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Budgeting provider MyBudget has applied for an Australian financial services licence, after a recent ASIC investigation.
Personal budgeting provider MyBudget had never held an Australian financial services (AFS) licence and was not authorised to provide financial services, but it did hold an Australian credit licence and was a member of complaints agency AFCA.
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But ASIC has concluded that the firm has provided services to its clients via a non-cash payment facility, which would require an AFS licence.
According to the regulator, MyBudget’s business model involves developing a budget plan to assist clients to meet their financial objectives and goals.
Once the budget is developed, MyBudget offers a service to manage the budget on the client’s behalf, which involves the client depositing their income into an account with the company, from which MyBudget can distribute funds in accordance with the budget plan.
ASIC had opened an investigation into the firm after it was hit by a ransomware incident in May last year, which caused a system outage.
The outage left 13,000 clients unable to access their online account for at least a week, with no ability to see their account balance or to find out if automated payments had been made.
MyBudget was still able to process client payments manually, but some clients faced significant delays and difficulties reaching the firm via phone.
ASIC signalled concerns around the firm potentially operating a financial services business without a licence, especially around providing debt management services to consumers left more vulnerable through the COVID-19 pandemic.
Since ASIC concluded MyBudget needed an AFS licence, the firm has applied for one.
The regulator has said it is currently assessing the application.
AFS licence holders are subject to specific obligations aimed to protect consumers’ interest, some of which include having adequate privacy and cyber security systems, maintaining an AFCA membership, ensuring staff are well trained and competent to provide financial services.
AFS licensees are also supposed to report any likely breaches to ASIC and to provide the regulator with additional oversight of their business and the industry more generally.
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