ASIC cracks down on adviser licensing

Alex Burke,  Senior Writer,  No More Practice Education

As part of a desire to "ascertain whether [a licensee] has reason to believe an applicant is likely to contravene its legislative obligations," ASIC is now requiring AFSL applicants to provide additional information.

For the purposes of this piece, we'll focus on financial advisers, covered under "applicants that are proposing to offer certain financial services or to operate in specific circumstances." Note that these requirements apply to both prospective licensees and those looking to vary their licenses.

Commenting on the changes, ASIC's executive director - assessment and intelligence, Warren Day, said: "ASIC has reviewed the AFS licence assessment processes and has streamlined its assessment processes in some limited respects."

"This is designed to avoid unnecessary delays that may arise when ASIC seeks additional information during an assessment," he added.

So, what's changed?

Providers of personal financial product advice

Those looking to apply for or vary their AFSL will now also need to provide documentation concerning compliance arrangements, a program for monitoring, supervision and training of authorised representatives and a risk management system statement.

Those looking to deal in managed discretionary accounts (MDAs) will also need to provide both evidence of compliance arrangements and a risk management system statement, along with an MDA operator capacity statement and arrangements for managing conflicts of interests.

Other required proofs

Other circumstances where licensees may be required to provide non-core proofs include where an applicant has nominated a responsible manager who is an officer of another AFS licensee. In this case, the applicant will need to provide proof of arrangements for managing conflicts of interests, which will have to "include specific details about the arrangements for managing the responsible manager's conflicts of interest that arise because of their various roles."

Where an applicant seeks to outsource a "material activity required to provide the financial service or product," they will need to provide an outsourcing statement.

If you'd like to see the full list of additional information required for applicants, you can do so here.


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