799 limited financial services licences issued by ASIC up to June 2017

799 limited Australian Financial Services Licences (AFSLs) were approved by ASIC up to 30 June 2017, according to the latest ASIC data.

By the end of the 2016/17 financial year ASIC had received 1,210 applications for limited AFSLs, 799 of which had been approved, 150 were withdrawn, 225 were not accepted for lodgement, 36 were pending and one was refused.

This is far from the number of limited licences predicted when the system was announced. Then Minister for Financial Services & Superannuation, Bill Shorten, said: “The new limited Australian Financial Services Licence (AFSL) is expected to see up to 10,000 accountants become licensed and able to provide a much broader range of financial advice than they were previously able to”.

Additionally the amount that licence holders are using the licence appears to be limited. During 2016/17 ASIC visited 20 limited AFSL holders to asses how they were operating and discuss compliance.

“Although most of the AFS licensees were still establishing their businesses under the new regime, many indicated that the provision of financial advice was not a large part of their business. Only half of the licensees had provided advice at the time of our visit,” said ASIC.

Some of the concerns ASIC identified during the visits were uncertainty about the ongoing compliance obligation of holding a licence, confusion around what information needed to be uploaded onto the financial advisers register (almost half the licensees had not updated the register) and uncertainty about what documents needed to be provided to clients, including the requirement to provide a Statement of Advice, where the licensee had not yet provided advice about SMSFs

“In light of the findings from these visits, we have provided additional education resources for limited AFS licensees, particularly about their ongoing compliance obligations and client engagement. We are also discussing these issues with the Joint Accounting Bodies at our industry liaison meetings,” said ASIC.

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