FSRA licensing still shrouded in confusion
UNCERTAINTY surrounding FSRA licensing requirements continues to prevail, with many corporate super fund trustees still confused about whether or not they need a licence to operate, a team of lawyers told delegates at the Investment and Financial Services Association (IFSA) conference in Brisbane.
Trustees of corporate super funds are typically exempt from licensing, unless they offer advice to super fund members. If they do offer members advice, as is often the case, they must apply for an FSRA licence — though the boundaries between advice and information remain unclear and need to be defined within FSRA legislation, according to Mallesons partner Jim Boynton.
“The FSRA changes the context of providing fund members with information — trustees of corporate funds are realising that if they keep doing what they’ve been doing for years, they’ll need to apply for licensing under the FSRA,” Boynton says.
Referrals are another grey area, and managers who refer clients to licensed practitioners need to be aware they might also need an FSRA license if they profit from the recommendation. In order to avoid licensing requirements, they may only offer referrals without advice, and must charge a flat fee, according to Boynton.
Institutions with existing licences are eligible to make streamlined licence applications, which are processed more quickly than standard applications. But many institutions may not actually be eligible for streamlining under the terms of the FSRA, according to Mallesons partner Joe Montano.
For example, an institution that receives foreign currencies for overseas sales may not even realise it is engaged in dealing foreign exchange — yet it may require additional licensing for foreign exchange trading, as well as an excess capital requirement worth $10 million.
“If you say you are engaging in a range of activities — from advice authorisation, wholesale schemes, deposit products and opening bank accounts — this will affect your licence application,” Montano says.
As a result, the government needs to ensure industry participants are fully aware of their licensing requirements under the FSRA.
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