AFS licence applications: Providing information for fit and proper people and certain authorisations

This information sheet (INFO 240) is for all Australian financial services (AFS) licence applicants.

As a result of recent amendments to the Corporations Act 2001 (Corporations Act), applicants for a new or varied AFS licence must provide additional information and documents as part of their application.

We need additional information:

Information on the application process

The AFS Licensing Kit (RG 1–3) provides applicants with information on how to apply for an AFS licence or a variation to their existing licence, how to complete the online application forms, how to prepare ‘core’ supporting proof documents, and what further additional non-core proof documents may be required.

Fit and proper people

On 18 February 2020, the Financial Sector Reform (Hayne Royal Commission Response—Stronger Regulators (2019 Measures) Act 2020 amended the Corporations Act to improve the regulatory tools available to ASIC.

The amendments require ASIC to obtain additional information to consider when assessing applications for either a new or varied AFS licence. We must assess a range of persons under a ‘fit and proper person’ test set out in section 913BA of the Corporations Act.

Who ASIC must consider as fit and proper persons

Until 18 February 2020, before making a decision on an AFS licence application, we considered whether we had no reason to believe that the ‘responsible officers’ of an applicant were of good fame and character.

One of the factors that we now consider is whether we have no reason to believe that the applicant, or any of the following persons, are not fit and proper to perform one or more of their functions:

  • any officers of a body corporate applicant (see paragraph below for the definition of ‘officer’)
  • any partners or senior managers of a partnership applicant
  • any trustees or senior managers of a multiple trustee of a trust applicant.

An ‘officer’ is defined in the Corporations Act, and includes:

  • a director or secretary of the body corporate
  • a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the body corporate’s business, or who has the capacity to significantly affect the body corporate’s financial standing
  • a person whose instructions or wishes the directors of the body corporate are accustomed to act on (excluding advice given by the person in a professional capacity or as part of their business relationship with the directors or the body corporate).

Note: For the full definition of ‘officer’, see section 9 of the Corporations Act.

A ‘senior manager’ is defined in the Corporations Act as a person who:

  • makes, or participates in making, decisions that affect the whole, or a substantial part, of the applicant’s business, or
  • has the capacity to affect significantly the financial standing of the applicant.

Additionally, we must consider the following people against the fit and proper person test:

  • any controller of the applicant
  • if a controller is a body corporate, any officer of the controller
  • if a controller is a partnership, any partner or senior managers of the controller
  • if the controller is multiple trustees of a trust, any trustees or senior managers of the controller.

Note: We refer to the people who ASIC must have no reason to believe are not ‘fit and proper persons’ as the applicant’s ‘fit and proper people’.

For further information on who is a controller, see our webpage ‘Change in control of AFS licensee’.

What information must be provided

So we can consider these matters, all applicants seeking an AFS licence, or a variation to their existing licence, must give ASIC the following details about each of their fit and proper people:

  • their full name
  • their position and a short description of their duties
  • their residential address
  • if they are fit and proper people due to their relationship with the controller of the applicant, the details of the controlling entity.

We have provided a template to help applicants set out their fit and proper people (Word 101 KB) and provide ASIC with the information we require, depending on the type of entity making the application.

For each of their fit and proper people, an applicant must provide the following People Proofs (which must be no more than 12 months old):

Certification for some fit and proper people

Usually, an applicant must provide People Proofs for all of its fit and proper people. However, in some circumstances, we may accept a certification from an applicant that a subset of the applicant’s fit and proper people are fit and proper to perform one or more of the functions relevant to their position.

We will accept a certification for officers, partners, trustees and senior managers of a controller: see section 913BA(1)(e)–(f) of the Corporations Act. We will not accept a certification for the officers of any ultimate holding company of an applicant.

Even if the applicant provides a certification, we may subsequently request information (including police and bankruptcy checks) on one or more of the applicant’s fit and proper people when assessing the application.

To help applicants, we have provided a template certification.

In all cases, we will require People Proofs for:

  • a natural person applicant
  • all officers of a body corporate applicant
  • all partners of a partnership applicant
  • all trustees of a multiple trustee applicant
  • any natural person who meets the definition of a ‘controller’.

Note: For further guidance on the People Proofs, see Section E of Regulatory Guide 2 AFS Licensing Kit: Part 2—Preparing your AFS licence or variation application (RG 2).

Applicants intending to provide certain financial services and certain financial products

As part of an application for an AFS licence or variation, applicants must specify the licence authorisations that cover the financial services and financial products that they intend to provide.

Applicants that want to provide the financial services and financial products in Table 1 and Table 2 must include the additional non-core proofs listed in those tables in their applications.

We have set out further guidance on the non-core proofs that we need to assess applications in Regulatory Guide 3 AFS Licensing Kit: Part 3—Preparing your additional proofs (RG 3).

Authorisations requiring additional non-core proofs

An applicant applying for an authorisation specified in Table 1 must provide the listed additional non-core proofs.

Table 1: Additional non-core proofs required for specified authorisations

Authorisation

Additional non-core proof

Crowd-sourced funding intermediary

B5: Information Technology Capacity Statement

C11: Crowd-Funding Service Statement

Custodial and depository provider (not applicable when the provider will only be authorised to provide incidental custody services)

C1: Custodial/Depository Service Statement

C1: Funds under Management/Custody Statement

C1: Product/Service Distribution Statement

Derivatives – where the applicant is seeking a make a market authorisation for derivatives. For the avoidance of doubt, the C4 proof is not required when the applicant will only use the derivative authorisation for the purposes of managing a financial risk – see section 763C of the Corporations Act for an explanation of when a person 'manages financial risk'

C4: Derivatives Statement

Financial product advice – personal advice only (not applicable when four or fewer ‘relevant providers’ will provide the advice – see section 910A of the Corporations Act – or when the applicant will only use the authorisation for wholesale clients)

B4: Program for Monitoring, Supervision and Training of Representatives

Foreign exchange contracts – where the applicant is seeking a make a market authorisation for foreign exchange contracts. For the avoidance of doubt, the C5 proof is not required when the applicant will only use the foreign exchange contract authorisation for the purposes of managing a financial risk – see section 763C of the Corporations Act for an explanation of when a person 'manages financial risk'

C5: Foreign Exchange Operating Statement

Investor directed portfolio service (IDPS) operator (not applicable when the applicant will only use the authorisation for wholesale clients)

C1: IDPS Statement

C1: Funds under Management/Custody Statement

C1: Product/Service Distribution Statement

Life insurance issuer (not applicable when the applicant will only use the authorisation for wholesale clients)

C7: Life Insurance Capacity Statement

General insurance issuer where the applicant will be acting under a binder agreement. (not applicable when the applicant will only use the authorisation for wholesale clients)

C8: Underwriting Agency Capacity Statement

Make a market

C3: Market Maker Statement

B3: Arrangements for Managing Conflicts of Interests

B3: Compliance Arrangements

B7: Risk Management System Statement

Margin lending issuer (not applicable when the applicant will only use the authorisation for wholesale clients)

C10: Margin Lending Facilities

Market participants

A4: Membership of a Licensed Market

Managed discretionary account (MDA) issuer (not applicable when the applicant will only use the authorisation for wholesale clients)

C9: MDA Operator Capacity Statement

Miscellaneous financial facility

A4: Miscellaneous Financial Facility Statement

Operator of registered managed investment scheme (responsible entity)

C2: Scheme Operating Capacity Statement

C2: Scheme Property Statement

C2: Funds under Management Details

Registrable superannuation entity (RSE) licensees that have applied for or already hold an authorisation to operate a registered management investment scheme

B5: Financial Statements and Financial Resources

B7: Risk Management System Statement

Note: We may still request the additional non-core proofs referred to in Table 1, depending on the application. This includes the non-core proofs for authorisations that will only be used for wholesale clients.

Circumstances requiring additional non-core proofs

Additionally, an applicant for a new licence or for a variation to a licence that intends to provide financial services in the circumstances specified in Table 2 must include the listed additional non-core proofs in their application.

Table 2: Additional non-core proofs required in specified circumstances

Specified circumstances

Additional non-core proof

The applicant has nominated a responsible manager that is an officer of another AFS licensee, or is employed or engaged by another AFS licensee

B3: Arrangements for Managing Conflicts of Interests

Note: We expect this proof to include specific details about the arrangements for managing the responsible manager’s conflicts of interest that arise because of their various roles.

The applicant intends to outsource a key activity required to provide the financial service or product

B3: Outsourcing Statement

The applicant has nominated a single responsible manager for a particular authorisation or authorisations

B5: Human Resources Capacity Statement

Note: We expect this proof to include specific details about how the applicant will deal with the temporary, periodic or permanent absence of that responsible manager.

The applicant intends to conduct a remittance business and seeks an AFS licence that includes authorisations to deal or arrange to deal by issuing:

  • Deposit and Payment Products – Non-cash payment products and Foreign Exchange Contracts, or
  • Deposit and Payment Products – Non-cash payment products.

The applicant must provide written confirmation that it has:

  • determined whether it is subject to the requirements of the Australian Transaction Reports and Analysis Centre (AUSTRAC)
  • contacted AUSTRAC and been advised of its obligations by AUSTRAC
  • if required to do so by AUSTRAC, applied to AUSTRAC for enrolment or registration as a remittance service provider.

If the applicant applies for enrolment or registration by AUSTRAC as a remittance service provider and AUSTRAC has approved that application, the applicant must provide evidence of the approval.

If we have determined that we will grant the AFS licence to the applicant, but they have not included this information in their application, they must undertake the steps identified above before we will grant the licence.

Where can I get more information?

Important notice

Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. Omission of any matter in this information sheet will not relieve a company or its officers from any penalty incurred by failing to comply with the statutory obligations of the Corporations Act.

You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.

This is Information Sheet 240 (INFO 240) reissued in April 2020.

Search our registers

Use our online services

Find a form

Contact us

Last updated: 09/04/2020 12:00