Getting an Australian Financial Services License could be a
challenge. Through the years I’ve observed that lots of applicants have
been declined or rejected by ASIC, or find themselves struggling to
conform after being licensed because they have not considered the effect
of the license obligations. Listed below are some essential questions
that you ought to consider before you apply for a license.
1. Have you evaluated your business model to look for the type of AFS License you’ll need?
It is very important take a look at business structure and compare it
to the kind of license that ASIC will issue. Your conformity
obligations, which is detailed on your own licence, will also be
prescribed within the Corporations Regulations. These will vary based on
the authorizations in your Licence. For instance:
• The financial obligations of the license could be more onerous if you plan to hold clients’ money; or
• You will be subject to much more onerous conformity obligations if you plan to use handled discretionary accounts.
In case you make an application for authorizations that you don’t
need, or even don’t need yet, you still have to spend some time and
money to conform with the conditions regarding those unnecessary
authorizations. But, in case you don’t make an application for the
authorizations that you simply do have to operate your planned business,
you can face ASIC action to get rid of or suspend your license.
2. Are you conscious of the costs of obtaining and sustaining a license?
Several potential applicants think that the only real cost of
receiving a license will be the initial application fee and also the
cost of PI Insurance. However, there are a variety of additional fees
that should be considered when evaluating the cost of receiving a
license versus the price of remaining authorized by a preexisting
licensee. These could include:
• Membership of the external dispute resolution program (only when you’ve retail clients);
• Ongoing price of the audit by the registered company auditor which handles financial as well as compliance audits;
• Cost of creating, implementing and looking after compliance systems and procedures;
• Annual price of lodging documents as well as auditor’s report;
• Maintaining information on your advisers on ASIC’s register of Financial Advisers;
• Ongoing training of the accountable managers and advisers
3. How do you propose to carry out your business?
While using appropriate structure can also be important. Like a
licensee you’ll be subject to ongoing financial needs. Such as a
necessity to possess sufficient financial resources to fulfill your
anticipated cash flow costs and be solvent. There might be some other
financial requirements, based on the business you want to conduct. It
may quite challenge ascertain this, so you may wish to consult another
compliance consultant to offer advice.
The amount of financial requirement imposed gets to be more onerous
based upon the kind of financial services business, you intend to
operate, for instance, if you wish to be a fund manager various
financial requirements utilize depending regardless of whether you
decide to have retail or perhaps wholesale investors. These financial
requirements are licence circumstances and will be susceptible to an
audit from your registered business auditor.
It is very important get yourself a licence utilizing a vehicle that
isn’t likely to be impacted by any other businesses within your group.
There has been several licensees who’ve cancelled their
AFSL licence
right after it was issued simply because they found that these were
performing other business which directly impacted the financial
conditions imposed around the Licence.
4. Do you’ve adequate responsible managers who fulfill the organizational competencies?
Among the important aspects in receiving an AFS Licence is to show
you’ve senior people who satisfy the competencies since the licence
authorization that you have applied. Here is the critical area of the
application and one which in turn causes the majority of the delays in
assessing a credit card application.
It is most significant how the persons selected as responsible
managers have both skills and knowledge covering all the authorization
requested and that they are directly accountable for the day-to-day
decisions from the proposed licensee. When applications depend on
“professional” responsible managers, ASIC right now asks in-depth
inquiries to check their proposed roles as well as responsibilities.
This could significantly delay an application, or even the application
might be unsuccessful.
In which the applicant is a small business asking for less complex
authorizations it’s possible that certain responsible manager is enough.
However, more complicated licence authorizations, where a candidate
intends to to experience a broad range of financial services, may need
several responsible managers.
While preparing the Licence application, it is crucial that each one
of the responsible managers very careful detail their particular
experience that is highly relevant to the authorization which is why
they’ve been nominated.
5. Do you will find the same time and the support to build up
the documentation and procedures essential to submit a Licence
application and also to comply?
An essential question is regardless of whether you have time to
understand info ASIC requires and make preparations all the
documentation required to obtain a license. From my notice a high number
of applications listed in ASIC are rejected since the documentation
submitted is insufficient.
ASIC needs particular documentation to become submitted using the
application (known as core proofs) but reserves the authority to request
some other documentation to become submitted included in the assessment
(non-core proofs). Occasionally, ASIC may request explanations where
the details are unclear, so it’s vital that you have well crafted,
concise applications.
ASIC provides some guidance for assistance with preparing these types
of documents. However, these will have to be reviewed with an ongoing
basis because the laws change as well as businesses grow and also
evolve.
In addition to the licence application, you have to consider
regardless of whether you have the time and expertise to build up your
compliance documents. In case you don’t, you might want engaging another
compliance consultant, especially if your organization is small and it
seems sensible to outsource.
Bear in mind because you have to comply once you receive your licence, even though you haven’t yet commenced business.
Get help from –
https://knowcompliance.com.au/uncategorized/australian-financial-services-licence-applications-5-tips-to-consider/
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