ASIC Report 503 Overview of licensing and professional registration applications: Jan to Jun 2016 (REP 503) sets out its current timetable for finalising  Australian financial services (AFS) applications and Australian credit licence applications and licence application compliance issues.

For 1 January to 30 June 2016:

• ASIC assessed approximately 2,850 applications, with 60% relating to a new licence application, 25% relating to variations to existing licence and the remaining 15% related to professional registration (liquidators and auditors);
• Of the total number of applications assessed, 67% of these related to an Australian financial services (AFS) licence and 18% related to an Australian credit licence;
• 41% of all applications assessed during this period were approved;
• 78% of those approved were in a form other than as requested by the applicant (with 76% of these relating to an AFS licence and 68% related to a credit licence);
• Nine AFS licences were suspended, 143 AFS licences were cancelled, three credit licenses were suspended and 153 credit licences were cancelled; and
• ASIC assessed 440 applications for professional registration as liquidators and auditors.

Time to decide licence applications and variations

Under its service charter, ASIC aims to decide whether to grant or vary a licence within 60 days (target: 70%), or within 120 days (target: 90%).

For AFS licences in 2015–16:
(a) 52% of new licences were granted within 60 days;
(b) 62% of licence variations were decided within 60 days;
(c) 82% of new licences were granted within 120 days; and
(d) 79% of licence variations were decided in 120 days.

For credit licences in 2015–16:
(a) 80% of new licences were granted within 60 days;
(b) 90% of licence variations were decided in 60 days;
(c) 89% of new licences were granted within 120 days; and
(d) 93% of licence variations were decided in 120 days.

In the 6 month period January to June 2016 ASIC received 899 limited AFSL applications from accountants providing SMSF advice. Of these 324 were finalised by 30 June 2016 and the balance are not expected to be completed until March 2017.

Compliance issues

ASIC expressed concern about the attitude of some applicants who appear willing to provide false or misleading information in support of a licence or professional registration application. ASIC will continue to scrutinise the veracity of representations.

ASIC says that applicants must provide full and honest disclosure of their intentions, and ensure that their representations and statements are not misleading. Applications must be prepared to a high standard, and demonstrate that the applicant has the ability to deliver the requested financial services in a professional and compliant manner.

In addition to its concern about the general nature of licensing applications being misleading, ASIC is specifically concerned about aspects of applications where individuals are required to make a declaration to ASIC.

When applying for an AFS licence, credit licence or professional registration, relevant persons are required to complete a statement confirming whether they have been the subject of regulatory or disciplinary action, bankruptcy or insolvency, or whether they have been involved in the management of failed companies.

This is required so that ASIC can consider whether the person is of good fame and character (or is a fit and proper person, in the case of other applications), and whether there is reason to believe that the applicant is likely to meet its obligations if a licence or professional registration is granted.

ASIC has identified a number of recent examples where applicants have failed to give correct responses in their application. These include where:
(a) a nominated responsible manager for an AFS licence application did not disclose that they had been involved in the management of a ‘company or business’ that had been the subject of an investigation which resulted in disciplinary action being taken;
(b) a nominated responsible manager for a credit licence application did not disclose that they had been ‘bankrupt’ or been ‘a director of an entity which was in liquidation’; and
(c) another nominated responsible manager for a credit licence application claimed to have work experience at a large Australian bank when the person had never been employed by that bank.

Under s1308 of the Corporations Act 2001 (Corporations Act) and s225 of the National Consumer Credit Protection Act 2009 it is a criminal offence to provide ASIC with materially false or misleading information in connection with a licence application.