Organizations engaged in regulated activities in Australia that are supervised by ASIC are required to have the appropriate permission. Getting it signifies the beginning of continuing responsibilities and regulatory scrutiny, so it’s more than just a certificate to cross off a list. The authorization serves as the entry point for any organization wishing to provide specific regulated offerings or give advice on them to local clients. If you do it incorrectly or disregard the necessity completely, you may face enforcement action, fines, or the suspension of your authorization rights. What is AFS licence, who usually needs to hold one, what holding it entails, and how to get one are all explained below.
But before reading, you can take a look at businesses for sale if you do not want to burden yourself with the complex course of action of creating one.
What is an AFS licence and who needs it
If an entity or individual plans to make markets, deal in products, give product advice, or provide custodial/depository style arrangements for clients—particularly when dealing with retail clients (as opposed to wholesale clients)—they must hold this permission. The regime is most likely applicable if operations are directed at or accessible by regular clients.
Unless there is a specific exemption, even foreign entities that interact with Australia may be subject to this regime. ASIC may take enforcement action against the operator if they conduct business in Australia (or to resident clients) without obtaining the permission or using an exemption.
AFS licence obligations and operational duties
- The license holder requires “responsible managers” with experience and training that complies with ASIC;
- The holder requires adequate human, technological, and other resources to carry out the tasks covered by the authorization;
- Fair, honest, and effective operations are required of the holder;
- The holder must have policies in place to identify, minimize, and manage conflicts of interest and be prepared to handle significant breaches or troublesome situations, including notifying ASIC when required;
- In accordance with ASIC’s guidelines, the license holder must maintain adequate resources, such as net tangible assets, cash flow projections, and liquidity;
- The holder must be a part of suitable external schemes and have appropriate dispute resolution procedures in place if retail clients are involved;
- The owner of a permit has to notify ASIC within certain timeframes if important details (like managers, address, or control) change.
Applying for an Australian financial services licence AFSL
- In a comprehensive submission to ASIC, the applicant outlines the intended business operations, the authorizations requested, and the qualified and experienced responsible managers. The application also describes the organization’s internal controls, IT systems, personnel, compliance plans, and structure;
- The required fee is submitted with the official application;
- ASIC then evaluates the integrity, background, and experience of the company’s key personnel to determine if they pass the “fit and proper” test;
- Cash flow projections, capital or net tangible assets, and liquidity plans are all required financial data. These are examined by ASIC to verify the company’s financial stability.
- During its review, ASIC might request more information. The complexity of the business and the completeness of the submission determine how long it takes to process.
Operations must remain within the license’s parameters after approval. The holder is continuously required to maintain proper systems, financial capacity, compliance, and reporting.
It is also recommended to use the assistance of a specialist. Eli Deal can provide you with an experienced one who will help in different aspects during the course of action.
Conclusion
An AFSL is necessary for companies doing business in Australia’s regulated industries. It is typically a legal necessity rather than a personal preference. The main steps are to determine whether your operations are covered by the license, confirm that you can fulfill the operational responsibilities (people, systems, resources, and reporting), prepare a strong submission to ASIC, and, if accepted, continue to maintain compliance over time. Comprehending and fulfilling these responsibilities is equally as crucial as obtaining the license.
FAQ
What is the Australian financial services license AFSL?
AFS licence Australia is permission given by the local regulator. It permits the holder to engage in certain legally restricted activities (like advising, dealing, creating markets, or holding assets). It is not a straightforward certificate because it creates recurring responsibilities.
Who requires an Australian financial services license?
Anyone (person or entity) that intends to engage in operations like advising on products, dealing in products, making markets, holding assets for clients—especially when retail clients are involved—will generally need the AFSL (Financial Services License) Australia for sale. Also, overseas entities that deal with Australian clients may fall under its scope.
How to check an AFSL licence?
To find out if a particular AFS licence number is valid, what permissions it includes, who owns it, and whether any conditions apply, you can use the regulator’s public register.
How long does it take to get an AFSL license?
The time varies according to the complexity of the proposed operations, the completeness and clarity of the submission and how promptly the regulatory body is able to assess it. In many cases it takes 4-8 months.
Can I buy an AFSL directly?
No. An AFSL Australia permit cannot be purchased and then transferred. A particular entity is given a license based on its operations, resources, personnel, and organizational structure. Purchasing a company that already has an authorization is an option, but it requires regulatory approval, thorough review, and change-of-control procedures.
What are the risks associated with buying an AFSL?
Key risks include picking up hidden liabilities of the existing licence-holder (past breaches, unresolved obligations), discovering that the authorisations don’t align with your intended operations (so you’ll need variations), and the change‐of-control process itself may trigger scrutiny and delays from the regulator.
What should I consider when buying an existing AFSL?
Make sure the authorizations included in an existing AFSL match your intended business when purchasing it. Examine any requirements, such as designated important individuals or geographical restrictions. Examine the license’s compliance history for any violations, audits, or legal problems. If modifications are required, estimate the time and cost required to change the license. Lastly, make sure the accountable managers fulfill ASIC’s requirements or can be substituted with capable individuals.
What happens after I purchase an AFSL?
You must notify the regulator of changes in control, changes in key personnel, structure or address. Then you must operate strictly under the permissions granted. You must maintain competent managers, adequate systems and resources, and fulfil ongoing duties. If you don’t, the authorisation may be suspended or cancelled.
How long does the AFSL acquisition process take?
The process typically takes around 4 to 8 months, though this can vary quite a bit.
Can Eli Deal assist with compliance after acquisition?
Yes. We offer ongoing support after purchase of a licence-holder entity. Eli Deal help set up internal processes, assist with reporting, and ensure the entity meets its continuing obligations.
