Australia: Getting (and then varying) your Australian Financial Services Licence

Did you know that if you laid out every FSR-related Corporations Act and Regulations amendment, ASIC Regulatory Guide, Class Order, Information Release, FS Form, Licensing Kit, Guide, Consultation Paper and Information Statement, you would have a paper-trail long enough to reach the moon and back five times?

Well, it certainly feels that way. Regardless, I know first-hand that financial licensees hesitate before getting or varying an Australian Financial Services Licence (AFSL). Information overload, combined with potentially increased legal risk and uncertainty makes obtaining (and varying) an AFSL seem daunting.

Drawing from our experience in successfully obtaining numerous AFSLs and AFSL-variations, this article attempts to provide you with some practical tips to help you understand and navigate your way through the quagmire of FSR. I've tried not to just regurgitate ASIC guidelines (which can be found on, but to offer useful tips and suggestions.

Getting your licence

Why get your own licence?

We receive lots of different reasons from potential applicants who:

  1. are multi-national companies wanting to set up in Australia;
  2. although running their own corporate authorised representative, want to be "their own boss" in a truer sense;
  3. are tax or business specialists, who sit on the fringes of FSR and have some big deals that they want to get involved in, but know that an AFSL would be needed;
  4. want to set up a new dealer group;
  5. want to set up in competition with their authorising licensee (subject to any restraint of trade, of course);
  6. have been issued a stop order from ASIC for operating an unlicensed financial services business;
  7. advise in property investment but want an AFSL for good "marketing"; or
  8. are unhappy paying licensee fees for the privilege of being authorised.

Can you relate to any of these? After discussing the pros and cons of obtaining a licence, including the threshold issues required (see step 1 in the diagram at the end of this article), we find that about two thirds of enquirers don't proceed immediately. They either seek an alternative to obtaining their licence (eg. become an authorised representative), complete further training, or try to find someone who would be more likely to meet the organisational competency requirements. "Organisational competency" refers to the skills and qualifications of your proposed responsible officers, and really means "Responsible Managers competency". This will be discussed in more detail throughout this article


The advantages of holding an AFSL are more obvious than the disadvantages. You are your own boss. You have a licence that sets out exactly the ambit of your business' authority. You can authorise others (usually for a fee) to come under your banner. You can apply to vary your licence to include any type of financial service that is listed under the Corporations Act and Regulations, as long as you can show organisational competency. You can operate your business anywhere in Australia, and be "ready for anything" if you want to apply for licences in other countries, such as Singapore, the UK, and the US.


The cost of compliance is the main barrier to entering the land of the AFSL. If outsourced, the cost of obtaining a licence can easily exceed $20,000.00. The ongoing costs are much higher. Annual compliance reviews (usually around $8,000 - $25,000), adviser reviews, annual financial audits (often around $10,000), monitoring, supervising and training representatives (including authorised representatives), external dispute resolution scheme membership, legal costs, insurance costs and minimum funds requirements are factors that must be considered by potential licensees. Some of the obligations listed above are waived if you're only applying to provide financial services to wholesale clients, and others are waived if you don't provide financial product advice.

Uncertainty about whether you will even succeed in your application to obtain a licence is another consideration, as some aspects of assessment by ASIC are subjective. However, uncertainty can be minimised by dealing carefully with the threshold issues (see step 1 of the diagram). The biggest threshold issue is organisational competency. Organisational competency is only a disadvantage if you don't have someone in your organisation who meets one of the 5 alternatives in Regulatory Guide (RG) 105. For example, is there someone with at least 3 years' experience in overseeing the provision of (or providing) the exact financial services that you're applying for, plus a directly relevant degree, plus a relevant ASIC-registered relevant short course? See RG 105 for your other options.

If ASIC decides to reject your application, it then goes to a delegate and you get to attend an informal hearing to put your case before it's formally denied.

The process (see diagram)

The process of getting your AFSL can be explained as a 7 step process:

  1. Clarify threshold issues: The threshold issues, discussed above, must be clarified before you proceed. If you don't do this initially, ASIC will ask you to clarify these issues during assessment, after you've spent time and money getting to that stage. In any application, ASIC will make its own assessment as to: whether you actually need the licence for what you propose to do; whether you're asking for the right authorisations; whether you or other proposed Responsible Managers have the competency required; and whether there are any other issues that merit further questioning. Also, ASIC has in-house lawyers who might review your submissions, depending on the authorisations you're choosing.
  2. Consider the cost: What is your time worth to you? You'll have to balance the cost of outsourcing the application or doing it yourself. If you outsource it, you'll still be quite involved in the process. If you do it yourself, you'll need to create everything from scratch. Your business procedures will need to meet the requirements of your proposed licence conditions, the Corporations Act and Regulations, ASIC's RG 104 and about half a dozen other regulatory guides, not to mention the Australian or International standards these regulations or RGs often reference. (This varies if you're only going to have wholesale clients.) Some potential applicants, when they're faced with the costs, decide that it isn't viable to proceed as planned and look at their other alternatives (eg. remaining an authorised representative). This is particularly the case with 1 or 2-person businesses.
  3. Prepare the documentation: There are three categories of documentation: (a) the online form; (b) supporting proofs; and (3) underlying procedures. ASIC's Licensing Kit walks you through the questions in the online form (but is a bit sketchy). The supporting proofs include a business description, a description of your financial resources and a description of your proposed Responsible Managers. After they're submitted to ASIC (see step 5), ASIC may ask for more proofs (of which there are a dozen or more). If you're preparing the application yourself, make sure you follow the requirements of ASIC's kit to the letter. We would suggest adopting their requirements as headings, and going from there.
  4. Finalise the issues that require external input: We've had applications being held up for months because accountants, insurers or banks have been slow in getting the required documentation into our hands, for submission to ASIC. If you're aware of the possibility, take action early.
  5. Submit the application: The online application is submitted electronically (no surprises there). The proofs must be sent electronically to ASIC within 20 business days of submitting the online application. We usually do it all on the same day.
  6. Liaise with ASIC: If you're applying for a miscellaneous financial product authorisation, be prepared for a very long wait (sometimes months) before getting a response from ASIC. If not, and you've got plenty of directly relevant experience and have prepared thoroughly, the assessment stage could take as little as two weeks until completion. ASIC's response time will also be longer if you have a complex or unusual business model.
  7. AFSL obtained: ASIC will give you a draft licence. If you're happy with it, it will issue you a final licence. Be aware that if you're issued an AFSL in May or June, you'll still be required to have a proper financial audit done of your business (because it is a requirement that you have this done each financial year that you hold your licence – even if it's only a couple of weeks until 30 June). This assumes your financial year ends on 30 June.

Varying your licence

Licensees often want to vary their licenses to branch out into other sectors of the financial services market, or to gain authorisations in financial products which were not previously financial services but are now (such as margin lending). One advantage of holding an AFSL is that you don't need to apply for another one – you just add to the one you have.

The disadvantage of varying your licence is that it is very similar to, and almost as onerous as, applying for a new licence. However, you won't be required to provide as many supporting documents as with the original application.

You'll still need to go through the seven steps outlined above. In particular, you'll most likely need to appoint another Responsible Manager who has the requisite competence to oversee the provision of the new financial services that you're planning to do.

Don't be caught out! Some licensees treat a variation too casually, and don't devote adequate resources or attention to the detail associated with the variation. This can lead to a number of problems, including the rejection of the application, at great cost to the licensee.

Top ten tips

  1. Organisational competency as demonstrated by your Responsible Manager will make or break your application.
  2. Get good legal advice on the need for a licence, and what types of authorisations you'll need.
  3. It may be possible to get a licence even if you've been a little bit naughty!
  4. Financial proof documentation takes forever to prepare.
  5. If you have overseas experience and you're applying to be a Responsible Manager, make sure you can demonstrate knowledge of the Australian regulatory environment (this might require you doing a short course).
  6. Decide whether or not to outsource the application or variation early! If you don't have time to do it properly, outsource it.
  7. Balance up the ongoing costs before proceeding – is it worth it?
  8. Give yourself plenty of time to get your licence.
  9. Have one or two backup Responsible Managers, in the event that ASIC doesn't think your initial applicants are competent under RG 105 during assessment.
  10. Don't cut corners!

What not to do

People often come to us after unsuccessfully obtaining or varying their licence themselves. Common mistakes are:

  • assuming that their many years of experience will satisfy ASIC's organisational competency requirements as set out in RG 105;
  • ignoring ASIC's Licensing Kit;
  • thinking "close enough is good enough";
  • providing insufficient information describing their business;
  • submitting too few "Responsible Managers" especially for complex business models;
  • providing unlicensed financial services in any shape or form prior to acquiring the licence; and
  • not ascertaining the correct types of authorisations for their proposed business model.

Often it's a combination of many of these factors. I hope, however, that after reading this article, you'll be able to make an educated assessment about whether you'd like to go ahead with that application or variation.

When you've made that decision, good luck!

How can we help?

We can help by offering

  • Full project and managed applications;
  • DIY option; or
  • DIY plus some light support option.

Click here to find out more.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Paul Derham
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions