The new powers of the Australian Securities and Investment Commission, ASIC, will allow it to revoke the financial services licenses (AFSL) of some inactive companies.
In February of this year, the regulator had the opportunity to revoke AFSL and ACL (Australian Credit License) if the operator did not start operations within 6 months from the date of its receipt.
Sophie Gerber, who is co-CEO of TRAction Fintech and director of law firm Sophie Grace, said that number of companies with inactive AFSL that are threatened with cancelling their licenses.
She said in a statement that there are some companies with AFSL that do not use their permissions.
In particular, the Australian regulator is able to immediately cancel AFSL or ACL if the licensee has not started its activity within 6 months after obtaining a license or has not shown any activity since February 18, 2020, for existing holders of AFSL or ACL. Besides, the regulatory body may revoke licenses if the organization has ceased to offer financial services or engage in the credit business.
What do license holders do?
TRAction Fintech, which provides financial reporting services for financial companies offering trading services, including OTC currency and derivative financial instruments, says that if the company is a legal entity, ASIC may terminate their licenses by sending them a written notice after six months.
In addition, if the six-month period ends, and the licensee has not begun to provide services permitted by the AFSL or ACL, then it must notify the ASIC 15 working days after the expiration of the specified period.
Licensees will be able to ask the ASIC for an extension if they do not have time to start their financial or lending activities within six (6) months after the submission of AFSL or ACL.
How did the new ASIC credentials come about?
The Australian regulator was given new powers after public comment, in response to a request from the ASIC Enforcement Review in 2017.
Until February of this year, the Commission could suspend or revoke licenses only if the licensee had ceased its activities in the field of financial services. However, it did not have the opportunity to do this if the company did not start operations after obtaining a license.
The new credentials eliminate the uncertainty about how much time is allotted to the company to start operations after getting a license. As TRAction experts emphasize, strengthening ASIC’s authority is necessary to ensure the integrity of the Australian market, as licensees earned money by selling them to individuals who might not meet the requirements for AFSL or ACL holders.