As from the 1st of February issuers and advisers of Margin Lending facilities can start applying for an Australian Financial Services Licence (AFSL). The period for Margin Lending licence applications will end the 30th of June 2010.
If you are a margin lender or adviser you must apply to the Australian Securities and Investment Commission (ASIC) for a licence within this timeframe if you want to stay in business. Margin Lending providers that don’t apply for an Australian Financial Services Licence will not be able to continue providing Margin Lending services.
These procedures are in line with the approval of the Corporations Legislation Amendment Act, also known as the Financial Modernization Act, approved last year.
What does the new Act require?
1) Issuers and advisers of Margin Lending facilities must be licensed by ASIC with an AFSL.
2) Advisers must only give advice that is in the interest of their client’s individual circumstances.
3) Margin Lenders must comply with the new responsible lending requirements.
4) Clients must have the option of accessing external dispute resolution services.
5) Advisers and Issuers must by transparent in their communication with clients in the case of a margin call.
These new regulations on conduct, disclosure and responsible lending take effect from the 1st January 2011.
You can see a more detailed timeline of the changes to margin lending regulation at the Australian Securities and Investment Commission website.
If you are an adviser or issuer of Margin Lending in Australia now is the time check if you are captured by the new requirements, comments Dr Peter Boxall, ASIC commissioner.
These new regulations come with an updated policy and regulatory guide to help issuers and advisers of Margin Lending facilities to fall in line with new requirements. Time is of the essence if you want to make sure you can stay in business after the 30th of June 2010 when the new licensing rules come into play.
These changes are designed to apply to Margin Lending the same licensing, conduct and disclosure requirements that other financial services are required to follow in an effort to regulate the credit industry as a whole. These efforts have been intensified in the light of the recent credit crisis worldwide.
For more information you should visit the Australian Securities and Investment Commission website where up-to-date copies of regulatory guides are available.
These new requirements will help in providing a more secure environment for investors that rely on the services of advisers and issuers of Margin Lending. If you are investing in Margin Lending, do you know if your broker and adviser are licensed or are in the process of applying for a new AFS licence?
