Under the Corporations Act, an Australian Financial Services Licence (AFSL) must include authorisations covering the financial services provided in relation to a managed investment scheme. The required authorisations depend on whether the licensee operates the scheme, issues interests, provides financial product advice, deals in scheme interests or performs other regulated financial services.
Expanded Answer
There is no single AFSL authorisation that applies to every managed investment scheme. Instead, ASIC grants authorisations based on the financial services a licensee provides and the financial products involved. A business operating a managed investment scheme must ensure its AFSL authorises each regulated activity it undertakes. Holding a licence alone is not sufficient if the required authorisations are absent.
The required authorisations vary according to the business model. For example, a responsible entity operating a registered managed investment scheme will generally require authorisations to operate the scheme and to provide any additional regulated financial services associated with issuing or dealing in scheme interests. A business that advises on managed investment scheme interests or arranges investments may require different or additional authorisations depending on its activities.
Key obligations:
- Hold an AFSL with authorisations covering every regulated financial service provided.
- Review authorisations before introducing new products, services or distribution arrangements.
- Update licence authorisations before undertaking regulated activities outside the licence scope.
Why it matters
Providing financial services without the necessary AFSL authorisations may breach the Corporations Act, even where the business already holds an AFSL. Matching licence authorisations to actual business activities is an important part of maintaining ongoing regulatory compliance.
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Practical guidance
- Map each managed investment scheme activity to the corresponding AFSL authorisation before commencing operations.
- Review your AFSL whenever your products, services or distribution model changes.
- Obtain additional authorisations before undertaking any regulated activity outside your current licence scope.
Further reading
Managed Investment Schemes and AFSL Requirements
What are the requirements for an AFSL? A Practical Guide for Prospective Licensees