Australian Financial Services Licence (AFSL) obligations
If you provide financial services in Australia — advising on, dealing in, or making a market for financial products — you must hold an Australian Financial Services Licence (AFSL) and comply with its conditions. Breaches carry civil penalties, licence suspension, or banning orders. This guide sets out 10 core obligations.
Coverage
Any person or entity that carries on a financial services business in Australia, including financial advisers, fund managers, securities dealers, insurance brokers, and superannuation trustees. Authorised representatives are covered by their principal's licence.
Legal basis
Corporations Act 2001 (Cth), Chapter 7, Part 7.6 — Australian financial services licensing. ASIC administers the regime under ss 911A–922A.
The obligations
Provide financial services efficiently, honestly, and fairly
Carry on the financial services business efficiently, honestly, and fairly. This is an overarching conduct obligation that applies to every dealing with clients.
Comply with licence conditions
Observe every condition on the AFSL, including authorised product and service types, client types, and any special conditions imposed by ASIC.
Maintain adequate financial resources
Hold sufficient financial resources (including cash, net tangible assets, and surplus liquid funds) to meet the requirements prescribed in ASIC Regulatory Guide 166.
Ensure representatives are competent and trained
Take reasonable steps to ensure that representatives are adequately trained, competent, and comply with the financial services laws. Training must meet the standards in ASIC Corporations (Work and Training Standards—Loss of Grandfathering) Instrument 2024.
Have adequate risk management systems
Establish and maintain risk management systems, including compliance arrangements, that are reasonably designed to ensure compliance with the financial services laws.
Provide disclosure documents (FSG and SoA)
Give clients a Financial Services Guide and, where personal advice is provided, a Statement of Advice that complies with Division 2 and Division 3 of Part 7.7.
Have a compliant dispute resolution system
Maintain an internal dispute resolution procedure that meets ASIC standards and be a member of the Australian Financial Complaints Authority (AFCA) for external dispute resolution.
Report significant breaches to ASIC
Self-report breaches and likely breaches of core obligations to ASIC within 30 calendar days of becoming aware. The reportable-situations regime replaced the old breach-reporting rules from October 2021.
Keep accurate financial records
Maintain financial records that correctly record and explain the licensee's transactions and financial position and enable true and fair financial statements to be prepared.
Manage conflicts of interest
Have adequate arrangements to manage conflicts of interest that may arise in connection with the financial services business, including remuneration-related conflicts.
What happens if you do not comply
Civil penalties up to $1.11 million per contravention for individuals and $11.1 million (or three times the benefit or 10% of annual turnover) for bodies corporate. ASIC may also suspend or cancel the AFSL, issue banning orders, or seek injunctions.
Reporting requirements
Reportable situations within 30 calendar days. Annual audited financial statements and compliance certificate lodged with ASIC. Ongoing notification of significant changes in circumstances (e.g., key person changes, material outsourcing).
What firms should do today
- Appoint a dedicated compliance officer or compliance team
- Maintain a compliance plan and review it annually against RG 104
- Track all authorised representatives and ensure current competency standards
- Implement a breach register and escalation procedure for reportable situations
- Conduct annual reviews of disclosure documents for accuracy
- Keep net tangible asset calculations up to date and monitor surplus liquid funds monthly
Compliance with Quillio
Quillio helps AFSL holders by monitoring regulatory updates, drafting compliance plans, and flagging potential breaches across client files. See /resources/security or start a free trial.
This guide is general information about AFSL obligations — not financial or legal advice. Always consult a qualified compliance adviser or lawyer for your specific licensing situation.
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