ASIC takes action on 58 licence holders over dual authorisation
Following a review by ASIC, 58 AFS licensees, who were in breach of the law because they were also authorised representatives of other AFS licensees, have now had their authorisation revoked.
In a public statement, ASIC said it has investigated 65 cases where AFS licence holders had also been appointed as authorised representatives by another AFS licensee. Of the 65 cases investigated, ASIC found that 58 were in breach of the law.
The corporate regulator noted that under section 916D of the Corporations Act 2001, an AFS licensee cannot be the authorised representative of another AFS licensee, unless they are a general insurance underwriting agent or broker operating under a binder given by an insurer.
In circumstances where an authorisation has been granted to one AFS licensee by another, ASIC said it is concerned that licensees may not have appropriate compliance measures in place, resulting in potential risks to consumers.
“For example, an AFS licensee may not maintain professional indemnity insurance (PII) or membership of an external dispute resolution (EDR) scheme because they are operating as an authorised representative of another licensee,” it explained.
“However, because their authorisation is void under the law, the licensee providing advice as an authorised representative will not have access to their AFS licensee’s PII and EDR scheme. This poses an unacceptable risk to their clients.”
ASIC said it expects AFS licensees to check ASIC’s professional registers prior to granting an authorisation to new representatives to ensure that they do not authorise a person or entity that already holds an AFS licence.
“AFS licensees are advised to adopt this practice as part of their onboarding process,” it said.
“AFS licensees wanting to become authorised representatives must give up their licence or take necessary steps to ensure that they are not in breach of the law.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.