Has FASEA complicated ASIC’s licensing process?

Alex Burke,  Senior Writer,  No More Practice Education

According to ASIC's latest report on licensing and professional registration applications, less than half of the 2,879 applications considered during July 2017 to June 2018 were approved.

It's worth noting that over the period, 62% of those approved applications were done so in a "form other than applied for by the applicant," as ASIC put it. ASIC's executive director, assessment and intelligence, Warren Day, invited "prospective applicants, and licensees intending to apply for variations, to review this report to better inform their applications and understand the regulatory context when applying."

Day added that the regulator's licensing and registration functions are being further enhanced with a new online portal.

"While there have been some delays," he explained, "we expect the portal will ultimately deliver efficiencies by ensuring that we ask for, and are given, all and only, the relevant information required to make the right regulatory decision to grant or not grant a licence or registration."

Given the introduction of FASEA, though, that relevant information looks set to change:

Updates to the financial advisers register

As per FASEA’s requirements, as of January this year only relevant providers – that is, those who are authorised representatives, employees or directors of an AFS licensee – who meet the new professional standards call themselves “financial planners” or “financial advisers”.

Due to this, ASIC will be updating the financial advisers register (FAR) to “include additional information about relevant providers, including their principal place of business, compliance scheme, and compliance with the code of ethics and CPD requirements.” In practice, this means licensees will now need to provide additional information about their authorised representatives and employees to ASIC. (You can see further details in my piece here.)

Organisational competence requirements

You may recall when we discussed Regulatory Guide 105 Licensing: Organisational competence (RG 105) in November last year. Basically, licensees should be required to “nominate responsible managers who will have direct responsibility for significant day-to-day decisions about the licensee's financial services business."

There were five options for a responsible manager to demonstrate their knowledge and skills to ASIC, with a proposed sixth option consisting of a knowledge component comprising the new FASEA exam as well as FASEA’s degree and CPD requirements. The skills component would be three years’ relevant experience over the past five years.

Consultation on that sixth option ended in December, but ASIC has flagged that it will be providing further guidance on how those higher professional standards will be included in the assessment of licensee applications.

This, overall, suggests that FASEA could potentially reduce that “less than half” figure at the start of this piece even further. Obviously, we’ll keep you posted on what the final guidance looks like.


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