Australian Financial Services licences and ASIC: More hoops to jump through during application process
The Australian Securities and Investment Commission (ASIC) regulates consumer protection within the financial sector. One of the ways in which they seek to protect consumers is in their role as a licensing body for the Financial Services industry.
In response to previous concerns, ASIC has recently become more vigilant in how they issue licences in order to strengthen their consumer protection functions. More in-depth inquiries in to products have been reported in 2015, with the Commission imposing a more strenuous questioning process on licence applicants.
This new, stronger, approach comes in reaction to a growing discontent regarding ASICs effectiveness and performance in previous years.
Who needs an AFS Licence?
An Australian Financial Services (AFS) Licence is required to carry out the business of providing financial services. Financial service is broadly defined, and includes services that:
- provide financial product advice, including making financial investments and managing financial risk;
- deal in a financial product;
- make a market for a financial product;
- operate a registered scheme;
- provide a custodial or depository service; or
- operate a financial market.
While ASIC is required to grant an AFS licence whenever all the relevant criteria are met, it appears that the Commission is now taking a more proactive approach to the licensing process. They are now requiring more detailed information regarding potential Licensees and their businesses before an applicant will be successful.
As such, entities looking to obtain an AFS licence in 2015 will likely be required to undergo a more rigorous process than those in the past. It is more important than ever for entities to be fully prepared before lodging an application, otherwise they should prepare to face a lengthy application process filled with requests for further information from ASIC.
What you need before you can apply
In order to successfully apply for an AFS licence, entities must be able to provide information relating to an array of areas, including:
- evidence that they are properly established;
- the appropriate type of financial service or product, including class of product;
- an appropriate description of the business including the types of business activities;
- organisational competence;
- compliance arrangements;
- the ability to make representations, including the businesses ability to comply with the licence conditions and the adequacy of resources;
- provision of adequate dispute resolution systems; and
- provision of risk management processes.
Overall businesses must be able to provide core proofs, that is a range of documents evidencing and fully supporting the assertions made within their applications.
How we can help
If you are applying for an ASF licence, setting up a business for the first time, or need assistance dealing with ASIC, get in touch with one of the experienced solicitors at Streten Masons Lawyers. We provide a range of services to business owners, including:
- Assistance in registering a business,
- Assistance in setting up the business under the appropriate business structure [See Rhennen Ford’s feature article: Choosing the Right Business Structure],
- Drafting important contracts such as employment policies.