PI and EDR membership should be kept until AFSL cancelled

Chartered Accountants Australia and New Zealand (CA ANZ) has advised its members cancelling their Australian financial service licence (AFSL) to maintain professional indemnity (PI) insurance and membership of external dispute resolution (EDR) scheme until they receive notification of AFSL cancellation.

The industry group said it provided the advice in response to rising costs of running an AFSL and because many members were considering cancelling their AFSL, or being required to do so after unsuccessful attempts at the Financial Adviser Standards and Ethics Authority (FASEA) exam.

CA ANZ said the current regulatory requirements of running an AFSL were both onerous and costly.

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“In addition, current advisers of the Financial Adviser Register (FAR) who have not successfully completed the FASEA exam prior to 31 December, 2021, will be forced to leave the FAR which for many, will also see the need to cancel an AFSL,” it said.

CA ANZ financial advice leader, Bronny Speed, said: “CA ANZ has continually advocated for a strategic advice model for members who should not need an AFSL to provide basic superannuation advice in the ordinary course of being a CA.

“This advocacy has recently been elevated to a further senior Federal Government Minister and we keenly await a decision. For those who can stay on the FAR, we suggest you do so.”

It said it would be prudent to seek the services of a compliance expert and that before a request for cancellation was made, AFSL holders should first:

  1. Revoke any authorisations you have given to representatives and notify the Australian Securities and Investments Commission (ASIC) of the revocations within 10 business days through ASIC Connect
  2. Notify all representatives of the revocation
  3. Confirm the status of any disputes with EDR schemes
  4. Lodge Form FS70 Australian financial services licensee profit and loss statement and balance sheet and/or Form FS71 Auditor’s report for AFS licensee for any financial year that ends before the date the licence is cancelled
  5. Take steps to discharge any amounts owed to ASIC.

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