Before granting a new or varying an existing Australian Financial Services Licence (“AFSL”) or Australian Credit Licence, ASIC must be satisfied that the individuals involved with the applicants are fit and proper persons. ASIC assesses a wider range of people that constitute fit and proper persons as set out under section 913BA of the Corporations Act than it did previously.
What is a Fit and Proper Person
ASIC will assess the following persons to ensure they are fit and proper to perform their functions within the AFSL or Credit Licence entity:
any officers of a body corporate applicant;
any partners or senior managers of a partnership applicant;
any trustees or senior managers of a multiple trustee of a trust applicant;
any controller of the applicant;
if a controller is a body corporate, any officer of the controller; and
if a controller is a partnership, any partner or senior managers of the controller.
In relation to Credit Licence applicants, ASIC will also assess:
- any senior managers who will perform duties in relation to credit;
- any partners or trustees who will perform duties in relation to credit; and
- the directors and company secretaries of a corporate partner or trustee.
What is a Company Officer?
Section 9 of the Corporations Act includes the definition of a company officer. A company officer includes:
- all directors or secretaries of a body corporate;
- persons who make, or participate in making, decisions that affect the whole or a significant part of the body corporate’s business or persons who have the capacity to significantly affect the financial standing of a body corporate;
- persons whose instructions or wishes the directors of the body corporate are accustomed to act on (excluding advice given by the person in a professional capacity or as part of their business relationship with the directors of the body corporate;
- A receiver or receiver manager of the property of the company;
- An administrator;
- An administrator of a deed of company arrangement executed by the company;
- A restructuring practitioner;
- A restructuring practitioner for a restructuring plan made by the company;
- A liquidator; or
- A trustee or other person administering a compromise or arrangement made between the company and someone else.
What is a Senior Manager?
Section 9 of the Corporations Act defines a senior manager as a person who:
- makes, or participates in making, decisions that affect the whole, or a substantial part, of an applicant’s business, or
- has the capacity to affect significantly the financial standing of the applicant.
Requirements for submission of an AFSL/Credit Licence application or variation to ASIC
For each fit and proper person, ASIC requires applicants to provide the following supporting documentation:
a national criminal history check (less than 12 months old);
a bankruptcy check obtained from the Australian Financial Security Authority (less than 12 months old); and
a completed Statement of Personal Information.
If a fit and proper person has answered yes to any question contained within the Statement of Personal Information, ASIC requires a separate attachment that includes details regarding the individual’s past conduct or order.
Fit and Proper Person requirements under a Credit Licence
Before granting a Credit Licence, ASIC must be satisfied that a fit and proper person:
is competent to operate a credit business. This is demonstrated by the person’s knowledge, skills and experience;
has the attributes of good character, diligence, honesty, integrity and judgement;
is not disqualified by law from performing their role in the applicant’s credit business; and
either has no conflict of interest in performing their role in the applicant’s credit business, or any conflict that exists will not create a material risk that the person will fail to properly perform their role in the applicant’s credit business.
The applicant will be asked to identify the people who are involved in the management of the business and specify which of those people the applicant will be relying on to demonstrate that they are competent to engage in credit activities as a Responsible Manager. The applicant may also be asked to provide detailed information about their past conduct and their role in the applicant’s credit business. It is an offence to provide ASIC with false or misleading information and ASIC can refuse the Credit Licence application if they think an applicant has provided such information.
During the assessment of the Credit Licence Application, ASIC will take into account whether a banning order or disqualification order under the National Consumer Credit Act 2009 (Cth) is in force against the applicant or an order under the State criminal organisations act against a director, secretary or senior manager.
ASIC will also take into account whether a fit and proper person has been the subject of specific regulatory outcomes e.g. serious fraud.
On 18 February 2020, the Financial Sector Reform (Hayne Royal Commission Response – Stronger Regulators (2019 Measures) Act amended the Corporations Act to provide additional information to applicants when assessing applications for a licence or variation.
- For AFSLs – ASIC Information Sheet 240; and
- For Credit Licence:
Sophie Grace can assist you with the preparation and lodgement of any AFSL and Credit Licence application or variation. Please contact us for assistance.