Financial Services Snapshots

Consumer Credit

ASIC penalises AFS licensees for authorising advisers who gave advice while unregistered

On 8 April 2025, ASIC released a summary of Infringement Notices to AFS licensees for providing personal advice while unregistered.

ASIC noted that the registration requirement is central to the consumer protection mechanism, ensuring that financial advisers are fit and proper and meet the training standards thereby protecting consumers form unqualified advice.

ASIC reminds AFS licensees and financial advisers to:

• Check Registration Status: Ensure the financial adviser is registered before providing personal advice to retail clients.
• Understand Registration Obligations: Be aware of when an individual needs to be registered and the circumstances that may lead to deregistration.
• Re-registering Advisers: If a financial adviser changes AFS licensee, the new licensee must re-register the adviser before they can legally provide advice.
• Legal Requirements: If a financial adviser breaches the law by giving advice while unregistered, ASIC must refer the adviser to the Financial Services and Credit Panel or take regulatory action

See: Media Release

Financial Advice

AFCA releases article on calculation of loss for financial advice complaints

On 3 April 2025, AFCA published an article outlining how loss is calculated and the rationale behind the calculation methods in respect of a financial advice complaint. AFCA noted that it is required to calculate the loss based on the direct financial loss from the breach, which is complex and requires varying methodologies to fairly assess the loss depending on the circumstances of the complaint. The process involves calculating loss in a 'counterfactual' manner, considering what should have happened in two methods: 'No Transaction' and 'Estimate'.

• No Transaction involves assuming the client received appropriate advice, often assuming no action would have been taken. This approach is used when the original investment was in a stable and regulated product, the advice to sell the was clearly unsuitable, and the advice to invest elsewhere led to significant losses.
• The Estimate method involves long-term financial advice relationships and considers the client's risk profile and an appropriate market benchmark. AFCA evaluates this risk profile and uses a market benchmark to estimate the returns the client should have reasonably achieved.

AFCA stated that the purpose of using counterfactual approaches is to prevent over-compensation or under-compensation based on short-term market fluctuations. It stated that this approach is aligned with relevant case law and does not risk compensation based on likely market exposure.

See: Media Release

Licensing

ASIC to launch new portal for Australian financial services licensees

On 16 April 2025 ASIC released its plans to launch a new digital portal for licensing on 5 May 2025 to apply for, vary and cancel AFS licences.

The new portal will pre-fill known information and present relevant questions for each applicant and collect all essential information upfront. This will attempt to reduce assessment times for applicants.

This project is a part of the RegistryConnect program to stabilise and uplift the existing ASIC professional registers and the wider digital transformation ASIC is making to become a more efficient and data informed regulator.

See: Media Release

Other

ASIC consults on plan to increase visibility of firms' breach and complaints data

On 10 April 2025, ASIC released two dashboards containing firm-level Reportable Situations (RS) and Internal Dispute Resolution (IDR) data in the second half of 2025. The proposals detailed in Consultation Paper 383 Reportable situations and internal dispute resolution data publication (CP 383) builds on reports ASIC has previously published.

The publication also provides consumers and investors access to RS and IDR data at firm level, enhancing confidence and informed participating in the financial system. The publication aims to:

• encourage firms to improve their behaviour;
• highlight areas of significant breaches and complaints; and
• enable firms to targe improvements in their compliance, consumer outcomes, and performance.

ASIC is inviting stakeholders to comment on proposals outlined in CP 383, to assess the impact of the data publication proposal and consider alternative approaches. Feedback is due by COB 14 May 2025.

See: Media Release; CP 383

Authors: Narelle Smythe, Partner; Samantha Carroll, Partner; Lisa Simmons, Partner; Rehana Box, Partner; Con Tzerefos, Partner; Scott Charaneka, Partner; Hannah Glass, Special Counsel; Geena Davies, Senior Associate; Greg Patton, Senior Associate; Nicole Mazurek, Senior Associate; Kim Yen Nguyen, Senior Associate; Nicky Thiyavutikan, Senior Associate; Justin Ho, Senior Associate; Holly Marchant, Senior Associate and Nicholas Dennis, Senior Associate.