Following an ASIC investigation into Australian personal budgeting services firm MyBudget, the company has applied for an AFS licence.
ASIC says in a statement that MyBudget has never held an AFS licence and was not authorised to provide financial services. It holds an Australian credit licence and is a member of AFCA.
The statement says that MyBudget’s business involves developing a budget plan to assist clients to meet their financial objectives and goals.
It explains that once the budget is developed, MyBudget offers a service to manage the budget on the client’s behalf. This service involves the client depositing their income into a MyBudget account, from which MyBudget then facilitates the distribution of funds in accordance with the budget plan.
…in May 2020, MyBudget was subject to a ransomware incident, which caused a system outage…
ASIC says that in May 2020, MyBudget was subject to a ransomware incident, which caused a system outage.
“The outage left MyBudget’s 13,000 clients unable to access their online accounts for at least seven days, meaning clients were unable to view their account balance and clients did not know whether automated payments had been made.”
It notes that MyBudget was still able to process client payments manually, although some clients faced significant delays and difficulties reaching MyBudget through the phone line.
ASIC states that it subsequently began an investigation into MyBudget to consider whether it was operating a financial services business without holding an AFS licence.
“ASIC was particularly concerned about unlicensed financial services conduct by an entity providing debt management services during the Covid-19 pandemic, when more consumers may face financial hardship and seek budgetary and related assistance.”
It says it has “formed the view that MyBudget is providing services to its clients via a non-cash payment facility, which would require the company to hold an AFS licence”.
ASIC says MyBudget has now applied for an AFS licence and is assessing the application.
AFS licence holders’ obligations
As background, ASIC says that AFS licence holders are subject to specific obligations designed to safeguard the interests of consumers. Some of these obligations include:
- Having adequate systems in place to provide financial services (including in relation to privacy and cyber security)
- Maintaining an AFCA membership
- Ensuring that its staff are well-trained and competent to provide financial services
- Reporting any breaches or likely breaches of licensee obligations to ASIC so that ASIC may act swiftly to minimise consumer harm
- Assisting ASIC in carrying out its functions and providing ASIC with additional oversight of the business and the industry generally
It adds that in response to the Covid pandemic’s impact on the financial system and the potential for harm that this has created, “ASIC has implemented a set of pandemic-related enforcement priorities that guide our response to suspected misconduct”.