Financial Services Essay Example

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Financial Services

Question 1

John is offering a financial service due to the nature of his business. According to article 766A (1) (a), a person is considered to be providing a financial service if they offer advice regarding the financial product advice. This is applicable to the situation that faces John. It is also important to note that John has registered with ASIC which is also a requirement for companies providing financial services according to section 766A (1) (d). Although his business has not been granted the Australian financial services licenses, he is still offering financial services.

Section 911A of the corporations act 2001 (Cth) clearly outline the needs for registration for the Australian financial services licenses. The section also states out the exemption for the registration. In the case of International Litigation Partners Pte Ltd v Chameleon Mining NL (Receivers and Managers Appointed)[2012] HCA 45, the court ruled out that litigation funders do not require the Australian financial services licenses (Legg, 2011). The services that are being offered by John are thus financial and he requires a license in order to explore the new opportunities.

Question 2

John is carrying on a financial service business as his actions are meant to influence the financial decisions to be made by the individuals. According to section 766B, one is deemed to be carrying on a financial service if their advice is for the purposes of influencing the financial decisions of an individual. Section 766C also defines what a financial market is and it shows that John is operating in a financial market. Operating in a financial market is also an indication that one is carrying on a financial service.

Although John does not have a license, his advice to the wealth people is for the purposes of ensuring that they take various decisions with regards to the financial market. This is also an indication that the he is carrying on a financial service business. It is also important to note that his clients benefits from his decisions in terms of the financial decision. Benefiting the clients in the financial market is an indication that one is carrying on a financial service. Carrying on a financial service however requires registration (Pearson, 2009). This is despite the fact that John is not carrying on the services on a frequent basis. Pam who works for John is also known to be carrying out the financial services and hence his working relationship is an indication that John is also carrying on a financial service.

Question 3

John is required to obtain an Australian financial services license for the purposes of ensuring that he continues offering his services as well as exploiting the new opportunities. However, in order to obtain the license, he has to fulfil some conditions. According to section 911A he has to obtain the approval of the courts before being licensed to carry on the financial services. He is also supposed to get a statement indicates that he is not bankrupt. This is also a requirement under section 911A. He is also supposed to present information that he has not been convicted in the last ten years with incidences of dishonesty. This is in accordance with section 913B of the corporation’s act 2001 (Cth). This is considering that high levels of integrity are required when offering financial services (Zubcic, 2011).


Legg, M, 2011, High Court Excludes Litigation Funding from Licensing Regime, New South Whales University.

Pearson, G, 2009, Financial services law and compliance in Australia, Cambridge University Press.

Zubcic, J, 2011, Examining the link between enforcement activity and corporate compliance by Australian companies and the implications for regulators, International Journal of Law and Management, 53(4), 299-308.