The benefits of operating under an existing AFSL licensee
Updated: Feb 10
There are many obligations of being an AFS Licensee from holding adequate professional indemnity insurance, maintaining a minimum level of net tangible assets, being able to produce regular cash flow projections to ensure the availability of sufficient financial resources to meet obligations on an ongoing basis through to multiple requirements mandated by law and ASIC policy. So it's not surprising that many investment professionals seek out the services of an AFSL licensee.
In summary, benefits include:
Operating under an existing Australian Financial Services License (AFSL) licensee (often referred to as AFSL for rent, AFSL for hire or Authorised Representative) can offer several benefits, including: 1. Regulatory Compliance: The licensee is responsible for ensuring that all operations are in compliance with the regulations set by the Australian Securities and Investments Commission (ASIC).
2. Reduced Compliance Costs: Operating under an AFSL licensee can reduce the costs of compliance, as the licensee is typically responsible for meeting most of the regulatory requirements.
3. Access to a Wider Range of Products and Services: Operating under an AFSL licensee allows access to a wider range of financial products and services, as well as a wider range of markets, through the licensee's existing relationships and infrastructure.
4. Reduced Time to Market: Operating under an AFSL licensee can reduce the time it takes to enter the market, as the licensee may already have the necessary infrastructure, relationships, and regulatory approvals in place.
5. Reputation and Credibility: Operating under a reputable and well-established AFSL licensee can enhance a company's reputation and credibility, which can lead to increased business opportunities and growth.
Ensuring the authorised representatives comply with financial services laws of course underpins the return on investment of working with an AFSL for rent type arrangement. ASIC sent a message to 'Licensees-for-hire' just last year and you can read further on this here, and ASIC 22-174MR ASIC issues civil penalty proceedings against wholesale licensee Lanterne Fund Services for risk and compliance failures.
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