A deeper look at the AFS licence application process

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As we noted in our previous article there are five parts to form FS01. Below we describe these in more detail.

Part A of the application requires you to provide details of the applicant as well as details of the person who will serve as a contact for the applicant during the application process. In part A you will also be asked questions about the financial services and products you would like to be authorised to provide and how your proposed business will operate. ASIC makes various references to the Corporations Act 2001. As noted in our previous article, applicants should ensure that they understand the applicable provisions of the Corporations Act and understand the controls that they will implement to ensure compliance.

Who can apply for an AFS licence

An applicant for an AFS licence can be an individual, partnership, company, trustee of a trust, or other entity. If you are applying for a company, the names and details of your directors and secretaries will be pre-filled by the online application form. If you are applying as an ‘other’ type of entity, you may be asked to provide more information in an A1 additional proof. We will explain the proofs that are required to accompany an application in an article to follow. An AFS licence cannot be held by the trust but can be held by a trustee.

The applicants’ contact person will be contacted by ASIC with any questions about the application lodged. The contact person can be the applicant, one of the applicant’s officers or employees or another person such as a lawyer or accountant.

Financial Service and Product selection

At Part A3 and A4 you will be asked to select the financial services and products that you want to be authorised to provide and your AFS licence. ASIC notes that this is one of the most important steps in the application process. The implications of a selection include that it will limit the financial services and products that can be provided under the licence and that it will determine the obligations you have as an AFS licensee. The proofs that you are required to provide include those that demonstrate that you have the competence, resources and processes in place to be able to provide the services and products that you have selected.

The financial services that you may select include those listed below:

  • provide financial product advice;
  • deal in a financial product;
  • make a market for a financial product;
  • operate a registered scheme;
  • provide a custodial or depository service;
  • provide traditional trustee company services;
  • provide a crowdfunding service.

Financial product advice may either be:

personal advice as defined in section 766B(3) of the Corporations Act 2001. You will generally be considered to be giving personal advice if you have considered, or a reasonable person might expect you to have considered, one or more of the client’s objectives, financial situations and needs; general advice as defined in section 766B(4) of the Corporations Act 2001. This covers all financial product advice that is not personal advice.

Class of product advice as defined in regs 7.6.01BA(3), 7.6.04BA(3), 7.8.12A(2), and 7.8.14B(3). This includes financial product advice about a class of products that does not include a recommendation about a specific product in the class.

In our next article, we will examine these terms in more detail.

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