disclosure||Regulatory Guide 168 Disclosure: Product Disclosure Statements (and other disclosure obligations) (RG 168)
Regulatory Guide 175 Licensing: Financial product advisers – Conduct and disclosure (RG 175)
A number of AFS licensees now have enhanced financial obligations following changes made to net tangible asset and preparation of cash flow projections requirements. Licensees impacted by these changes are those who are a:
- responsible entity
- operator of Investor directed portfolio services
- custodial or depository services provider (including as a provider of incidental custody services)
- trustee company providing traditional services
- issuer of margin lending facilities
- foreign exchange dealer
- retail OTC derivative issuer.
These financial conditions may have been enhanced since your licence was granted. You should therefore refer to RG 166 to understand the obligations you must meet to ensure that you remain compliant with your financial obligations as an AFS licensee.
If you are a licensee in one of these categories, you should refer to the appendices in RG166 for guidance on what is required. A separate appendix has also been prepared for market and clearing participants to clarify the circumstances where our financial requirements will not apply.
You must inform us in writing within 3 business days when your membership of an external dispute resolution scheme (EDRS) ceases. This includes circumstances where:
- the EDRS is no longer operating
- you fail to renew your membership of the EDRS, or
- the EDRS has terminated your membership of the EDRS.
You must also advise us of the details of the new EDRS(s) you intend to or have joined (including the date the membership commences and the name of the EDRS) and provide confirmation of coverage for complaints made by retail clients in relation to the provision of all of the financial services authorised by your licence.
Complying with your obligations as a licensee
You must have arrangements in place to ensure that you comply with your obligations as an AFS licensee.
Use the following publications as a guide to planning and implementing compliance measures, processes and procedures in your business:
- Regulatory Guide 104 Licensing: Meeting the general obligations (RG 104)
- Australian Standard AS 3806-2006: Compliance programs. You can purchase a copy of AS 3806-2006 from www.saiglobal.com/shop.
To find out more about building a culture of compliance in your business, visit the website of the GRC Institute at www.thegrcinstitute.org.
Risk management systems
As an AFS licensee, a key ongoing obligation is to have adequate risk management systems in place.
RG 104 outlines our general guidance for AFS licensees about meeting this obligation.
For responsible entities, we have released tailored guidance in Regulatory Guide 259 Risk management systems of responsible entities (RG 259) which outlines our expectations for risk management systems at the business and scheme level. This guidance is also relevant for operators of managed discretionary accounts, investor directed portfolio services and unregistered schemes.
Under the Corporations Act 2001 you must notify us if you are unable to meet, or have breached, your obligations as a licensee.
- Changes you must tell us about
- Financial obligations
- Dispute resolution
- Compliance – RG 104 Licensing: Meeting the general obligations
- RG 259 Risk management systems of responsible entities
- Breach reporting
- Appointing, varying or revoking authorised representatives
- Applying for relief
- More regulatory resources on financial services
- Monitoring and enforcement
- Link to Corporations Act