With a surging number of Australian Financial Services Licence (AFSL) and Australian Credit Licence (ACL) applications, the Australian Securities and Investments Commission (ASIC) has experienced increasing difficulties in managing their workload and has an inefficient ability to assess applications within the expected timeframes.
Under the new approach in calculating ASIC’s completion time for AFSL and ACL applications from 1 July 2015, ASIC aims to decide whether to grant or vary an AFSL or ACL application within 60 days of receiving a complete application (with a target rate of 70%). ASIC also aims to decide 90% of complete applications within 120 days of receipt; once again noting that applications may incur delays where more information is required to be provided by the applicant or complex issues are raised.
Interestingly, the table below illustrates that ASIC failed to achieve its target rates for processing AFSL applications during the past financial year (2015-2016). Positively, ASIC has still managed to assess ACL applications rather quickly. ASIC has advised that it is currently reviewing its service charter in terms of sustainable target levels with current resources.
The financial services industry can only hope that ASIC will provide more realistic target rates that truly reflect their capacity:
|New licences granted within 60 days||Licence variations decided within 60 days||New licences granted within 120 days||Licence variations decided in 120 days|
The below statistics indicate ASIC’s work progress in assessing AFSL and ACL applications between January to June 2016:
In ASIC’s latest licensing report published in December 2016 entitled ‘Report 503: Overview of licensing and professional registration applications: January to June 2016’, ASIC noted the following:
New AFSL Applications
Among the 1146 new AFSL applications received during the period from January to June 2016:
- 205 (18%) were approved;
- 189 (16%) were rejected, withdrawn or refused; and
- 752 (66%) had not been finalised.
New ACL Applications
Among the 212 new ACL applications received during the period from January to June 2016:
- 56 (26%) were approved;
- 37 (17%) were rejected, withdrawn or refused; and
- 119 (56%) had not been finalised.
*All percentages have been rounded to the nearest whole number.
As evidenced above, ASIC’s ongoing resourcing and capacity restraints to assess AFSL and ACL applications in an efficient and timely manner continues to delay new entrants to the financial services industry especially when there has been a drastic increase in the number of AFSL applications.
ASIC has acknowledged that there will be a significant delay in assessing Limited AFSL applications as a result of the funding which was implemented for the limited AFSL regime ended last financial year. ASIC is only able to assess the significant number of outstanding applications out of existing ongoing resources. For more information specifically relating to the backlog in limited AFSL applications refer to our ‘Limited AFS License Application Catch 22’ blog article.
It is likely that some AFSL and ACL applicants will receive emails from ASIC advising them of “increased workloads” and “resourcing constraints” as reasons for the delay in processing AFSL and ACL applications.
It is recommended that businesses which are planning on providing any financial services or credit activities in Australia commence the application process and join the queue. If you should require any information on AFSL and ACL applications, please contact us.
Angela works with the Compliance Team with a particular focus on drafting and amending compliance documentation to tailor to our clients needs. She also assists with AFSL and ACL applications as well as compliance reviews. Angela also works with the Legal Team by providing ongoing assistance in drafting documentation and legal research. Angela assists the compliance consultants in implementing ongoing compliance support, updating procedural documentation and preparing compliance reporting for Compliance Committees and Board of Directors.