ASIC gets tough on licensing

Financial planners who do not hold an Australian Financial Services Licence (AFSL) will be hit with heavy fines and may even face imprisonment if they are caught out in a new Australian Securities and Investment Commission (ASIC) compliance crackdown.

“If you are operating a financial services business without holding an AFSL or representing a licensee, you can expect to hear from us. ASIC will take action against anyone we find breaching the law,” ASIC financial services regulation executive director Ian Johnston says.

The new compliance checks, which will be conducted over the next six months, are the second phase of a license checking campaign initiated by ASIC in late December 2003, which found 966 old law licensees had not applied for an AFSL.

ASIC says the earlier part of the campaign attempted to ensure an orderly transition of old licensees to the new licensing regime. Now ASIC will be turning its attention to identifying and taking action against unlicensed operators.

The penalty for carrying on a financial services business without a license is a $22,000 fine or imprisonment for two years or both.

“Unlicensed operators put consumers at risk and potentially damage the reputation of the industry,” Johnston says.

Of the 966 businesses identified in the first phase of the campaign, most where found to have either restructured their businesses to operate under an AFSL held by a related industry, become an authorized representative of another licensee or had decided to exit the industry altogether.

ASIC says a small number of unlicensed operators in this group may be the subject of legal action.