The ASIC Corporations (Amendment) Instrument 2020/635 (Instrument) commenced on 15 August 2020. The Instrument amends the existing ASIC Corporations (Financial Counselling Agencies) Instrument 2017/792 to extend the Australian Financial Services (AFS) licensing exemption for financial counselling services to small businesses with less than 100 employees. Prior to this, the definition of “financial counselling service” applied only to individuals.
Rationale behind the new law
The overall objective of the new law is to reduce the regulatory burden on financial counselling agencies by permitting those agencies who advise individuals and small businesses, now defined as a business with less than 100 employees, to largely dispense with the AFS licensing obligations in Ch 7 of the Corporations Act 2001 (Cth) (Act). Ch 7 also covers conduct and disclosure obligations imposed on financial advisors.
Without the amending Instrument, financial counselling agencies who provide financial counselling services to small businesses may require an AFS licence.
ASIC recognises that this full compliance with Ch 7 of the Act in relation to certain types of advice, may be unduly burdensome and could affect the ongoing viability of some financial counselling agencies.
The amending Instrument addresses this concern.
Further reading and sources
Explanatory Memorandum to the ASIC Corporations (Amendment) Instrument 2020/635
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