Fifty-eight Australian financial services (AFS) licensees have had their authorisation revoked after ASIC found they were also authorised representatives of other AFS licensees.
ASIC has revoked authorisation of these dual licence holders after an investigation into 65 AFS licence holders found that 58 were breaking the law.
Under the Corporations Act, an AFS licensee cannot be the authorised representative of another AFS licensee - with the only exceptions being general insurance underwriting agents and brokers operating under a binder given by an insurer.
The regulator said in circumstances where an authorisation has been granted to one AFS licensee by another it is concerned licensees may not have appropriate compliance measures in place.
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ASIC said these dual licensees could result in potential risks for consumers.
As an example of the risks that could be associated with these dual licensees, ASIC pointed out an AFS licensee may not maintain professional indemnity insurance or membership of an external dispute resolution scheme because they are operating as an authorised representative of another licensee.
Another issue is because the licensee's authorisation is actually void under the law, the licensee providing advice as an authorised representative will not have access to their AFS licensee's professional indemnity insurance or external dispute resolution scheme.
ASIC reminded licensees it expects them to check ASIC's professional registers prior to granting authorisation to a new representative to ensure they do not authorise a person or entity that already holds an AFS licence.
ASIC indicated this should be part of the onboarding process for AFS licensees.