The new powers of the Australian Securities and Investment Commission, ASIC, will allow it to revoke the Australian Financial Services Licenses (AFSL) of certain inactive companies.
28 April, 2020 | AtoZ Markets – There are several companies in Australia that hold inactive Australian financial services licenses or AFSLs. However, these companies are now at risk of having their respective AFSLs cancelled. In February, the regulator ASIC was able to revoke the inactive AFSL and ACL Licenses if those did not start its activities within six months of the date of its receipt.
Inactive AFSL Holders Risking Forfeiture of Licenses
Sophie Gerber, co-CEO of TRAction Fintech, said the number of inactive AFSL companies threatened with cancelling their licenses. Gerber explained that a large number of AFSL holders have the necessary authorizations to cover all of the operations of a retail forex brokerage. However, these AFSL license holders are not currently using their license. It can very probably abstain from using it for a specified period.
However, ASIC has yet to take many steps in this regard. Their powers have not so explicitly defined in the regulations in the past. Some AFSL holders may not take this threat seriously. Those may not fully understand what the new legislation means to them. In particular, the regulator can immediately cancel the AFSL or ACL:
- If the license holder has not started its activity within six months of obtaining the license or
- The license holder has no proof of activity since 18 February, 2020.
Besides, the regulatory body can revoke licenses if the organization has stopped offering financial services or engaging in credit activity.
What Do Licensees Do?
If the company is a legal entity, ASIC can terminate its license by sending them six months’ written notice. Besides, if the six-month period ends and the licensee has not started providing the services authorized by the AFSL or ACL, it must inform ASIC 15 working days after the expiration of the specified period. Licensees may request an extension from ASIC if they do not have time to start their financial or lending activities within six (6) months of the presentation of the AFSL or ACL.
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