58 Australian finance services (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 following an ASIC review.

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.

ASIC 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.

In circumstances where an authorisation has been granted to one AFS licensee by another, ASIC is concerned that licensees may not have appropriate compliance measures in place, resulting in potential risks to consumers.

ASIC 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. 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.