In order to legally conduct a financial services business, you need an Australian financial services (AFS) licence. An AFS licence allows you to carry out a range of activities including giving advice on a financial product, and dealing or selling a financial product. Some examples of financial products are shares, bonds, superannuation, derivatives, and general insurance.
Applications are submitted to ASIC online through their eLicencing system. There are 4 key steps that must be followed to obtain an AFS licence. It is important to comply with ASIC and ensure your application contains the correct information. It is an offence to provide false or misleading information to ASIC. Therefore, it is best to speak with your lawyer if you need to obtain an AFS licence.
Step 1: Decide the Type of Authorisations you Need
The first step in obtaining an AFS licence is deciding which type of authorisations you require. The authorisations you choose must cover all the financial services and products you want to provide in your business. The type of authorisations you select will affect what services you can offer, your obligations as a licensee and the type of restricted terms you can use.
There are important things you must consider when determining which authorisations to request. This includes:
- What type of financial products will you be providing? (e.g. shares, derivatives, bonds, managed investment schemes, securities, insurance etc.)
- What type of financial services will you be providing? (e.g. advice, dealing, custodial or depository services, operating a registered scheme)
- What type of clients will you be providing the services to? (e.g. wholesale, retail or both)
To ensure you select the correct authorisations that will encompass all your activities it is best you talk to a lawyer.
Step 2: Select Who your Responsible Managers will be
In your application you must nominate your responsible managers. The responsible managers you select must meet the relevant level of skills and experience in order for your application to be successful.
A responsible manager is a person in the business that ASIC examines to determine whether the licensee has the necessary knowledge or skills to provide the financial services.
The responsible manager can be a director of the licence, an employee or a contractor.
ASIC has set out certain requirements that the person must meet in order to be nominated as a responsible manager. They must:
- be directly responsible for important day-to-day decisions about your financial services;
- meet one of the five options to demonstrate their knowledge and skills (these relate to their qualifications/training across a certain number of years); and
- be a ‘fit and proper’ person.
The number of responsible managers you should nominate will be dependent on the type, size and complexity of your business.
Step 3: Prepare the Documents for ASIC
You must then prepare all the documents you need to submit in your application to ASIC.
You first would need to prepare a FS01 Application for AFS Licence. In this document you must include information about:
- the applicant;
- the business;
- the financial services and products you want to provide; and
- your capability to meet the AFS licensee obligations.
As part of the FS01 Application you will also need to prepare all the Core Proofs Documents. These are discussed in depth below.
A5 – Business Description
This document should contain a more in depth description of your business and should include the:
- types of financial services and provides;
- types of clients;
- sources of business income;
- expected growth;
- organisational chart; and
- service delivery mode and location.
People Proofs for each Responsible Manager
These documents should contain information on each responsible manager to examine their organisational competence and whether they are fit and proper. The following information should be given:
- a statement of personal information;
- a criminal history check;
- a bankruptcy check;
- their qualification certificates; and
- two business references.
B1 – Table of Organisational Competence
This document should provide more detail on the experience and skills of the responsible managers.
B5 – Financial Statements and Financial Resources
This document should identify which financial requirements you are required to follow and show how you will comply with them.
Step 4: Prepare Additional Proof Documents for ASIC
Once you have submitted your application and it is under review, ASIC may request additional proof documents. These documents must be submitted to ASIC within 10 business days.
Additional documents that may be requested include a development program for responsible managers, compliance arrangements, or a dispute resolution system statement.
If your application is successful, ASIC will send you a letter of offer containing the conditions upon which ASIC will give you the AFS licence. If you wish to speak to a lawyer to ensure your application is completed correctly contact 1300 337 997 or fill out the form on this page.