ASIC has published Report 433 Overview of licensing and professional registration applications: July to December 2014 (REP 433) on its approach to licence applications and trends it has identified.
The report sets out the result of recent Australian financial services (AFS) applications, Australian credit licence applications, liquidator registration applications, company auditor and approved SMSF auditor registration applications.
It also provides details of the assessment process and statistics.
New products
The report confirms that product distribution and financial market innovation and complexity— which includes financial services relating to foreign exchange and derivatives being marketed to retail clients— are areas of strategic focus for ASIC.
It also confirms peer-to-peer lending as a ‘digital disruption’, where technology is driving innovation.
For peer to peer lending ASIC considers:
- whether an applicant’s business model operates in a manner consistent with the regulatory regime of financial services and product authorisations required;
- how a borrower’s creditworthiness is expressed to potential investors; and
- advertising and promotional material that seek to make comparisons with banks and bank-like deposit products.
The assessment process
ASIC emphasises that “the assessment of applications is not an automatic process; each application is subject to a detailed and rigorous assessment.”
ASIC explains that it may reject an application for lodgement where:
(a) the applicant fails to promptly provide ASIC with its core proof documents when lodging its application. This is known as ‘pre-lodgement rejection’; or
(b) the application includes all of the relevant core proof documents, but ASIC subsequently identifies that the core proof documents contain some substantive deficiency—for example, the core proof documents do not include signed financial statements. This is known as a ‘pre-lodgement completeness check rejection’.
ASIC declines to accept responsible managers nominated by the licensee when it is concerned they do not have the knowledge and skills to meet the organisational competence obligations.
The most common AFS licence condition ASIC imposes is a key person condition. If an AFS licensee is heavily dependent on the competence of one or more responsible managers, it will require that they be named on the licence as a key person condition.
The report also explains when an application is withdrawn, rejected or approved with conditions.
