Personal budgeting service MyBudget has applied for Australian financial services licence (AFSL), following an investigation into its operating model by the Australian Securities and Investments Commission (ASIC).
ASIC said it was particularly concerned about unlicensed financial services conduct by an entity providing debt management services during the COVID-19 pandemic, when more consumers may face financial hardship and seek budgetary and related assistance.
“ASIC has formed the view that MyBudget is providing services to its clients via a non-cash payment facility, which would require the company to hold an AFSL,” ASIC said.
MyBudget had never held an AFSL and was not authorised to provide financial services, but it did hold an Australian credit licence and was a member of the Australian Financial Complaints Authority (AFCA).
ASIC said MyBudget’s business involved developing a budget plan to assist clients to meet their financial objectives and goals.
“Once the budget is developed, MyBudget offers a service to manage the budget on the client’s behalf,” ASIC said.
“MyBudget’s service involves the client depositing their income into a MyBudget account, from which MyBudget then facilitates the distribution of funds in accordance with the budget plan.”
In May 2020, MyBudget was subject to a ransomware incident, which caused a system outage, which left 13,000 clients unable to access their online account for at least seven days, meaning clients were unable to view their account balance and did not know whether automated payments had been made.
MyBudget was still able to process client payments manually, although some clients faced significant delays and difficulties reaching MyBudget through the phone line.
ASIC subsequently commenced an investigation into MyBudget to consider whether it was operating a financial services business without holding an AFSL.