AustraliaWhat Are The Requirements for an Australian Financial Services License?

January 16, 2023by Tetra Consultants0
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Tetra Consultants understand that applying for an Australia AFS License (also referred to as Australia Financial Services Licence) with the Australian Securities & Investments Commission  (ASIC) can be a very daunting process. That is why we have a dedicated licensing team to support you right from the beginning of the application to the end.  Our team of consultants is also here to support you throughout the journey, whether it be with legal advice when deciding on what authorizations your business needs, or drafting of compliance documents to ensure you comply with your regulatory obligations as a licensee.

It is not as easy as you may assume to apply for an Australian Financial Services Licence (AFSL). There is a lot of planning and documentation needed, so doing it correctly the first time will ultimately save you a lot of time, money, and hassle with ASIC. Why not allow us to handle the difficult work on your behalf if you lack the time or resources to apply for an AFSL?

Before you rush to apply for an Australia AFS License, it is important that you must understand and consider AFS license requirements. Our team of licensing experts has enlisted the AFS license requirements and other key considerations to know before proceeding with the AFS license application. 

Minimum regulatory requirements 

An applicant for an AFSL must satisfy the conditions and requirements set out in the Corporations Act, as well as ASIC regulatory guidance materials. The key requirements for an AFSL are as follows:

Forming of an Australian entity

  • In order to obtain a financial license in Australia, the first thing to do is to register company in Australia (A private (i.e. “Pty Ltd”) company). The company can be 100% established by non-residents of Australia.
  • The time that registration takes: the company can be registered and the application can be filed for registration with the tax authorities within 2 business days from the date of providing all the necessary information.

Directors

  • Australian legislation provides that at least 1 director of the company must be a resident of Australia.
  • The number of directors to be appointed will depend on the complexity of your business. Be that as it may, the ASIC (regulator) prefers 2 or more responsible directors to be appointed one of them should be a resident of Australia. Tetra Consultants can assist you with meeting this requirement by providing our nominee director services in Australia. 

Australian Public Officer

  • Upon the request of the local tax authority, there must be a position at each enterprise that can only be occupied by an Australian citizen who has an accounting education.

Corporate bank account opening

  • Clients looking to acquire AFS (Australian Financial service) License are required to complete the process of corporate bank account opening a client does not need to be personally present in Australia.

Responsible manager

  • An obligatory requirement for a financial company in Australia is the presence of directors (“responsible managers”) with the necessary experience and skills in the field of finance.
  • You will need to employ “responsible directors/managers” with the required experience in the stated activities. “Responsible director/manager” is a person who is responsible for daily decisions regarding the provision of financial services of the company. Each of the directors should have the appropriate education, experience, and skills in working with financial services and products that your company will provide.
  • ASIC has strict criteria for appointing a Responsible Manager (RM) on your AFSL. You cannot obtain an AFSL without a responsible manager.
  • The RM you nominate needs to have the required qualifications and experience and generally, they cannot be an existing RM on more than one other AFSL. In most circumstances, the experience requirements include:
  • 3 out of the past 5 years experience working for an AFSL that contains the authorizations you are looking to obtain; or
  • 5 out of the past 8 years of experience working for an AFSL that contains the authorizations you are looking to obtain.
  • The qualification requirements include:
  • Your nominated RM holds an appropriate tertiary qualification to at least a Diploma level;
  • For a retail AFSL, the RM also needs to have had RG146 for the duration of their relevant experience in the products you are seeking.

Additional requirements apply for retail AFSLs that will provide personal advice, including the RM having passed the financial adviser exam.

Other considerations and AFS License requirements: 

Good fame and character 

  • If the applicant is a natural person, ASIC must be satisfied that there is no reason to believe that the applicant is not of good fame and character. If the applicant is not a single natural person, ASIC must be satisfied that there is no reason to believe that any of the applicant’s responsible officers, partners and/or trustees are not of good fame or character.

Competency 

  • The applicant must demonstrate its organizational competence for the financial services and products that the business is proposing to provide. Responsible managers must also have the necessary knowledge and skills to carry out their roles.

Compliance and conflicts management arrangements 

  • The applicant must demonstrate that adequate compliance measures are in place to meet relevant obligations.

Adequacy of resources 

  • The applicant must demonstrate that they have sufficient financial, human, and technological resources to carry out the business that is being proposed.

Adequate risk management systems

  • The applicant must demonstrate adequate risk management systems, tailored to the applicant’s financial services business.

Dispute resolution 

  • If it has applied to provide financial services to retail clients, the applicant must demonstrate that it has an adequate dispute resolution system in place.

Compensation and insurance arrangements 

  • If it has applied to provide financial services to retail clients, the applicant will need to have arrangements in place for compensating those clients for losses they suffer if the applicant breaches its obligations under the Corporations Act.

Research and benefits

  • If the applicant is seeking to provide financial services to retail clients, the applicant will need to demonstrate how it conducts product research and present it is an approved or recommended product list. Additionally, the applicant must demonstrate its ability to meet other obligations as an AFS Licensee if ASIC grants the license

Conclusion:

  • Tetra Consultants assist financial companies with their regulatory and licensing needs and provide continued support and assistance to financial companies with regard to all aspects of entity formation and operation in Australia.
  • Tetra Consultants is an international professional consultancy firm that specializes in the preparation of an Australian Financial Service License. 
  • In addition, Tetra Consultants can also assist with attaining other offshore financial licenses depending on your long-term business goals. We can assist you in obtaining a specific license or authorization from your selected jurisdiction, in order to lawfully operate financial businesses.
  • Contact us to find out more about how to get an Australian Financial Service License. Our team of experts will revert within the next 24 hours.

Tetra Consultants

Tetra Consultants is the consulting firm that works as your advisor and trusted partner in your business expansion. We tell our clients what they need to know, instead of what they want to hear. Most importantly, we are known for being a one-stop solution for our valued clients. Contact us now at enquiry@tetraconsultants.com for a non-obligatory free consultation. Our team of experts will be in touch with you within the next 24 hours.

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