Advice businesses with multiple entities should carefully consider their licensing arrangements to reduce the burden of compliance, according to legal consultancy The Fold.
The Fold lawyer Jaime Lumsden Kelly said in a statement issued yesterday that businesses offering services through a number of entities have two options when it comes to the AFSL regime.
“Certainly one of those options is for each entity providing a financial service to hold its own licence” Ms Lumsden Kelly said.
“This can make it easier to sell parts of the business, but it will multiply compliance tasks.”
Ms Lumsden Kelly said the other option is to have one entity as the AFSL holder and to appoint the other entities as authorised representatives, which can reduce the administration needed for compliance.
However, she warned that this can often have its own complications surrounding which company should hold the licence and whether employees need to be appointed as authorised representatives.
“When making a decision, you need to be mindful of the fact that the entity that holds the licence will need to undertake monthly cash flow forecasts,” Ms Lumsden Kelly said.
“They also need to obtain all the authorisations needed for all the financial services offered throughout the group.
“The thing to remember is that the only employees who need to be formally appointed are employees of companies who are unrelated to the AFS licensee,” she added.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 19 Feb 2019CFS hamstrung advisers as they left for DoverBy Adrian Flores
- 18 Feb 2019ASIC appeals Westpac best interests court decisionBy Adrian Flores
- 18 Feb 2019FASEA mostly funded by the major banksBy Adrian Flores
- 19 Feb 2019Great advisers are going to thrive: Dow JonesBy Eliot Hastie
- 15 Feb 2019ASIC to undertake harsher penalties against banksBy Eliot Hastie
- 18 Feb 2019NAB most distrusted bank, survey findsBy Sarah Simpkins
- view all