General obligations

AFS licensees have obligations relating to:

• conduct and disclosure
• the provision of financial services
• the competence, knowledge and skills of responsible managers
• the training and competence of relevant providers and authorised representatives
• ensuring relevant providers and authorised representatives comply with the financial services laws
• compliance, managing conflicts of interest and risk management
• the adequacy of financial, technological and human resources, and
• dispute resolution and compensation arrangements (if your clients include retail clients).

See Regulatory Guide 104 Licensing: Meeting the general obligations (RG 104) for information about compliance with the general obligations under s912A(1) of the Corporations Act 2001.

Obligations relating to relevant providers

You must also ensure your relevant providers comply with the financial services laws and the professional standards for relevant providers. This includes notifying ASIC when relevant providers have complied (or failed to comply) with the standards.

AFS licensees must also register their relevant providers (including time-share advisers) with ASIC before they provide personal advice to retail clients. Provisional relevant providers cannot be registered.

You must notify ASIC within 30 business days of any changes in relation to relevant providers and/or authorised representatives, such as when:

• you appoint a relevant provider or authorised representative, or change their details
• you register a relevant provider with ASIC
• you cease a relevant provider or authorised representative, or
• your relevant providers fail to comply with the professional standards for relevant providers.

You can notify ASIC of any changes using ASIC’s Online services.

Financial obligations

AFS licensees must meet certain financial obligations. These obligations vary depending on the financial products and services you offer.

As a minimum, AFS licensees must meet the following base level financial requirements:

• the solvency and positive net assets requirement
• the cash needs requirement, and
• the audit requirement.

Some AFS licensees may have to comply with additional requirements that reflect specific business risks.

Enhanced financial obligations apply to AFS licensees following changes made to net tangible asset and preparation of cash flow projections requirements. AFS licensees impacted by these changes are:

• responsible entities
• corporate directors of corporate collective investment vehicles (CCIVs)
• operators of investor directed portfolio services
• custodial or depository services providers (including as providers of incidental custody services)
• trustee companies providing traditional services
• issuers of margin lending facilities
• foreign exchange dealers, and
• retail OTC derivative issuers.

See Regulatory Guide 166 Licensing: Financial requirements (RG 166) to understand your financial obligations.

Risk management systems

As an AFS licensee, you must have adequate risk management systems in place. Regulatory Guide 104 Licensing: Meeting the general obligations (RG 104) outlines our general guidance for meeting this obligation.

For responsible entities, see Regulatory Guide 259 Risk management systems of responsible entities (RG 259). This guide outlines our expectations for risk management systems at the business and scheme level. It is also relevant for operators of managed discretionary accounts, investor directed portfolio services and unregistered schemes.

Dispute resolution

AFS licensees must have a dispute resolution system that consists of:

• internal dispute resolution (IDR) procedures that meet the standards or requirements made or approved by ASIC, and
• membership of the Australian Financial Complaints Authority (AFCA).

Internal dispute resolution (IDR)

Regulatory Guide 271 Internal dispute resolution (RG 271) sets out how financial firms that are required to comply with IDR requirements can meet their obligations. The requirements relate to matters such as how firms must record and respond to complaints, and the timeframes for doing so.

Most financial firms with IDR obligations under RG 271 will also need to report IDR data to ASIC.

External dispute resolution (EDR)

The Australian Financial Complaints Authority (AFCA) is the single dispute resolution scheme for financial services. AFCA may be able to resolve complaints that a financial firm could not resolve using internal dispute resolution.

AFCA considers complaints that were previously handled by the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.

AFCA can consider complaints about:

• credit, finance and loans
• insurance
• banking deposits and payments
• investments and financial advice, and
• superannuation.

When AFS licensees join AFCA, they must notify ASIC within 10 business days. If they are not a member of AFCA, they are in breach of their licence obligations. Regulatory Guide 267 Oversight of the Australian Financial Complaints Authority (RG 267) sets out who must have a dispute resolution system and which financial firms must be members of AFCA.

For more information, see Dispute resolution.

Notifying ASIC of changes to your AFCA membership

You must inform ASIC in writing about changes to your AFCA membership.

This includes circumstances where:

• you fail to renew your AFCA membership
• you no longer require AFCA membership, or
• AFCA has terminated your membership of the scheme.

Dispute resolution and consumers

Information about dispute resolution for consumers can be found in ASIC Information Sheet 174 Disputes with financial firms (INFO 174) and on our consumer website Moneysmart.

Australian financial services (AFS) licensees have obligations to compensate consumers who have suffered from non-compliant financial advice. For more information, see:

• Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees (RG 126)
• Regulatory Guide 256 Client review and remediation conducted by advice licensees (RG 256)
• Information Sheet 232 Fees for no service: Remediation (INFO 232)
• Regulatory Guide 277 Consumer remediation (RG 277)
• Making it right: How to run a consumer-centred remediation

Details you must tell us about

You must notify ASIC of any changes to your AFS licence, such as when:

• your details change, for example, responsible managers, address and contact information
• you appoint an auditor, or
• you change control of the AFS licensee

For notification periods, fees and how to make changes, see lodgement requirements for AFS licensees.

You must also notify ASIC if you fail to meet one or more of your obligations by submitting a reportable situation via the ASIC Regulatory Portal. For more information, see Reportable situations for AFS and credit licensees.

Reportable situations

Australian financial services (AFS) licensees and Australian credit licensees are required to report ‘reportable situations’ (previously 'Breach reporting') to ASIC, generally within 30 calendar days, using the ASIC Regulatory Portal.

The types of reportable situations that must be reported include:

• significant breaches or likely significant breaches of ‘core obligations’
• investigations into whether there is a significant breach or likely breach of a ‘core obligation’ if the investigation continues for more than 30 days
• the outcome of such an investigation if it discloses there is no significant breach or likely breach of a core obligation
• conduct that constitutes gross negligence or serious fraud, and
• conduct of relevant providers and mortgage brokers who are representatives of other licensees in certain prescribed circumstances.

For more information see:

• Reportable situations for AFS and credit licensees
• Regulatory Guide 78 Breach reporting by AFS licensees and credit licensees (RG 78)

Relief from obligations

Class relief or individual relief may be available for some obligations. See Information Sheet 82 Apply for relief (INFO 82).

ASIC regulatory guidance

Your AFS licence obligations are explained in our regulatory documents.

Related information

• Regulatory Guide 104 AFS licensing: Meeting the general obligations (RG 104)
• Appointing and ceasing an AFS authorised representative
• Professional standards 
• ASIC's regulatory guidance on compliance with the financial services regime
• Information Sheet 151 ASIC’s approach to enforcement (INFO 151)
• Regulatory costs and levies