ASIC taking a more detailed and rigorous approach to assessing applications.
ASIC is now taking a tougher approach on AFS and ACL licence applications – they’re refusing to accept applications for lodgement if they don’t contain all the required material and they’re taking a more detailed and rigorous approach to assessing applications.
Lodgement failures
On lodgement of an AFS or credit licence application, ASIC initially checks to see if all the required supporting information or documents have been provided.
If anything is missing, ASIC will refuse to accept the application, which will need to be resubmitted. This initial check can take up to 4 weeks – causing significant delay for applicants in having applications assessed.
So, before lodging your application, carefully check all the material you submit in support of your application to ensure everything required by ASIC’s AFS Licensing Kits is included.
Assessment rigour
Since July 2013, ASIC has been able to decline to issue an AFS or credit licence if it forms the view that the applicant is likely to contravene the financial or credit services laws going forward.
ASIC’s licensing analysts now look for evidence indicating that applicants might be unlikely to comply.
They actively look at a past conduct especially past deliberate or wilful disregard of the financial or credit services laws. So you can expect that ASIC will consult one or more of the following when assessing and validating the information you provide about your company and responsible managers:
- The internet and social media such as LinkedIn – to assess character and verify past experience;
- Past employers – to verify past experience;
- Company records – to verify financial information;
- Other ASIC stakeholder and enforcement teams – to check for direct or indirect involvement in or association with past contraventions;
- External agencies, such as other local or international regulators for information about compliance with analogous obligations in other regimes.
So it’s now more critical than ever that information provided to ASIC in support of AFSL and ACL applications is:
- Accurate and truthful – and does not mislead ASIC. Any past contraventions or misdemeanours should be disclosed (with an explanation of why they don’t indicate that you will contravene your obligations);
- Not contradicted by information published on the internet and via social media;
- Consistent with corporate and financial information previously provided to ASIC through the companies register.
We’ve also seen ASIC ask for material that licence applicants will use under their licence, e.g., a copy of their FSG or SoA. It’s difficult to predict what they might ask for, so it’s advisable to have your operating procedures and disclosure documents ready when applying for your licence.
If you need help or you’re concerned about ASIC’s line of questioning when your application is being assessed, consider seeking professional assistance.
More information please ASIC?
ASIC told us in May this year that it would revise the AFS Licensing Kit (RG 1- 3) to include details of the information it will request to assess whether applicants are likely to contravene their licence obligations. It suggested that it might require submissions, but gave no indication of what form these might take. Unfortunately, even though ASIC appears to be taking a different approach to assessing applications, the foreshadowed guidance hasn’t yet materialised.
This means that, because you don’t know what you’re likely to be asked for, it’s hard to prepare in advance.
Impact for you
The one thing you can be sure of is that AFSL and ACL applications are taking longer than ever. So apply early, and be prepared to wait.ASIC’s current KPI is 60 days for simple applications, but in our experience, it’s more likely to be well over 4 months.
And the situation seems unlikely to improve. In ASIC’s 2016–17 Corporate Plan only 4% of the total budget of $400 million has been allocated to licensing and professional registrations.
By Sónia Cruz
