ASIC grants 303 new AFS licenses from July 2017 to June 2018

Maria Nikolova

Of the 1,167 AFS licence applications finalised, ASIC granted 303 new licences and 455 licence variations.

The Australian Securities & Investments Commission (ASIC) has earlier today posted some numbers concerning Australian financial services (AFS) licensees, Australian credit licensees, lawyers, application service providers, and professionals working in financial services. The report describes the key regulatory issues and ASIC’s activities regarding licensing and professional registration. It focuses on the period from July 1, 2017 to June 30, 2018.

During the relevant period, the regulator considered 1,728 AFS licence applications (comprising 1,226 received during the relevant period and 502 received before the relevant period), and finalised 68% (1,167) of these.

Of the 1,167 AFS licence applications finalised, ASIC granted 303 new licences and 455 licence variations. Of the 758 AFS licence applications approved (including variations), the regulator imposed:

  • a key person condition on 386 licences;
  • an additional responsible manager requirement on 21 licences (five new licences and 16 variations); and
  • modified authorisations on 154 licences.

ASIC declined to accept six responsible managers nominated by the AFS licensee (three new licences and three licence variations) amid concerns that they did not have the knowledge and skills to meet the organisational competence obligations.

A total of 202 AFS licence applications were withdrawn before ASIC made a formal determination.

The Australian regulator has also shown rigor when it comes to saying “no” to applicants. ASIC refused 11 AFS licence applications during the relevant period (seven new AFS licence applications and four AFS licence variation applications). The watchdog says the number of applications refused would have been much higher if applicants had not withdrawn their applications in response to ASIC’s feedback rather than proceeding to a formal determination.

During the relevant period, ASIC suspended 12 AFS licences due to the licensee’s circumstances (for instance, where the licensee entered into external administration), or as initiated by ASIC (non-enforcement related). Such suspensions may originate from complaints by the public, or from surveillance activities initiated by ASIC or other persons (for example, a breach notification provided by the auditor or where the licensee fails to comply with the conditions on its licence).

ASIC notes that in cases where a cancellation or suspension occurs, it may still specify that statutory obligations remain in place. Such obligations may include continuing to hold PI insurance, maintain membership of AFCA or lodge accounts.

During the relevant period, ASIC cancelled 191 AFS licences. Of these:

  • 160 licences were cancelled at the request of the licensee. The main reason licensees gave for requesting a cancellation is that they had ceased to conduct a financial services business as a result of retirement or the sale of their client list and/or business; and
  • 31 licences were cancelled following action ASIC initiated (non-enforcement related). The main reason for ASIC initiating the cancellation of an AFS licence was because the licensee entered into external administration or the regulator deregistered the licensee.

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