ASIC expects an Australian Financial Services Licence (AFSL) applicant to demonstrate that appropriate compliance policies and procedures are in place before the licence is granted. The required documentation depends on the proposed financial services but must be sufficient to show the applicant can comply with its ongoing obligations under the Corporations Act.
Expanded Answer
An AFSL applicant should have a documented compliance framework that reflects the nature, scale and complexity of the proposed business. ASIC assesses whether the applicant has appropriate governance, risk management and operational controls to support the financial services covered by the application. Policies and procedures should demonstrate how the business will meet its legal obligations rather than simply restating legislative requirements.
The compliance framework commonly includes policies covering compliance management, risk management, breach and incident reporting, complaints handling, conflicts of interest, training and competence, supervision, record-keeping, financial crime controls, where applicable, outsourcing, business continuity, and information security. The documentation should be supported by practical procedures that explain how compliance activities will be implemented, monitored and reviewed. ASIC expects these arrangements to be operational before licensed activities commence and to evolve as the business grows.
Applies when: a business applies for a new AFSL or seeks additional licence authorisations that require enhanced compliance arrangements.
Requirements increase when: the business provides more complex financial services, operates through representatives, outsources critical functions or has a higher operational risk profile.
Why it matters
A well-developed compliance framework demonstrates organisational readiness and reduces the likelihood of delays caused by ASIC requests for additional information. It also provides the foundation for meeting ongoing licence obligations after the AFSL is granted.
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Practical guidance
- Document compliance policies that address the risks and obligations relevant to the proposed financial services.
- Implement operational procedures that explain how compliance activities will be performed, monitored and evidenced.
- Review the compliance framework against ASIC’s licensing expectations before lodging the AFSL application.
Further reading
What are the requirements for an AFSL? A practical guide for prospective licensees
Demonstrating organisational competence beyond responsible managers