Home › Forums › Australian Financial Services Licensing (AFSL) Forum › Representatives with prior convictions
November 21, 2014 at 12:47 pm #4196
What do you do if you have an employee with a previous fraud conviction who wishes to be a credit representative of an Australian Credit Licence (ACL) and an authorised representative of an Australian Financial Services Licence (AFSL)?
ACL holders cannot authorise a person as a credit representative if that person has been convicted of serious fraud within the last 10 years.
What does ‘serious fraud’ mean?
The National Consumer Credit Protection Act 2009 (NCCP) defines serious fraud as an offence involving fraud or dishonesty which is punishable by imprisonment for a maximum period of at least 3 months. The person does not need to have been imprisoned for their offence to be considered serious fraud.
Obtaining financial advantage by deception by defrauding Centrelink is an offence under section 134.2 of the Criminal Code Act 1995. The offence carries a penalty of imprisonment for up to 10 years. Accordingly, this offence is serious fraud within the NCCP definition and the employee will unfortunately not be able to be authorised as a credit representative.
AFS authorised representative
There is no similar requirement to the above for AFSL holders and accordingly you are free to authorise a person to provide financial advice under your licence. However, given the serious nature of the conviction, you should consider additional monitoring and supervision of the employee as part of the licensee’s risk management system.
Must the conviction be disclosed on the register of financial advisers that will be implemented?
Currently the following information is being considered for inclusion on the register:
- the adviser’s name, registration number, status, and experience;
- the advisers’ qualifications and professional association memberships;
- the adviser’s licensee, previous licensees/authorised representatives and business name;
- what product areas the adviser can provide advice on;
- any bans, disqualifications or enforceable undertakings; and
- details around ownership of the financial services licensee and disclosure of the ultimate parent company where applicable.
The register is currently still in the planning stages and so not all details are available. While a fraud conviction will not be disclosed on the register it may prove to be a barrier to an adviser being entered on the register. Holley Nethercote is unable to provide any additional advice on this matter until the register details are finalised next year.
Please feel free to contact our office for further information.
Author: Michelle ChasserFebruary 22, 2015 at 10:30 am #4299
This is an interesting development by ASIC. I have always found it interesting how some types of ARs do not need to be listed whiles others do. At first it seems like a simple register, but I think the affects will be far wider and greater than expected.