ASIC today published its first report on its approach to licence applications to help inform businesses and individuals wanting to provide financial services or credit, or register as a liquidator or auditor.

Report 433 Overview of licensing and professional registration registration applications: July to December 2014 (REP 433)  sets out recent regulatory outcomes achieved by ASIC in relation to Australian financial services (AFS) applications, Australian credit licence (credit licence) applications, liquidator registration applications, company auditor and approved SMSF auditor registration applications.

ASIC Deputy Chairman Peter Kell said the report is intended to assist applicants, current licensees and professional registrants better understand ASIC’s assessment of applications and highlight areas of specific focus, to improve overall and ongoing compliance.

The report will also assist stakeholders to better understand the overall number and type of participants that ASIC licenses or registers across the financial services sector, the credit industry, auditors and liquidators and financial markets. It provides a picture of how this population is changing over time.

‘The report is part of ASIC's ongoing commitment to providing greater public information about our regulatory activities. The outcomes in this report demonstrate ASIC’s commitment to ensuring financial services and credit licensees, professional registrants and other licensees meet their key obligations, including minimum standards of compliance, supervision and conduct,’ Mr Kell said.

‘In approving applications, ASIC may impose additional conditions on, and/or make adjustments to the original licence application. Further, we may refuse a licence application if we are not satisfied that the applicant can offer financial or credit services in compliance with the legal obligations.’

For 1 July to 31 December 2014:

• ASIC assessed approximately 1,660 applications, with 46% relating to a new licence application and the remaining 40% relating to variations to existing licence; 14% related to professional registration (liquidators and auditors)
• Of the total number of applications assessed, 27% of these related to an Australian financial services (AFS) licence and 14% related to an Australian credit licence
• 49% of all applications assessed during this period were approved
• 73% of those approved were in a form other than as requested by the applicant (with 68% of these relating to an AFS licence and 83% related to a credit licence)
• eight AFS licences were suspended, 120 AFS licences were cancelled and 172 credit licences were cancelled
• ASIC assessed 235 applications for professional registration as liquidators and auditors; and
• ASIC also cancelled 426 SMSF auditors who failed to comply with their SMSF auditor competency examination by 30 June 2014 (refer: 14-335MR).

Mr Kell said ASIC’s licensing assessment and registration work provided ASIC with  insights into innovative products, new business models and practices as well as higher risk market segments, that can feed into ASIC’s broader surveillance and enforcement work.

‘Examples are the area of foreign exchange-related financial products and services, where concerns about some potential and current applicants have led to greater scrutiny of the sector across ASIC and the emerging sector of peer-to peer lending, where technology  website-based platforms are being used to display a range of loans and investments consumers can acquire,’ Mr Kell said

In addition to reporting of key outcomes and statistics, ASIC will use these six-monthly reports:

• to highlight sectors of focus for regulatory intervention based on issues identified in the preceding period
• where necessary, to foreshadow changes to ASIC’s assessment and processing of applications (and related guidance information), and
• to impose new licence conditions or requirements on individual licensees in response to poor behaviour and misconduct.

Download the report

Background

REP 433 is the first of six-monthly reports ASIC intends publishing on licensing and registration activities.

REP 433 covers new applications and variations to existing licences. The regulatory outcomes apply equally to applications for a variation to an existing licence. There is a narrower range of regulatory outcomes associated with the registration regime, given the reduced scope for tailoring or imposition of conditions on registrants compared to licensees.

This first report provides detail about the licensing process which will not be repeated in subsequent reports.