ASIC provides licence applications update

According to the Australian Securities and Investments Commission’s (ASIC) Licensing and Professional Registration Activities: 2020 update (Report 671), between July 2019 and June 2020, ASIC received 1,346 credit and Australian Financial Services (AFS) new and variation licence applications.

It received a total of 1,500 licensing and professional registration applications, down from 1,504 in the previous year.

The licensing report is released annually to provide guidance to licensees, registrants and prospective applicants about ASIC’s licensing and professional registration decision making, what ASIC considers when receiving an application, why certain information is required, and what factors may increase the time taken to assess the application.

In the 2019-20 financial year, ASIC granted 974 AFS and credit licence applications, while 365 AFS and credit licence applications were withdrawn or refused.

Furthermore, ASIC approved 394 new AFS and credit licences and 580 variation applications by AFS and credit licensees.

ASIC said that when assessing the majority of the applications, it achieved other regulatory outcomes, including by imposing additional conditions on the licence to ensure that applicants were only granted authorisations that were appropriate for their business activities and competence.

ASIC reported that 361 AFS and credit licence applications were withdrawn or rejected for lodgement, four were refused, and 683 were cancelled, while 40 were suspended.

ASIC finalised 2,062 licence-related applications, compared with 2,618 in the previous financial year.

It finalised 50 per cent of credit licence applications within 12 days, 70 per cent within 45 days, and 90 per cent within 109 days. It also finalised 50 per cent of AFS licence applications within 91 days, 70 per cent within 141 days, and 90 per cent within 276 days.

In adherence to the ASIC service charter, ASIC aims to decide whether to grant or vary on AFS licence or credit licence within 150 days of receiving a complete application in at least 70 per cent of cases, and within 240 days in at least 90 per cent of cases.

As such, in the 2019-20 financial year, ASIC said it finalised 93 per cent of new credit licence applications and 96 per cent of credit licence variation applications within 150 days, while it finalised 94 per cent of new credit licence applications and 97 per cent of credit licence variation applications within 240 days.

Commenting on ASIC’s licensing approach during the coronavirus pandemic, the report said the impacts have ranged from moving employees, representatives and operations to an online environment, to delaying the commencement of operations entirely.

The corporate regulator said it is responding to these impacts with flexibility.

“Since April 2020, we have made additional requisitions of all AFS and credit licence applicants to clarify the impact of the COVID-19 pandemic on their businesses,” ASIC said in the report.

“The responses to these requisitions enable us to consider whether we have reason to believe that an applicant is likely to contravene any of its obligations, such as having available adequate resources (including financial, technological and human resources) to provide financial services and carry out supervisory arrangements.

“The responses received have indicated that many applicants have made changes to how they operate as a result of the COVID-19 pandemic, while maintaining adequate resources. We thank applicants for their cooperation in providing these responses.”

Speaking on ASIC’s report, ASIC commissioner Danielle Press said the update outlines ASIC’s work in maintaining the standards of financial services and credit activities, and recent reforms to ASIC’s licensing processes.

“These reforms broaden the scope of who ASIC will consider as “fit and proper people” for licence applications,” Ms Press said.

“We have new powers to refuse a licence application where we have been provided false or misleading information or there is an omission of a material matter in an application, report or statement from an applicant.”

For example, ASIC is now required to adhere to a “fit and proper person” test for AFS licence applications, not only credit licence applications. ASIC must also apply the test to a wider range of people for both AFS and credit licence applications.

Prior to 18 February 2020, there was a “good fame and character” test.

The additional requirements have stemmed from the Financial Sector Reform (Hayne Royal Commission Response – Stronger Regulators [2019 Measures]) Act 2020 (Stronger Regulators Act).

[Related: ASIC commissioner caught unawares over credit changes]