We've observed quite a few changes in ASIC's
approach to licence applications, especially over the past year or
two. This blog series considers those changes, as well as the
current trends in licence applications and variations.
Some of you reading may already hold a licence issued by ASIC,
be it an AFSL, an ACL or both. If you're not looking to set up
a new business or expand your current business activities, you may
wonder why you should care about changes in the licensing
We find that the approach taken to licence applications, often
signals changes in ASIC's wider approach to certain industries.
For example, the scrutiny applied to licence applications in the
OTC derivatives and margin forex space, predated ASIC's
publication of action against individual actors in this space.
Additionally, if you want to vary your licence, or (in some
cases) change your responsible managers, you will have to deal with
the licensing team. Accordingly, it is important to know how the
process has changed since you last dealt with ASIC. For those of
you that streamlined into the AFSL or ACL regimes, the changes are
The first question usually asked by clients seeking to apply for
or vary a licence is "how long will it take?" The answer
will vary depending on the complexity of the application. The bad
news is that timeframes for applications are increasing
significantly across the board. ASIC's current
service charter states that it aims to make a decision on 70%
of licence applications (either for new licences or variations)
within 60 days, and 90% within 120 days. In our current experience,
ASIC is not addressing applications within the charter standards
– especially AFSL applications.
If you need to vary your licence to add a complicated new
product (for example, you wish to commence operating registered
managed investment schemes), we suggest allowing at least 6-9
months for the application process. Many applicants forget that it
can be a process of several months just to get the application in a
state to lodge, let alone the time required by ASIC to assess the
Part of the reason for the extended timeframes is that
ASIC's resources are currently stretched, with declining
budgets and an expanding remit. However, the rise of innovative and
fintech businesses means that the applications being considered by
the licensing analysts are more complex than 5 years ago, so each
application is generally taking much longer than previously.
The transition period for accountants is nearing an end, with
applicants required to apply before 1 March 2016 to ensure ASIC
makes a decision before the end of the current exemption. At the
time the amendment to the exemption was proposed, the Government
suggested that up to 10,000 accountants would seek AFSLs. At the
end of 2015, only 259 applications had been made to ASIC, of which
only 87 had been approved.
In our experience, many accountants have not yet made a decision
on whether they wish to exit the superannuation space, become an
authorised representative of another AFSL or obtain their own
licence. If even a small proportion of the original 10,000
accountants intend to apply for a licence prior to the deadline,
then the timeframes are likely to be affected even further.
Wider scope of review
If you are looking to vary your licence, be aware that ASIC is
unlikely to restrict its assessment purely to the changes to your
licence, especially if your licence has remained unchanged for some
time. We have had several situations where ASIC has used a
variation application as an opportunity to conduct a broader review
of the licensee's activities. Such a review could mean ASIC
asking further questions about your responsible managers, or
delving into the details in your business model.
We have especially noticed this in ASIC's current areas of
focus, such as margin forex, CFD and OTC derivatives businesses. We
note that the licensing team is now housed within the Assessment
and Intelligence department of ASIC, which also means that the
analysts appear to have greater access to intelligence gathered
throughout the organisation. Do not be surprised if a licensing
analyst asks questions about a matter where you dealt with another
stakeholder team, or if they bring in staff from other areas to
consult on your application.
Wider reviews or consultations can lead ASIC to better
understand your business, but they are also likely to increase the
time taken for ASIC to make a decision on your application.
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.
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