AFSL Application Process

Are you engaged in the financial services industry of Australia? If yes, then the Australian Government requires you to be AFSL compliant. If you are non-compliant, you may be penalised. 

This brings you to the next question, what is AFSL compliance? In this blog, you will get an idea of what AFSL is and which businesses need this license. 

First off, what is an AFSL?

What is AFSL, and How to Apply for it?

AFSL is short for the Australian Financial Services License. Every financial services business in Australia requires this license issued by the ASIC to operate.

Typically, the application process for an AFS license is through an online application. 

As an applicant, you have to provide your and the proposed authorisation’s information. You will also be required to attest that you have set up all processes and systems needed to commence your business.

Also, prepare supporting documentation for the proposing licensee, i.e., you and the key personnel such as responsible managers. Submit these documents along with your application. 

Requirements for AFSL

The Corporations Act lists the key requirements and obligations for AFSL. Some of these include:

  • Implementing and maintaining processes that help provide advice
  • Provide services efficiently and honestly
  • Comply with the laws for financial services
  • Adequately train all the employees
  • Ensure that all representatives comply with the laws for financial services at all times.
  • Professional development of employees and self
  • Making cash flow forecasts to improve the management of financial resources
  • Regularly review your preferred solutions, strategies, and services
  • Risk management of the business
  • Monitor employees
  • Handle service providers
  • Handle complaints and grievances
  • Handle any breaches that may occur in the advice or business
  • Manage resources, including people and IT, to ensure it is adequate
  • Solve conflicts of interest
  • Maintain adequate professional indemnity insurance

While most of these are functions that businesses providing financial services already perform, these are still formal prerequisites.

What is the Application Process?

Authorities require that your business covers all the necessary business activities under AFSL. 

Furthermore, you will have to share details of suitable and responsible managers in your application. It will go on to show that you have the required skill and experience to conduct business. The goal is to demonstrate your company’s competency to provide financial services as per AFSL guidelines.

Once you have arranged all of this, you can start your application process. However, you will have to apply with the ASIC. Under this, you require:

  • Business Description – A detailed overview of the business that includes the types of financial products and services offered.
  • Table of Organisational Expertise – Details of the responsible managers’ knowledge, skills, and experience.
  • Supporting Documents for Every Responsible Manager – Includes copies of their qualification and business references that can attest to their experience in financial services.
  • Proof of Financial Resources – A description proving your current compliance with financial requirements and processes, including cash flow projections and financial statements.
  • Additional Proof – Depending on the type of authorisation requested, you may need to furnish additional documents.

You need to wait for a period of 5 to 8 months after completing the application process.

Wrapping Up

You can easily outsource the AFSL compliance process to make the entire process smooth.

The ASIC makes its decision about issuing the license based on your business’ competency and financial resources. Make sure you can furnish documents to show proof of both to get your license.

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