Australian regulator ASIC announced earlier today that 58 Australian finance services (AFS) licensees have now had their authorisation revoked. The reason is that the companies were in breach of the law because they were also authorised representatives of other AFS licensees.
According to section 916D of the Corporations Act 2001 (the Act), 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.
The Australian regulator investigated 65 cases where AFS licence holders had also been appointed as authorised representatives by another AFS licensee, and found that 58 were in breach of the law.
ASIC has shared its concern that licensees may not have appropriate compliance measures in place, resulting in potential risks to consumers.
AFS licensees are expected to check ASIC’s professional registers prior to granting a authorisation to new representatives to ensure that they do not authorise a person or entity that already holds an AFS licence. The regulator reminded that AFS licensees are advised to adopt this practice as part of their onboarding process. 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.