Section 192 of the Corporations Act 2001 (Cth) provides general obligations that apply to holders of an Australian Financial Services Licence (AFSL). These obligations state that an AFSL holder must, ‘do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly’. But what do these terms really mean? It is worthwhile to explore this section and the significance of this obligation for AFSL holders.
In the matter of ASIC v Camelot Derivatives Pty Ltd (in liq) 2019: the ‘Camelot’ case, the Judge outlined that the duties to be efficient, honest and fair all overlap and interrelate. They noted that the terms ‘connote a requirement of competence in providing advice and in complying with relevant statutory obligations’. A person who holds an AFSL must therefore be ethically sound and have a working moral compass. Notably, in the recent Banking Royal Commission, Commissioner Hayne said the section of the Corporations Act encompassed the ‘six norms of conduct and that these norms should act as guides for those offering financial services. The norms are to obey the law, not mislead or deceive, act fairly, provide services that are fit for purpose, deliver services with reasonable care and skill and finally, to act in the best interests of a person.
ASIC has stated that it will seek to use penalties to ensure that both corporate bodies and individuals can be held accountable for not obeying their obligations as AFSL holders.
If you need further clarification on your AFSL obligations, you are welcome to contact our team of experienced taxation and commercial lawyers by clicking here to submit an online enquiry form or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange a teleconference or appointment.