Financial product ratings services need AFSL
Companies which seek to provide financial products ratings services to consumers will need to hold an Australian Financial Services License (AFSL) to do so.
The Australian Securities and Investments Commission (ASIC) believes that providing product ratings is tantamount to providing financial product advice.
The latest ASIC report on its decisions on relief applications has revealed that the regulator rejected an application by a company seeking to provide product ratings.
"We refused to grant relief from the requirement to hold an AFS license to an entity that proposed to provide consumers with a rating for various aspects of different financial products," the report said.
"We considered that the rating of products constituted providing financial product advice."
In providing the reasons for its decision, ASIC said "the regulatory detriment was neither minimal nor clearly outweighed by the resulting commercial benefit".
The regulator went on to say that granting relief would have had a significant regulatory detriment, as:
(i) We expect persons in similar circumstances to hold an AFS licence; and
(ii) The licensing provisions also impose other important duties on AFS licensees. For example, Div 3 of Pt 7.6 of the Corporations Act requires that AFS licensees:
(a) Do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly;
(b) Have in place adequate arrangements for the management of conflicts of interest;
(c) Comply with the conditions on the licence and the financial services laws; and
(d) Have a dispute resolution system complying with s912A(2).
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