Frequently asked questions

Submit your questions to innovationhub@asic.gov.au.

Licensing

Innovation Hub

Regulatory sandbox

Licensing

Do I need an Australian financial services (AFS) licence?

Generally, if you carry on a financial services business in Australia, you will need to hold an Australian financial services (AFS) licence or an authorisation from an AFS licensee. Some exemptions from the requirement to be licensed may apply.

For more information see Do you need an AFS licence?

Do I need an Australian credit licence?

If you engage in credit activities involving consumers you will generally need an Australian credit licence (credit licence) or an authorisation from a credit licensee before commencing business.

For more information see Do you need a credit licence?

I'm going to provide services in relation to consumer credit, but not act as a lender. Will I need a credit licence?

Some non-lenders do need a credit licence. In particular, if you 'act as an intermediary' or provide 'credit assistance', you will need a licence unless there's an exemption that applies to you. These terms are explained in more detail in Regulatory Guide 203 Do I need a credit licence?

In general terms, you may 'act as an intermediary' if you are take part in the process of securing credit for a consumer by preparing or passing on information. You may be an intermediary even if you do not have face-to-face contact with the consumer.

In general terms, you may be providing credit assistance if you assist someone to apply for credit/a consumer lease, or are making suggestions to consumers about credit/consumer leases. If you provide credit assistance, you may also have what are known as 'responsible lending' obligations. This includes making reasonable inquiries about the consumer’s financial situation and taking reasonable steps to verify the consumer’s financial situation.

More information on responsible lending

Does ASIC have a preference in relation to whether my business seeks an AFS licence or to act as an authorised representative of another AFS licensee?

No. ASIC does not have a preference whether your business has its own AFS licence or acts as an authorised representative.

If you are acting as an authorised representative you will need to meet the regulatory obligations of the AFS licensee that has appointed you which are relevant to your business. Your AFS licensee will need to supervise the financial products and services you provide on their behalf. The AFS licensee will need to have sufficient expertise about your business to enable them to do this.

Can ASIC refer me to an Australian financial services licensee that would be willing to appoint me as an authorised representative?

We understand that some licensees offer an authorised representative appointment service. However, it is up to you to identify these licensees through your own research. ASIC’s MoneySmart website has a register of licensed financial advisers that you could refer to as a starting point.

How long does the licensing process take?

The Innovation Hub aims to help start-ups and small businesses to navigate the regulatory requirements and to understand the licensing process. We expect that the assistance we provide will reduce the time it takes to process licence applications.

However, once you make a licence application you will need to go through the same process and assessment criteria that apply to all AFS and credit licence applications.

ASIC’s Service Charter provides that we will make a decision on 70% of Australian financial services licence and Australian credit licence applications within 60 days. Further, we aim to decide 90% of complete applications within 120 days.

Please keep in mind that the time your application takes may differ depending on the quality and complexity of your application and proposed business.

High-quality applications that contain all the information ASIC requires may be able to be processed more quickly.

Applications will typically take longer where:

  • they raise complex or new policy issues;
  • the applicant has not provided all the information we need;
  • there has been past unlicensed conduct or non-compliance by the applicant, its directors, responsible managers or controllers; or
  • we have concerns about the controllers, directors, or responsible managers that raise doubts about their character or whether the licensee is likely to comply with the financial services laws or operate its business in an efficient, honest and fair manner.

Can I tailor my licence to the specific needs of my business?

Yes, you can apply for a licence that only covers the authorisations that you require for your business.

The AFS licencing requirements are scalable to the size, nature and complexity of your business. The simpler and smaller your business is, the less onerous the requirements. One way of reducing the compliance burden of the licensing requirements is to limit your activities. For example, if you will only be offering one or two financial services, you will only need a licence that authorises you for these specific activities.

Some activities do not require you to hold an AFS license or be an authorised representative of a licensee. You only need an AFS licence if you are providing a 'financial service' (see Regulatory Guide 36 Licensing: Financial product advice and dealing and Regulatory Guide 104 Licensing: Meeting the general obligations for guidance on what constitutes a financial service).

Can I operate under a restricted licence?

In general, no. The same licensing regime applies to all service providers equally.

Licensing is an important part of the financial service regulatory regime as it allows us to ensure that:

  • businesses operating in the market have the skills and experience necessary to operate in an efficient, honest and fair way;
  • businesses have adequate resources to carry out their activities; and
  • important protections are provided to consumers.

These things are very important to maintain consumer trust. A more restricted licensing regime that replaces these requirements and protections, even with trading or turnover restrictions, may undermine consumer outcomes, even if the number of customers affected is small.

However, you can simplifying the licence application process by ensuring that you only apply for the authorisations you need. In addition, ASIC can provide waivers from the law in certain circumstances.

Can I apply to ASIC for a waiver from certain requirements of the law?

Yes. ASIC has certain discretionary powers to grant a waiver (or relief as it is normally referred to) from the various laws it administers. ASIC’s policy on application for relief is explained in Regulatory Guide 51 Applications for relief. As a general principle, we will not provide relief where there is a more than minimal risk of detriment to investors or consumers or where relief would reverse the usual and intended effect of the law.

What competencies does ASIC expect of responsible managers?

If you are applying for an licence from ASIC, you will need to nominate senior staff with direct responsibility for significant day-to-day decisions about the financial services you offer and who hold the relevant skills and experience for this purpose. We refer to these people as your 'responsible managers'. ASIC assesses your business' competence to provide the financial or credit services covered by your licence by looking at the knowledge and skills of your responsible managers.

If you are applying for an AFS licence, ASIC offers five options for these responsible managers to demonstrate the relevant necessary skills and knowledge. There are four options to demonstrate by a combination of relevant formal qualifications or assessment and experience.

Option

Knowledge component (qualifications, training etc)

Skills component (experience)

Option 1

Meet widely adopted and relevant industry standard or relevant standard set by APRA

3 years relevant experience over past 5 years

Option 2

Be individually assessed by an authorised assessor as having relevant knowledge equivalent to a diploma

5 years relevant experience over past 8 years

Option 3

Hold a university degree in a relevant discipline and complete a relevant short industry course

3 years relevant experience over past 5 years

Option 4

Hold a relevant industry or product-specific qualification equivalent to a diploma or higher

3 years relevant experience

If an applicant does not fit within the first four options, the fifth option allows for an applicant to explain why they think their nominated responsible managers have the knowledge, skills and experience for the services and products their role relates to. Whether you can rely on option five to demonstrate competency will depend on the particular facts and it is up to the applicant to provide sufficient detail and reasons for ASIC to exercise its discretion under option five.

For more information see Regulatory Guide 105 Licensing: Organisational competence (section C), and see also ASIC's AFS licensee page.

If you are applying for a credit licence, ASIC has also provided guidance on relevant qualifications for responsible managers. Generally, your responsible managers must have at least two years relevant problem-free experience and either:

  1. credit industry qualification to at least the Certificate IV level; or
  2. another general higher level qualification (e.g. a diploma or university degree) in a relevant discipline.

There are also specific requirements for some responsible managers.

More detail about this is provided in Regulatory Guide 206 Credit Licensing: Organisational competence and training (section B), and see also ASIC's credit licensee page.

Innovation Hub

What is the Innovation Hub?

The Innovation Hub is an ASIC initiative for new fintech businesses that are developing innovative financial products or services. Through the Innovation Hub eligible fintech startup businesses can receive informal assistance to to help them navigate our regulatory system.

ASIC is committed to promoting innovation without compromising the fundamental principles of financial services regulation or the licensing process as reflected in ASIC’s strategic objectives. ASIC has five approaches to implementing its Innovation Hub initiative:

  1. Engagement with the fintech community, including at physical hubs and co-working spaces that have been established for start-up businesses.
  2. Streamlined facilitation for new innovative business models which meet our eligibility criteria.
  3. This Innovation Hub website, which is a one-stop shop for innovative businesses to access information and services targeted at them.
  4. A co-ordinated approach to innovation issues. We have established an internal taskforce, which includes senior staff from many teams in ASIC. The Innovation Hub Taskforce plays an important co-ordination role in the development of ASIC’s new policy work, including on crowd-sourced equity funding, roboadvice and other innovation initiatives.
  5. An external advisory group, known as the Digital Finance Advisory Committee, which helps inform how we focus our efforts in this area. The members of DFAC are drawn from a cross-section of the fintech community, as well as academia and consumer backgrounds.

What type of assistance does the Innovation Hub provide?

ASIC's Innovation Hub is intended to provide assistance to help fintech start-ups navigate the regulatory framework that ASIC is responsible for. If you meet the eligibility criteria on our website, you are eligible to receive informal guidance from us about your obligations under the financial services regulatory framework, how we administer this framework (e.g. how to obtain an Australian financial services licence) as well as our thoughts on regulatory issues you should consider as you set up your business. ASIC does not provide legal advice or financial assistance.

What kinds of businesses can use the services of the ASIC Innovation Hub?

We are open to discussing any type of 'fintech' start-up business, provided the business meets certain criteria. A business will be more likely to receive support through the Innovation Hub if it:

  • is a financial technology (fintech) business;
  • has not been trading under a licence from ASIC for more than 12 months;
  • offers a potentially ground-breaking innovation; and
  • offers an innovation that provides a potentially better outcome for investors and consumers.

View the eligibility criteria for Innovation Hub assistance along with a link to the assistance request form.

What does ASIC expect me to do before it offers me assistance through the Innovation Hub?

If you believe your business meets the eligibility criteria and you are thinking about making an application for assistance from the Innovation Hub it is important that you are well prepared. Apart from the eligibility criteria we want you to attempt to identify the regulatory obligations that might apply to your business. You can do this by reading the regulatory guidance that's available on the ASIC website and analysing your business model against the requirements described in the relevant guides.

Attempting to understand the regulatory obligations for your business will help you specify the type of assistance you are requesting from ASIC in the application request form. It will also make our engagement with you more beneficial for you and bring you a step closer to starting your business.

How much information about my business should I provide?

You are encouraged to provide as much technical detail about your business as you can. Please explain exactly how the product/service works, including each step involved in users obtaining the product/service, and the role your business plays in providing it. This should allow the Innovation Hub to fully consider what regulatory requirements might apply.

Will the information I provide be kept confidential?

The law requires ASIC to take reasonable measures to prevent unauthorised use and disclosure of information we receive in confidence in connection with our statutory functions.

More information about this topic is available in Regulatory Guide 103 Confidentiality and release of information.

Can I refer publically to assistance ASIC provides through the Innovation Hub?

ASIC does not object to you mentioning that we have provided informal assistance to you through the Innovation Hub. However, you should not create an impression (either explicitly or implicitly) that your business or services are in any way endorsed or approved by ASIC and you must not reproduce ASIC's logo without our express approval.

Can ASIC give me legal advice?

No, ASIC cannot give legal advice. However, ASIC can provide you with informal assistance. Help we can provide includes:

  • providing an ASIC contact for your business during the pre-licence application, the licensing application phase and 1st year of being licensed;
  • guidance and assistance during the pre-licence application phase, including meeting with senior staff to discuss the licence application process and any regulatory issues that the business has identified; and
  • guidance and assistance during your business’s first year of being licensed if required, for example if an application for a licence variation is being considered.

A large number of resources are available on ASIC’s website to assist you in understanding how ASIC interprets the various laws it administers and to help you determine how these laws may apply to your business.

What is the ‘business angel introductory service’ class order?

ASIC has a legal waiver (Class Order [CO 02/273] Business introduction or matching services) that modifies the Corporations Act 2001 to facilitate what is generally known as a ‘business angels introductory service’. It allows a business, without holding an AFS licence, to connect potential investors with companies looking to raise funds provided certain conditions are met.

If your business intends to do more than just the introduction of potential investors to these companies, you may still need to hold an AFS licence.

Regulatory sandbox

Testing without a licence

As a first step, you should read Regulatory Guide 257 Testing fintech products and services without holding an AFS or credit licence (RG 257). This guide contains information about when, and how, a fintech business can test without a licence. We expect that a business will read this guide before it contacts us to discuss its particular testing plans.

What is the Regulatory sandbox framework?

Australia’s regulatory sandbox framework is comprised of three broad options for testing a new product or service without a licence. Those options are:

  • relying on existing statutory exemptions or flexibility in the law – such as by acting on behalf of an existing licensee;
  • relying on ASIC’s ‘fintech licensing exemption’ for the testing of certain specified products and services; and
  • for other services, relying on individual relief from ASIC.

More information about each of these options is available in RG 257.

The regulatory sandbox framework deals with laws under ASIC's administration. This means the 'fintech licensing exemption' does not provide exemptions from other laws. For example, depending on your business model you will need to check whether you need to comply with the anti-money laundering legislation administered by AUSTRAC or the tax agent services legislation administered by the Tax Practitioners Board.

Am I eligible to rely on the fintech licensing exemption?

ASIC’s fintech licensing exemption applies to specified products or services. The eligibility criteria are explained in this infographic, along with some of the main conditions that apply.

If a business is eligible to rely on the exemption, it must notify us before it begins to test. However, once the notification process is complete, the business is legally entitled to rely on the relief for 12 months, so long as it follows the conditions that apply.

More information on eligibility and the conditions that apply is available in Sections C and D of RG 257.

How do I notify ASIC that I am going to test under the fintech licensing exemption?

If you are eligible for the fintech licensing exemption, you must send ASIC written notice that you intend to test under the exemption – a letter or email to innovationhub@asic.gov.au will suffice. You must also provide ASIC with certain information:

  • the name of the legal person seeking to rely on the exemption;
  • information about that person (e.g your ABN, ACN or ARBN (if applicable), your principal business address, and if you are a foreign company, whether you have registered under the Corporations Act)
  • a key contact person and contact number;
  • details of the website (if applicable);
  • the names and dates of birth of all directors and controllers;
  • whether or not there are any experts assisting you (e.g. consultants) and, if so, who they are;
  • a short description of your innovation and business model, with a focus on what is the nature of the services that are provided to clients in relation to what kinds of financial products and the process for providing those services
  • a certified copy of a bankruptcy check for each director and controller in the business;
  • a certified copy of a national criminal history for each director and controller in the business;
  • a statement that the person intending to rely on the exemption does not hold an Australian financial services (AFSL) or is an authorised representative of an AFSL
  • a statement that the person intending to rely on the exemption does not hold an Australian credit services (ACSL) or is a representative of an ACSL
  • a statement that the person intending to rely on the exemption is not a related body corporate of an AFSL or ACSL;
  • a statement that the person intending to rely on the exemption or any of its directors or controllers have not been the subject of any findings or judgment in relation to fraud, misrepresentation or dishonesty in any administrative, civil or criminal proceedings in any country, or is currently party to any proceedings that may result in the person being the subject of such findings or judgment;
  • confirmation that you are a member of an external dispute resolution scheme; and
  • confirmation that you have adequate compensation arrangements (e.g. PI insurance).

Some of this information will be placed on our website so that there is transparency about who is testing under the fintech licensing exemption and what services they are testing.

More information on notifying ASIC that you will rely on the fintech licensing exemption is available in Section E of RG 257.

How do I get the national criminal history that I need to provide to ASIC?

Before you can rely on the fintech licensing exemption, you must provide ASIC with scanned copies of a certified national criminal history for each director and controller in the business. These documents should be no more than 12 months old.

National criminal history checks can be obtained from the Australian Federal Police, state and territory police services, and brokers accredited by the Australian Criminal Intelligence Commission (ACIC).

Some important tips are:

  • You are not obliged to disclose convictions to us that are ‘spent’ or ‘quashed’. You should ensure that the national criminal history checks you apply for do not disclose details of spent convictions. National criminal history checks that have been conducted for other purposes, such as for applications for a firearms licence, may include details of spent convictions.
  • You will need to pay a fee to the organisation providing the national criminal history checks on your responsible managers. These fees differ between the organisations listed above.
  • The time it takes to obtain national criminal history checks also differs between the organisations listed above. We encourage you to apply early.
  • If you are applying for national criminal history checks from the Australian Federal Police, insert code number 25 ‘Australian Securities and Investments Commission (ASIC) Consumer Credit/Financial Services Licensing Requirements’ in the ‘Code Number’ field on the application form.

How do I get the bankruptcy check that I need to provide to ASIC?

Before you can rely on the fintech licensing exemption, you must provide ASIC with scanned copies of a certified bankruptcy check for each director and controller in the business. These documents should be no more than 12 months old.

You can get bankruptcy checks on your responsible managers from the Australian Financial Security Authority (AFSA). You can conduct a point in time search through AFSA’s Bankruptcy Register Search or via an authorised provider.

AFSA maintains the National Personal Insolvency Index (NPII), which contains information on proceedings and administrations under the Bankruptcy Act 1966. The Bankruptcy Register Search is an online service, available 24 hours a day, seven days a week. A fee is payable to conduct a search.

Once I have notified ASIC, when can I start testing?

Your testing period will begin 14 days after you notify us that you intend to rely on the exemption. We will notify you in writing of the date on which your testing period commences.

It is important to note that we may give a person written notice that they cannot rely on the fintech licensing exemption at any time. We may do this for a number of reasons, including:

  • concerns about poor conduct while relying on the exemption;
  • failure to meet one or more of the conditions of relief; or
  • previous misconduct.

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News

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Distributed ledger technology (blockchain)

20 March 2017

ASIC has released an information sheet on evaluating distributed ledger technology (DLT), also known as blockchain technology.

Read the media release

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Events

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Discussing ASIC's regulatory sandbox
6 April 2017

ASIC has launched a regulatory sandbox environment, designed to help fintechs develop and test their ideas.

It includes a world-first class waiver that allows eligible businesses to test certain services for up to 12 months without an Australian financial services or credit licence.

ASIC Commissioner John Price, and Senior Executive Leader Mark Adams will explain how it works, who is eligible and address questions.

Thursday 6 April 2017

At Stone & Chalk

Level 2, 50 Bridge Street, Sydney NSW

To attend see Meetup details

Podcasts

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Mark Adams on ASIC’s RegTech Roundtable

The roundtable facilitated discussion on the current RegTech landscape and its development and future potential to promote good risk management and compliance outcomes, and drivers and barriers to RegTech in Australia, including what the industry and ASIC can do to help promote the development and application of RegTech.

Listen now or download for later

Last updated: 02/03/2017 11:17