ASIC toughens licensing process
Australian financial services licensees (AFSLs) and Australian credit licensees lodging licence applications to the corporate regulator can expect a more rigorous approach to assessing applications but guidelines on the exact requirements are not available yet, according to The Fold Legal.
Senior consultant, Sonia Cruz, wrote in a blog that the Australian Securities and Investments Commission (ASIC) would reject applications after the initial check if any component was missing in the licensing applications, which could take up to four weeks. This would then need to be resubmitted, causing significant delays 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," Cruz wrote.
She also said that since 2013, ASIC had been able to reject applications if it believed the applicant could contravene the financial or credit services laws in the future.
Applicants can also expect ASIC to conduct rigorous background checks to look for past misconduct, particularly deliberate or wilful disregard of financial or credit services laws.
However, Cruz noted that while ASIC said it May it would update the AFS Licensing Kit (RG 1-3) to specify its new approach to assessing applicants on if they contravened the law, it had not yet released any guidance.
ASIC's timeframe was currently 60 days for simple applications but Cruz said it could take four months.
"And the situation seems unlikely to improve. In ASIC's 2016—17 Corporate Plan, only four per cent of the total budget of $400 million has been allocated to licensing and professional registrations," Cruz said.
ASIC may also ask for materials applicants may use under the licence include a financial services guide or statements of advice.
"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," Cruz said.
AUTHOR
Malavika Santhebennur
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
