At what point do I need an AFSL to sell a financial product or service?
If you’re currently at this stage, we'll try and demystify the process, shedding light on when acquiring an Australian Financial Services License (AFSL) becomes a necessity for you.
The need for an AFSL arises when your business activities fall within the legal definition of ‘providing financial services’. This includes activities such as offering financial advice, dealing with financial products, facilitating the buying and selling of financial products through to providing custodial or depository services.
Here are some of the key triggers that might prompt the necessity for an AFSL:
Financial Product Advice: If your business involves providing advice on financial products to clients, an AFSL is typically required. This spans advice on purchasing, selling, or dealing with financial products.
Dealing with Financial Products: Engaging in transactions involving financial products, such as buying or selling, often triggers the AFSL requirement. This applies to a broad range of financial instruments.
Making a Market: If your activities involve making a market for financial products, you are likely within the AFSL regulatory scope. This applies to entities facilitating the buying and selling of financial products.
Custodial or Depository Services: Offering custodial or depository services for financial products necessitates an AFSL. This includes holding financial products on behalf of clients.
When it comes to the choice between Retail and Wholesale AFSLs, be clear from the start about who you intend to target as future clients. Just to clarify, Retail AFSLs are geared towards financial services targeting individual retail clients, encompassing a broad array of financial products and services. This category is suitable for businesses aiming to provide services to a wider audience, including retail investors. On the other hand, Wholesale AFSLs are designed for professional or sophisticated investors, catering to a more limited and specialised clientele. This category is often preferred by businesses dealing with institutional investors, high-net-worth individuals, or other sophisticated entities.
>> For further information on ASIC’s definition and guidelines please refer to the ASIC website: https://asic.gov.au/ and https://asic.gov.au/regulatory-resources/financial-services/financial-product-disclosure/certificates-issued-by-a-qualified-accountant/
Avenir Capital’s range of clients acting under Avenir’s AFSL wholesale licence as Authorised Representatives include: fund managers (equity, property, private equity, hedge fund etc), M&A advisors, VC platforms through to credit finance providers.
To expedite the process and allow you to focus on your business sooner, it can be advantageous to consider outsourcing or renting someone else's AFSL. This can enable you to obtain the necessary license within a week or two, rather than going through the lengthy application process yourself. Should you have any further questions, require assistance in applying for your own AFSL, or to become an authorised representative of Avenir Capital,
contact us today for an obligation free consult:
>> Complete our short enquiry form
>> OR, contact one of our team directly, Anya M. 0438 355 002
This article discussed general concepts in the context of the Australian Financial Services Licence (AFSL). The examples and discussion may not cover specific legal requirements applicable to your situation. Avenir Capital disclaims any liability for any actions taken or not taken by readers in reliance on the contents of this article.