ASIC’s Licensing and professional registration activities: 2020 update (Report 671) highlights new requirements for licensees, prospective applicants and service providers.
The Financial Sector Reform (Hayne Royal Commission Response—Stronger Regulators (2019 Measures)) Act 2020 has resulted in substantive additional assessment requirements in 2020. Background.
Fit and proper person test for AFS licence applications
ASIC is now required to have regard to a ‘fit and proper person’ test for AFS licence applications as well as credit licence applications (prior to 18 February 2020 there was a ‘good fame and character’ test for officers and managers of AFS licensees).
ASIC has released two new information sheets outlining additional information it requires from certain AFS or credit licence applicants: Information Sheet 240 AFS licence applications: Providing
information for fit and proper people and certain authorisations (INFO 240) and Information Sheet 244 Credit licence applications: Providing information for fit and proper people (INFO 244).
Requirement to commence operations within six months
The Stronger Regulators Act created a new power for ASIC to cancel an AFS or credit licence in the event that a licensee has not commenced operating a financial services business or engaged in credit activities within six months of the licence being granted.
Licensees are required to notify ASIC of a failure to commence operations within six months. ASIC does not expect licensees who have commenced providing some, but not all, of the products and services authorised under its licence to provide a notification.
ASIC says that, in light of the impact of the COVID-19 pandemic, its intention is not to cancel a licence unless it identifies specific concerns about the warehousing or commodification of the licence.
Other changes made by the Stronger Regulators Act
The Stronger Regulators Act also provides that:
- ASIC must refuse a licence application where it has been provided false or misleading information or there is an omission of a material matter in an application, report or statement from an applicant;
- licensees must notify ASIC within 30 business days of when an entity starts to control, or stops controlling, a licensee;
- applicants have a right to a hearing before ASIC refuses an application for a variation to an AFS or credit licence.
In addition, new requirements for AFS licensees apply to foreign financial services providers, providers of funeral expenses facilities, and litigation funding scheme operators.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
