The Australian Securities and Investments Commission (ASIC) has visited 20 licensees during 2016 and 2017 so far to assess how they are operating under their new Australian financial services licence (AFSL), in addition to discussing compliance with their AFSL obligations.
The program followed the removal of the accountants’ exemption from 1 July 2016, which was previously relied on by accountants when providing advice to SMSFs.
Although most of the licensees were still establishing their businesses under the new regime, many indicated the provision of financial advice was not a large part of their business, the corporate regulator revealed.
Only half the licensees had provided advice at the time of ASIC’s visit.
Areas of concern identified during the visits included:
• uncertainty around ongoing compliance obligations – the licensees were uncertain about the resources required to monitor compliance and what steps were required to comply with their general licensee obligations,
• confusion about what information needed to be uploaded to the Financial Adviser Register (FAR) – nearly half the licensees had not updated the FAR with adviser information, and
• where licensees had not yet provided advice about SMSFs, they were uncertain about what documents needed to be provided to clients, the content of those documents and when they had to be provided to clients – that included the requirements around giving a statement of advice, a key document.
The licensees ASIC visited indicated they were actively seeking training and assistance on a number of aspects of the AFSL regime.
In light of the findings from this project, the regulator will provide additional education resources for limited AFSLs, particularly around their ongoing compliance obligations and client engagement.
ASIC will shortly provide further guidance on its website on areas of uncertainty highlighted by the visit program.
It will also contact limited licensees that have no advisers recorded on the FAR to remind them of their obligations in relation to the register.
Limited AFSLs that have not recorded any advisers on the FAR are likely to be in breach of the law.
As at 30 June 2017, ASIC had granted 787 limited AFSLs.
