Do financial advisers need to be licensed?

  • Understand the purpose of an AFS licence.
  • Confirm that your adviser is licensed.

A financial adviser must be licensed to provide personal advice and recommendations. But there are also obligations on licensees regarding the conduct of its representatives.

do financial advisers need to be licensed

What is an AFS licence?

An Australian financial services (AFS) licence is a licence granted to a business that provides financial services, including financial advice. You will find an AFS licence is required when a person issues or deals in financial products. AFS licence details can be found in an adviser's financial services guide (FSG) or on its website. Make sure to check ASIC's Financial Advisers Register to see whether your
adviser is licensed.

Note: Some financial services industry participants are not required to have an AFS licence as they are not providing advice or dealing in financial products.

Authorised representatives

A licensee may appoint an authorised representative who acts on their behalf to provide specific financial services.

Principals must keep a register of their authorised representatives. "Principal" means "licensee" under the Corporations Act 2001 (Corporations Act), and the two terms are used interchangeably. A "licensee" is the holder of an AFS licence under the Corporations Act.

Licensees' obligations

AFS licensees must monitor and supervise the activities of their representatives to ensure they are complying with the law. Licensees must also ensure that their representatives are adequately trained and are competent to provide financial services.

The "know your client" obligation

Licensees and their representatives who are providing personal financial advice to a retail client must generally:

  • as per the language of the relevant legislation, make "reasonable inquiries" as to the client's personal circumstances and have reasonable basis for the advice
  • warn the client if the advice is based on incomplete or inaccurate information
  • provide the client a statement of advice (SOA).

 What do financial services regulators actually do?
 A financial adviser's obligations to you