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ASIC to ‘intensify scrutiny’ of licensing applications

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Reporter 5 minute read

The financial regulator has extended its service charter for credit and financial services licenses, according to the head of licensing at a legal firm.

The licensing division of the Australian Securities and Investments Commission (ASIC) has been directed to “intensify their scrutiny of applications”, with the service charter for Australian Credit Licenses (ACL), and Australian Financial Services (AFS) licenses, set to be extended, according to head of licensing at The Fold Legal, Sónia Cruz.

Ms Cruz noted that she was informed of the changes at a liaison meeting between ASIC and professional licensing consultants in March.

“ASIC has altered its service-level targets for assessing AFS and credit licence applications. We have now been conditioned to expect 70 per cent of applications to be assessed within 150 days and 90 per cent within 240 days,” the head of licensing said.

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“That’s five to nine 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.”

Ms Cruz added that such revisions have increased pressure on applicants, claiming that some businesses have sought to operate in alternative markets in order to avoid the process.

“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.”

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ASIC developing new online licensing system

Further, Ms Cruz noted that during the liaison meeting, ASIC revealed plans to develop a new online licensing application process, designed to better “triage” applications. 

According to Ms Cruz, regarding the online process, ASIC noted:

  • 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 applicants should 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.

ASIC to enhance examination of Responsible Manager capability

Moreover, Ms Cruz noted that “ASIC will more closely scrutinise representations made about Responsible Managers”, which will include:

  • 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 trueness 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.

Ms Cruz claimed: “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.”

[Related: ‘Trust and financial services don’t sit together’: ASIC]

ASIC to ‘intensify scrutiny’ of licensing applications
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