Jaime Lumsden

New reporting requirements now apply to AFS licensees for financial years commencing 1 July 2021.

What are the new financial requirements?

AFS licensees previously relying on special purpose financial statements will now be required to prepare general purpose financial statements due to amendments to the Australian Accounting Standards.

How do the changes to the accounting standards apply to AFS Licensees?

AFS Licensees, who are not APRA regulated, must annually prepare and lodge with ASIC financial statements using form FS70. These financial statements must now be prepared as general purpose financial statements.

General purpose financial statements have either Tier 1 or Tier 2 requirements:

• Tier 1 (full disclosure) requirements apply to entities which have public accountability.  Requirements include full application of recognition, measurement, and presentation requirements for all assets, liabilities, income and expenses. Under AASB 1053 Application of tiers of Australian Accounting Standards (AASB 1053) entities which have public accountability must comply with the full disclosure requirements of Tier 1.
• Tier 2 (reduced disclosures) requirements apply to all other entities that have no public accountability. Requirements involve the recognition and measurement requirements of Australian Accounting Standards, but with reduced disclosures. Tier 2 general purpose financial accounts have been recently replaced with the new simplified disclosures as set out in AASB-1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities (AASB-1060).

Public accountability applies to entities where:

• Its debt or equity instruments are traded in a public market, or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or
• It holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (this includes AFS licensees that hold client monies or assets).

Some examples of AFS licensees that have public accountability and would need to meet the Tier 1 requirements, include:

• ASX listed entities;
• General insurance broker that holds client money;
• Retail over-the-counter derivative issuers;
• Corporate advisers that deal in financial products;
• Over-the-counter derivative traders;
• Wholesale trustees;
• Responsible entities of a registered scheme; and
• Corporate directors of a corporate collective investment vehicle.

For some AFS licensees, it is less clear whether they have public accountability, for example, the impact to underwriting agencies who manage a trust account for insurers is not as clear. There may be times where underwriting agencies pay claims or return premiums on behalf of the insurer through a trust account which they manage for the insurer. Under the Corporations Act, those payments are not required to be held in a statutory trust account under s981B of the Corporation Act (because it is not client money) and such money is held at the risk of the insurer. AFS licensees should seek assistance from their accountant/auditor to determine whether they can rely on the simplified disclosure regime of Tier 2.

AFS licensees should update internal processes and provide training to staff involved in managing financial arrangements and statements.

By Jaime Lumsden and Sónia Cruz.

The post Financial Reporting Changes for AFS Licensees appeared first on AdviserVoice.

Who is a Responsible Manager?

An AFS licence holder has an obligation to always maintain organisational competence. This is demonstrated by relying upon the knowledge and skills of the people who manage the business operations.  These people are known as Responsible Managers. This is an artificial role designed by ASIC to determine whether a licensee has organisational competence when assessing licence applications.

What is a Responsible Manager’s Role?

Responsible Managers should be directly responsible for the significant day-to-day decisions about the ongoing provision of financial services. This means the people in your business who:

• are responsible for the quality of your financial services, and
• decide how your financial services are provided and supervise the provision of those services.

Responsible Managers can act in one or all of the following capacities for an AFS licensee:

• as an employee or authorised representative
• as a director, or
• purely as a contractor to be a Responsible Manager in circumstances where the licensee does not have the organisational competency inhouse.

So before accepting (or continuing in) a role as a Responsible Manager, make sure that:

• you have the time or capability to do the role properly
• your job description carefully defines your role and responsibilities as a Responsible Manager
• you’re given the authority and autonomy to properly exercise those responsibilities – otherwise you could be liable for something that is outside your control
• the licensee has adequate compliance arrangements or a keen appetite for improving them.

Who is not a Responsible Manager

Senior executives responsible for business operations, such as a chief financial officer, risk manager, or HR manager, are unlikely to have the level of direct responsibility for the provision of financial services that would be expected of a Responsible Manager. This will, of course, depend on the size and scale of the business. In some small businesses, the Responsible Manager may be the managing director, and in larger businesses it could be someone in a middle management position that has the responsibility for overseeing the significant day-to-day decisions about the ongoing provision of financial services.

Who qualifies as a Responsible Manager?

Whether a Responsible Manager has the knowledge and skills to fulfil the role comes down to whether the person qualifies under one of 5 prescribed pathways set by ASIC. These can be quite rigid and usually require the person to have the same or similar experience in the financial services for which they are demonstrating organisational competency.

The 5 prescribed pathways are:

1. the person meets a widely adopted industry or relevant APRA standard and has 3 years’ relevant experience over the past 5 years
2. the person is individually assessed by an authorised assessor as having relevant knowledge equivalent to a diploma and 5 years’ relevant experience over the past 8 years
3. the person holds a university degree in a relevant discipline and has completed a short industry course, and 3 years’ relevant experience over the past 5 years
4. the person holds an industry or product specific qualification equivalent to a diploma and 3 years’ relevant experience over the past 5 years
5. if the person does not fit into any of the above 4 options then this option can be used by providing ASIC with a submission to demonstrate the responsible manager’s relevant experience over the past 10 years.

Responsible Managers must also be ‘fit and proper’. This is demonstrated by supplying ASIC with two business references and criminal history and bankruptcy checks, and completing ASIC’s statement of personal information form.

ASIC may have concerns over whether a person is fit and proper to be a Responsible Manager if:The nominated Responsible Manager has had an AFS or credit licence suspended or cancelled;

• a banning or disqualification order has been made by a court against the nominated Responsible Manager
• the nominated Responsible Manager has been disqualified from managing corporations;The nominated Responsible Manager has been banned from engaging in any credit activity under a State or Territory law
• the nominated Responsible Manager has ever been linked to a refusal or failure to give effect to a determination made by AFCA
• the nominated Responsible Manager has been convicted of an offence in the last 10 years.

Compliance

When Responsible Managers or business activities change, your organisational competence must be reviewed to ensure that the licence holder continues to meet its organisational competence obligation.

Some compliance measures for complying with the organisational competence obligation are:

• include a regular agenda item in your compliance/management meetings to consider whether any changes to your business activities or Responsible Managers affects your organisational competency
• have a succession plan in place for Responsible Managers, especially those that have key expertise in particular financial products
• maintain and update a Responsible Manager register that shows their knowledge and skills and the financial services for which they are demonstrating organisational competency, and the ASIC option they were nominated under to support their appointment
• keep records showing that you have reviewed your organisational competence and the steps you have taken to maintain your organisational competence, and
• to ensure the Responsible Manager continues to be fit and proper, conduct periodic criminal history and bankruptcy checks.

Some of the ways we can help in relation to Responsible Managers are:

• Responsible Manager Service Agreement template for engaging external responsible managers.
• Responsible Manager Masterclasses. We run these as public course throughout the year (the next one will be held in the second half of 2022) or we can be engaged to run a private in-house session;
• Responsible Manager assessments to advise whether they will satisfy ASIC’s requirements to support a licence application or variation; and
• Responsible Manager notifications of appointment.

By Sónia Cruz, Head of Licensing

The post Responsible Managers in a nutshell appeared first on AdviserVoice.

The change is bigger than it looks

Previously AFS licensees had a lower threshold test that a person be of ‘good fame and character.’ On the face of it, the change may seem trivial, but the effects are wide reaching.

ASIC now has the ability to:

• Assess the suitability of entities applying for a licence or that control an AFS or credit licence by requiring applicants to provide information on all officers of the licence applicant and any controllers of the licence applicant (or its officers);
• Refuse to grant a licence if any of the officers of the licence applicant, or its controllers, if any, or the controller’s officers, are found not to be fit and proper;
• Consider previous conduct in other businesses to determine whether an officer of a licence applicant will satisfy the fit and proper test; and
• Vary or revoke an AFS or credit licence if the licensee, its officers, or controllers (or its officers) no longer satisfy the ‘fit and proper person’ test.

Who must be a fit and proper person?

All ‘officers’ of both a licensee and the controller of the licensee, and the controller itself (if not a company), must meet the fit and proper person test.

An ‘officer’ typically includes:

• directors;
• company secretaries;
• responsible managers;
• chief executive officers;
• chief financial officers;
• senior managers; or
• any other person who influences the whole, or a substantial part of the decisions made by the business. This will of course vary from business to business.

This means that an applicant must demonstrate to ASIC that each of these people are ‘fit and proper’ when applying for an AFS or credit licence.

What will ASIC consider when assessing a ‘fit and proper’ person?

To grant an AFS or credit licence, ASIC must have no reason to believe that the applicant is not a ‘fit and proper person’ to engage in the activities authorised by the licence.

Practically, ASIC now requires each ‘officer’ to provide the following:

• Criminal history check;
• Bankruptcy check; and
• A statement of personal information.

This allows ASIC to consider:

• Any previous AFS or credit, or other professional licence, suspensions or cancellations of the person or any company for which they were a director;
• Whether the person has had any banning orders;
• Whether the person has ever been insolvent or has been the director of a company that has been placed into administration;
• Whether the person has had any criminal offences; and
• Any additional information that ASIC requests.

Licence applicants must also now provide ASIC with an express declaration that there has been no material changes to the person and the information that was lodged to ASIC before a licence is granted.

How will this impact existing licensees?

Even if you already have an AFS or credit licence, you will need to meet the ‘fit and proper person’ test moving forward. If you apply for a variation to your licence ASIC will assess whether all existing and new ‘officers’ are ‘fit and proper’. Consider putting measures in place to ensure you regularly check that ‘officers’ remain ‘fit and proper’. This could include:

• Periodically conducting police and bankruptcy checks; or
• Asking officers to complete a declaration about any conduct of theirs that may affect their standing as a ‘fit and proper’ person.

By Sónia Cruz and Nicholas Pavouris

The post More than a synonym – what is a fit and proper person? appeared first on AdviserVoice.

Sonia Cruz

ASIC rejects 30% of AFS licence applications and 24% of credit licence applications. In this article, we explain why it rejects applications and give you tips on how to avoid becoming a statistic.

In 2017/2018, ASIC approved just 40% of all Australian financial services licence (AFSL) applications and 49% of credit licence applications. Many licence applications could have avoided rejection with a little extra preparation.

When applying for a licence, ASIC performs a key role as a gatekeeper. It may grant a licence if:

• The application is made in the prescribed format and all the supporting documents are provided;
• It has no reason to believe the applicant is likely to contravene the general obligations applicable to all licensees. These obligations are outlined in the Corporations Act and the National Consumer Credit Protection Act (NCCP Act); and
• Anyone responsible for performing duties under the licence are of good fame and character. This includes responsible managers, partners and trustees.

Why ASIC may reject your licence application

There are 5 common reasons why ASIC may reject a licence application.

1. The application did not include all the information

When ASIC receives a licence application, the first thing it does is make sure it’s complete. If the application is incomplete it will be rejected and you will need to reapply.

To submit a complete application it must include:

• All core proofs and supporting documents outlined in ASIC’s Regulatory Guide 2 or 204 (whichever is applicable); and
• Any other information required for ASIC to conduct a detailed assessment.

You must include all the information in the format prescribed in the guide. When putting the information together, remember it’s your chance to make a good first impression on ASIC, so make it count.

2. It’s not clear what services you intend on providing

You need to be crystal clear about what products and services you will provide and how they are regulated. When reviewing your application, ASIC needs to be reasonably satisfied that you will comply with your obligations under the Corporations Act or the NCCP Act. So you need to show ASIC that you understand the law and what it means to your business.

For example, if you intend on advising on warrants, your application must be clear about what type of warrants and how they’re legally categorised. This is because warrants can legally be securities, derivatives or managed investment schemes. If it looks like you have misunderstood the regulated nature of your products or services, you will not inspire faith in ASIC.

3. Your responsible managers are unsuitable

Your responsible managers have direct responsibility for significant day-to-day decisions about your financial services. They must be able to collectively demonstrate that they have the relevant qualifications and experience for all the product authorisations you’re seeking a licence for. If they can’t, then they’re not the right people to be your responsible managers.

4. You can’t show how you will meet your statutory obligations

ASIC wants to know how you’re going to manage your business and embed your compliance arrangements. They may want to see that your processes and policies are well documented. For example, ASIC may ask to see procedures that document how you will manage representatives, training, compliance, risk, disputes and your compensation arrangements.

They may also ask to see documents that show your product research or demonstrate that you have adequate resources. For example, in a recent AAT decision one of the reasons a licence application was rejected was because the applicant couldn’t adequately demonstrate how they would manage their financial resources i.e. they had no documented policies and procedures for managing their financial resources.

If you’re applying to be a lender, ASIC may also ask to see your responsible lending and financial hardship policies.

5. You don’t respond to ASIC’s questions in a timely and adequate manner

If ASIC asks you for information, you’re expected to respond in a timely and adequate manner. For example, applicants usually have 10 business days to supply additional proofs. If you don’t provide the information or ask for an extension, your licence application may be rejected.

ASIC will look at how you communicate and conduct yourself during the process when assessing your licence application. If you don’t provide some information, it may be enough to satisfy ASIC that you can’t ensure that the “financial services covered by the licence are provided efficiently, honestly and fairly”.

By following these tips you can maximise your chances of getting your licence approved on your first attempt.

New factors will also affect licence applications soon

Recommendations from the ASIC Enforcement Review Taskforce will also impact the future assessment of licence applications. If these are adopted, ASIC may be able to:

• Refuse a licence application (or, for existing licensees, take licensing action) if it’s not satisfied that the entities or persons controlling the licensee are fit and proper;
• Cancel a licence if the licensee fails to commence business within six months;
• Refuse a licence application if it’s false or misleading in a material way;
• Require applicants to explicitly confirm that there have been no material changes to the information they gave in their application before their licence is granted;
• Align the assessment requirements for AFS and credit licence applications so that the highest standard applies; or
• Align the consequences for making false or misleading statements in documents it’s provided with.

If you’re preparing or resubmitting your licence application, we suggest having it reviewed before you submit it to ASIC. This includes ensuring you have all the core, complex product and additional proofs you require and that your responsible managers meet ASIC’s requirements.

By Sonia Cruz

The post Five reasons ASIC will reject your licence application appeared first on AdviserVoice.

Using a broker can save you a lot of time and energy in the long run.

Some financial services and credit licence applications are being delayed because licensees simply cannot buy professional indemnity (PI) insurance. We outline what to do if this is happening to you.

The Royal Commission has made it more difficult for licensees to get PI insurance

The insurance market has hardened following the Royal Commission. This is making it difficult for some organisations to obtain PI insurance. Leaving a growing number of licence applicants who can’t buy cover.

It’s mandatory for Australian Financial Services (AFS) Licensees dealing with retail clients and some credit licensees (like mortgage brokers) to hold adequate PI insurance. Licensees must have arrangements for compensating clients for losses suffered as a result of a breach by the licensee or its representatives of their obligations under the Corporations Act or the National Consumer Credit Protection Act. Without cover, licence applicants can’t satisfy ASIC they have met their statutory requirements so ASIC can’t issue their licence. This is resulting in substantive delays for some licence applicants.

What you can do so your licence application isn’t delayed because of PI insurance

Here are some steps you can take to mitigate the risk of a licence being held up because you can’t obtain PI insurance:

• Start looking for insurance early. As soon as you decide to apply for a licence, and before you even lodge your licence application, you should start looking for PI insurance.
• Find a broker that specialises in PI insurance. In particular, make sure they’re familiar with the compensation and insurance arrangements outlined in ASIC’s RG 126 (for financial services licensees) and RG 210 (for credit licensees).
• Know what PI insurance you need and what it must cover. Not all services require PI insurance. For example, if you’re a lender, there’s no strict legal requirement for you to hold PI insurance. Some covers are harder to obtain than others, so if you don’t need them to comply with the law, it may be worth not insuring that risk in the short term.
• In your licence application, clearly describe your business and the services you will provide. This will make it clear to ASIC what you need to insure and what you don’t.

As you will need to renew your PI insurance annually, and without it you can find yourself in breach of your regulatory obligations, we suggest finding a broker that can support and work with you to obtain the right level of cover. It will save you a lot of time and energy in the long run.

By Sónia Cruz

The post Can’t get mandatory PI cover? Here’s what to do appeared first on AdviserVoice.

Sonia Cruz

At a liaison meeting between ASIC and professional licensing consultants in March this year, we were warned not to expect a return to the good ol’ days of 2 month turnarounds on AFS and credit licence applications – ever! It seems that ASIC considers 6 months to be an acceptable minimum. Here’s why.

According to ASIC, licence application assessment is a critical gatekeeper function in the battle against bad apples entering the industry. So its Licensing Division has been directed to intensify their scrutiny of applications.

In addition to the increased workload that this entails, the Division has been tasked with licensing 3 new sectors (accountants, platform based MDA providers and crowd sourced funding intermediaries). And at the same time, insufficient funding has been allocated to the Division.

As a result, staff numbers have been reduced from 35 to 25. This chronic under resourcing doesn’t look like being solved any time soon.

ASIC has extended its service charter

For many years, ASIC claimed to assess licence applications and variations within 28 days. This increased to 60 days in c. 2016.

But a 60 day timeframe hasn’t been achieved for a considerable time as illustrated by the table below, showing the time taken to assess applications for new or varied licences in the first 7 months of FY 2018.

Indeed, in January 2018, ASIC only managed to finalise 115 of 685 existing and 90 new applications, i.e. the backlog was only reduced by 25!

Bowing to the inevitable, ASIC has altered its service level targets for assessing AFS and credit licence applications. We have now been conditioned to expect 70% of applications to be assessed within 150 days and 90% within 240 days.

That’s 5-9 months, give or take.

Applications will take longer to assess if they raise complex or new policy issues, or if ASIC is not given all the information they need.

This is making it more difficult for businesses launching new products and services to get to market. Indeed, some innovative businesses are exploring launching in other jurisdictions.

Some changes are on the cards which sound good in theory, but only time will tell whether sustainable improvement will be achieved.

An improved online licence application process

ASIC is developing a new online licence application, which aims to better “triage” applications. While we don’t know when it will be launched, we can tell you that:

• The triage approach will ensure that only questions that are relevant to the applicant are asked – which will reduce confusion and potential for error
• Most information and documents that are needed to assess the application will be identified and requested in the course of completing the application
• Improved guidance on ASIC’s information requirements will be provided
• Instead of additional proofs, applicants will be prompted to provide additional information about relevant topics (word limits will apply, so be prepared to be concise)
• Applicants will be required to justify their answers and, where possible, provide information in diagrammatic form, e.g. transaction and money flow charts and organisational charts

The objective is a ‘one read’ review and analysis by ASIC to reduce double handling and the elapsed time currently taken up by multiple requests for additional information.

Enhanced examination of Responsible Manager capability

ASIC will more closely scrutinise representations made about Responsible Managers. This will include the following:

• Checks on claimed experience – ASIC may contact past employers; in our experience, this already occurs with some applications
• Specific good fame and character questions
• Personalised business references, addressing Responsible Manager’s actual roles and responsibilities, rather than the current pro-forma approach
• Substantive role verification – ASIC will consider the appropriateness of the responsibilities delegated to the Responsible Manager, remuneration, time commitment and reporting lines. Responsible Managers will be asked to justify their capacity and time availability to perform their duties
• Certification from Responsible Managers and referees as to the true and correctness of the supplied information. ASIC takes this seriously, and will warn that it is a criminal offence to provide false or misleading information.

While ASIC’s efforts to simplify the licensing process are welcome, we predict that the increased scrutiny and complexity may well further protract and complicate the licensing process. Except for the simplest of applications, applicants are likely to continue to need professional assistance.

The Fold’s Licensing Team have assisted with over 500 licence applications, variations and Responsible Manager appointments in the past 16 years. We’d be happy to help with yours.

By Sónia Cruz

The post Changes to ASIC licensing appeared first on AdviserVoice.

Sonia Cruz

Employing someone with a conviction or bankruptcy can jeopardise compliance with an Australian Financial Services (AFS) licensee’s obligations.

ASIC can ban any person it considers to not be of ‘good fame and character’. It can suspend an AFS licence if a significant representative of a licensee is banned, or if ASIC believes the licensee will not comply with the general licence obligations.

This means that employees with a history of bankruptcy or conviction can expose a licensee for two reasons:

They may not be of good fame and character; and
They may be motivated to breach the financial services laws or behave dishonestly.
Where an employee has a conviction, the licensee should consider the nature of the offence. Convictions involving dishonesty are likely to affect the person’s good fame and character. They also call into question the individual’s ability or willingness to comply with the financial services laws. Other types of convictions are less likely to present a problem, but each case must be assessed on its merits.

Undischarged bankrupts also create problems for licensees because they have additional conflicts of interest. Even the best person can be motivated to behave dishonestly if they find themselves in difficult circumstances. Undischarged bankrupts could be tempted to misappropriate client funds, so they shouldn’t be employed in any role that requires them to handle money or that gives them an opportunity or ability to misappropriate client monies.

Undischarged bankrupts also cannot act as directors, responsible managers, company secretaries, or be involved in the management of a company. Only once the bankruptcy is discharged, can they fulfil these roles. However, they can be employed in another capacity while still bankrupt.

By: Sónia Cruz

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How to get your clients to read their SOA.

Most clients don’t read Statements of Advice (SoA) because they are far too long. This renders them ineffective and exposes advisers to the risk that their client may not understand the advice they’ve been given. If things go wrong down the track it may even leave advisers on the hook if the SoA is not clear, concise or effective.

The clear, concise and effective obligation in the Corporations Act 2001 applies to both words and presentation. So how you present your SoA is just as important as its content. Information should be presented as briefly as possible without compromising its accuracy or leaving any essential information out.

Here are our top three tips to a clear, concise and effective SoA that is easier for clients to read:

1. Remove jargon

Legal, industry and technical jargon make any document difficult to understand, especially to clients who are inexperienced or unfamiliar with financial terms. Avoid acronyms such as TTR, ETF, LPT and words that clients may not understand like wrap, concessional or non-concessional contributions, defensive or passive assets. While these may sound impressive, clients may not understand them.

If you must use industry jargon then include an explanation that is written in simple language that the client will understand and relates to their specific circumstances.

2. Stick to the essentials

More information is not always better. An SoA will not be compliant if it contains irrelevant information. So this is not the time or place to include marketing spiels, educational information or research materials.

The SoA must only include information relevant to the client – anything else may distract them from the critical information. For example, if you are advising a single person about their superannuation contributions do not include information about spouse contributions. If you think your client would benefit from more generic information about their contributions perhaps refer them to another resource like ASIC’s MoneySmart website.

3. Templates need to be tailored

Beware of templates that promise to prepare an SoA for you with minimal client information. While templates can be efficient they should give you enough flexibility to tailor the SoA to the client’s unique circumstances and the advice you are providing.

Some generic SoAs we have seen contain so much irrelevant information that it takes more time to cull the document than it would to create a tailored SoA from scratch. A seven-page document about their situation is also more appealing to the client than 40 pages of irrelevant information.

Templates can still be very useful with some enhancements. For starters, include instructions and guidance on how to use the template to prepare a tailored SoA. Also specify what content is mandatory, what is optional and what requires tailoring to produce a meaningful document. Your client will thank you for it.

By Sónia Cruz

The post 3 tips to write an SOA your clients want to read appeared first on AdviserVoice.

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

The post New tough approach to licensing appeared first on AdviserVoice.

Individuals who provide personal advice to retail clients about financial products have until 30 May 2015 to update their details on ASIC’s Financial Adviser Register in order to avoid late fees. This applies to employees, directors and authorised representatives of AFS licensees – unless they only advise on basic deposit products, general insurance and consumer credit products, in which case they don’t need to register at all.

The Fold Legal (The Fold)’s Senior Consultant, Sonia Cruz, says that ASIC’s statistics show that since the launch of the Financial Adviser Register on 31 March 2015, over 22,000 advisers have been added. “Believe it or not, around 2,800 people search the Register every week day,” she says.

Ms Cruz says between 25-30 May 2015 the following additional information must be uploaded to the Financial Adviser Register for each current financial adviser:

• The training and courses that the adviser has completed, including the name of the course, the year it was attained and the provider or educational institution.
• Membership of a professional body which is relevant to financial services, e.g. AFA, FPA, etc.
• Employment history for the last 5 years including AFSL numbers of previous employers and employment start and end dates.
• The date the adviser first commenced providing financial services.

“As it’s an offence to enter incorrect information, the person entering the additional information must verify it before updating the Financial Adviser Register,” Ms Cruz says.

She recommends:

• Requesting copies of certificates, qualifications and statements of attainment; and
• Conducting checks with previous employers, relevant training providers/education institutions and professional associations (where necessary).

“If advisers are authorised representatives, both the Authorised Representative Register and the Financial Adviser Register need to be updated when they are appointed and when changes occur,” she says.

The Financial Adviser Register can be viewed via both ASIC’s MoneySmart portal and the Professional Registers section of its website. For more information about how to access the Register, useful FAQs and screen shots of the ASIC Connect webpages can be found on the ASIC website.

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