A new license assessment procedure will be adopted for certain AFS applicants

The Australian Securities & Investments Commission (ASIC) has recently adopted a new approach to its financial services licensing procedures (AFS) for certain applicants. ASIC has also released an actual guideline in this regard.

Warren Day, ASIC Executive Director said the following:

"ASIC has reviewed the AFS license assessment processes and has streamlined its assessment processes in some limited respects. This is designed to avoid unnecessary delays that may arise when ASIC seeks additional information during an assessment"

The aforesaid changes will be applicable to the AFS applicants that are (I) a body corporate; (II) that are regulated by the Australian Prudential Regulation Authority (APRA); or (III) proposing to provide certain financial services and financial products. The updated information with respect to the new requirements is outlined in Information Sheet 240.

We should note that the new license assessment procedure will be applicable to the companies that intend to offer foreign exchange (forex) contracts. These companies will be required to submit:

• C5: Foreign Exchange Operating Statement
• B3: Arrangements for Managing Conflicts of Interests
• B3: Compliance Arrangements
• B7: Risk Management System Statement.

The companies that aim to provide derivatives will have to submit additional non-core proofs (as it specified in the Information Sheet 240):

• C4: Derivatives Statement
• B3: Arrangements for Managing Conflicts of Interests
• B3: Compliance Arrangements
• B7: Risk Management System Statement.

The above-mentioned procedures would allow ASIC to determine if there is sufficient ground to believe an applicant has no intention to violate its legislative responsibilities, including to provide financial services "efficiently, honestly and fairly" and to guarantee that the officers in charge of an entity have sufficient skills and qualifications.

At this point, ASIC is creating a new regulatory platform that, among other things, will include a new AFS license application section. For the time being, ASIC will continue to use its existing AFS license program, until the new platform is fully developed and implemented.

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