All clients beware

Significant increase penalties for misleading statements in licence applications.

Pursuant to Section 1308(8) of the Corporations Act a person must not, in connection with an application for an Australian financial services licence:

  1. make a statement that is false or misleading in a material particular knowing it to be false or misleading;
  2. omit to state any matter of thing knowing that because of that omission the application is misleading in a material respect.

Parliament has now significantly increased the penalty for any breach of the above provision from five penalty units (currently $1,050) to FIVE YEARS IMPRISONMENT.

Clients should be aware that they can get into difficulty by making false statements OR by omitting to include certain key information. In the latter case silence as to a particular topic can be deemed to be misleading. For example, all applicants must clearly state the purpose of the application. Last year, ASIC banned two applicants who has applied for a licence with the purpose of on-selling but did not disclose their intention to ASIC.

Clients should also be wary of buying “of the shelf” licence application templates for the purpose of DIY applications. Such a practice could easily lead to errors or omissions and could leave the applicant suffering from severe legal ramifications.

The team at Know Compliance has a combined 100 years of experience in helping clients prepare licence applications. We are here to assist you in order to ensure that you do nor fall foul of the new legislative changes.