Why You Should Apply For An Australian Financial Services License.
First, let’s cover the fundamentals.
If an Australian business is providing services in any of the below areas, you need an Australian Financial Services License (AFSL):
- Providing financial product advice
- Dealing in financial products
- Making a market in financial products
- Operating a registered managed investments scheme
- Conduct crowd-funding campaigns
- Providing custodial or depository services
- Providing traditional trustee company services
Many financial advisers begin their career as an employee under someone else’s AFSL. However, once you’ve reached the pinnacle of your career as an employee, you may choose to set up your own financial services business. At this point it’s a good time to consider applying for your own AFSL.
Now, let’s uncover what it takes to apply.
Building your own advice firm is a common goal amongst many financial advisers. Holding an AFSL allows you to establish yourself as a licensed professional and gives you the freedom to choose the type of advice you would like to provide. However, there are some key rules that need to be considered before applying for your license. We’ll simplify them for you here.
Responsible Managers are a must.
All Licensees need at least one Responsible Manager (RM) to monitor compliance with the license conditions. As the name suggests, an RM is the person who is accountable for the daily management of the financial services you provide. You or one (or more) of your new employees, will need particular management knowledge and experience to take on this position as a requirement of your AFSL. And it’s not negotiable.
Be prepared to apply online.
The application process is completed online via the Australian Securities and Investments Commission eLicensing system. The software will tailor the application to apply to your individual business. While it is possible to pause and save your application process, it will be less time consuming and confusing if you prepare all of the necessary documentation before you begin (that’s where Integrity Compliance comes in – we can help you bed down the paperwork).
You will need to prepare the following documents:
- People Proofs – these contain information about your proposed RM including their previous experience in relation to your proposed financial services and products
- Business Description – know as an ‘A5’
- Financial Statement and Financial Resources report – known as a ‘B5’
Give yourself at least six months to apply.
Applying for your AFSL can take up to 6 months for various reasons. Due to the relative complexity of some financial services and the necessary background checks which must be completed on your RMs, this process can sometimes be laborious. However, a comprehensive application process needs to exist to ensure financial advice clients receive sound advice from qualified and trustworthy advisers. It is not uncommon for applicants to be questioned by ASIC during the application process to clarify their RM’s skills and experience. Preparing ahead of time helps to reduce the time and effort it takes during the background check.
Consider working with an expert on your application.
Integrity Compliance can simplify the process and help you understand it better. We have years of knowledge and experience and can help guide you through the process from beginning to end. Being well-prepared increases the probability of a successful application and may save you time and money in the future. Once your application has been approved, you will receive a draft AFSL. Integrity Compliance can help you review this document and ensure you are happy with your license. Once you have your license, Integrity Compliance can help you to implement and manage your policies to help you remain compliant with your license conditions as you set off on your new business venture.
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