If you have been an Authorised Representative for 3 years or more then you can start to explore the possibility of obtaining your own AFSL.
I’m approached by a number of ARs that want more control over their client relationships, a more customised and simple process in giving advice and are contemplating whether obtaining their own AFSL may be cheaper than the high dealer group fees some firms are paying.
If this is going through your mind, there are a few things to mull over.
- What support do you currently get from your dealer group?
Assess what support you are getting and how you’ll implement new forms of support without the dealer. Some dealer groups offer great support in research, software and systems. However, if this doesn’t come with flexibility (or comes with a mountain of complex compliance processes) then it can have a trade-off. By law the dealer group needs to be fully across and monitoring what you are doing so it is understandable they are going to micro manage to some level. Some do this better than others.
There are now many opportunities to get the type of support you pay for from a dealer group but have autonomy. You just need to piece the framework together carefully so it can all work smoothly.
- Do your clients want this?
Some clients may be more than happy in receiving advice from an AR. As we all know, there are dealers and dealers. Some dealer groups are not aligned to product issuers and really do provide ARs flexibility in giving advice to clients. In this situation many clients won’t really care whether you have your own AFSL or are an AR. However, in other situations, your alignment with a particular dealer group may be preventing you from growing your advisory business as the focus on autonomy in advice grows.
In days gone by the cost of obtaining an AFSL and then maintaining it were huge and out of the question for many smaller practices. With online support that is now available, this is no longer the case. A number of ARs I’ve spoken with may save costs in obtaining their own AFSL if they set up the support systems carefully.
- Ability to get the AFSL through
You don’t want to go full steam ahead and then find out your organisation and people involved don’t yet meet ASIC’s requirements. ASIC’s RG105 (updated in December last year) sets out what ASIC will look at in determining if your organisation is “competent”. What you won’t find in the RG is ASIC’s very prominent shift in assessment of AFSL applications and responsible manager competency that I have seen over the last 12 months. It is safe to say that it is definitely now harder to get an AFSL. AFSL applications that would have got through a couple of years back now may not. The shift I’ve seen is that the people put forward as responsible managers must have experience in actually doing the activities you wish to obtain authorisation for (rather than being a director of an organisation that has done the activities or other supervisory role). Activities directly relevant to the authorised activity no longer cut it. This isn’t so big a deal if you are happy to apply for an AFSL that has authorisations exactly the same as your AR authorisations. It becomes more of an issue when you want to expand or try for new authorisations.
N.B. on this point, it is also one to watch out for when you try to vary your AFSL. ASIC are now really going through existing authorisations to assess (a) competency and (b) use.
If in reading this it is something you want to explore, I’d love to have a chat to expand on the above and answer any questions that you have.
Our online compliance product “Rescue” (from your regulatory nightmare) will be released soon. However, if you’re looking at getting an AFSL, we can commence the process whenever you’re ready as it can take some time.
Catherine Evans, CEO & Senior Lawyer, Kit Legal.