How ASIC assesses AFS licence applications for emissions units

When we assess an AFS licence application we consider whether you will be able to satisfy your AFS licensee obligations on an ongoing basis. These obligations are set out in section 912A of the Corporations Act 2001. Specifically, we will look at whether you:

  • are organisationally ‘competent’ to carry on the kind of financial services business you are applying for
  • have sufficient financial resources to carry on the business you are proposing – unless you’re regulated by the Australian Prudential Regulation Authority (APRA), and
  • can meet your other obligations as a licensee if we grant you a licence.

You should ensure that your application is complete and contains all relevant information. Make sure you:

  • understand which financial services and products you need to select in your application to enable you to carry on that business – you will be applying for these specific ‘authorisations’
  • understand the obligations of an AFS licensee and have appropriate systems and processes in place to meet them, and
  • are able to support your application with any documents we request to prove that you can meet the licensee obligations – we call these supporting documents ‘proofs’.

Organisational competence: Responsible managers

We assess the competence of your organisation to provide financial services by looking at the knowledge and skills of people who manage your financial services business. We refer to these people as your ‘responsible managers’.

In assessing the competency of your nominated responsible managers, we will look at a combination of their relevant experience, training and qualifications. Regulatory Guide 105 Licensing: Organisational competence (RG 105) details the different options you may select to demonstrate the competency of your responsible managers. These different options provide sufficient flexibility to account for responsible managers with a range of different educational and occupational backgrounds. Nominated responsible managers need to have knowledge and skills that collectively correspond to the ‘authorisations’ you are requesting: see RG 105.

In the context of regulated emissions units, product knowledge might include a combination of relevant qualifications and training, and relevant experience under the carbon pricing mechanism, carbon farming initiative, other Australian environmental markets or overseas carbon markets.

You should be able to demonstrate that your nominated responsible managers have a good understanding of the relevant products and the regulatory and market context in which they operate.

We will also assess whether your responsible managers have a good understanding of the financial services regime, and AFS licensee obligations, so that we can be satisfied that, once licensed, you will be able to comply with the AFS licensee obligations in section 912A on an ongoing basis. In some cases, responsible managers are able to supplement their existing experience with a relevant short industry course: see RG 105.

If we are satisfied with your organisational competence, but we think you are heavily dependent on the knowledge and skills of one or two responsible managers, we will generally impose a ‘key person condition’ on your AFS licence. The key person condition will name those responsible managers whose competence we think you heavily depend on. If that person leaves the business, you will need to inform us, and apply to have your licence varied to remove the key person condition: see RG 105.

You should familiarise yourself with the supporting documentation required to be lodged with us in relation to responsible managers, as some checks can take time to process (e.g. criminal history and bankruptcy checks).

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Last updated: 20/10/2014 12:00