Addressing the parliamentary joint committee on corporations and financial services on Friday, ASIC deputy chairman Peter Kell said that by implementing tougher check points in the application process, this will help weed out unfit candidates earlier.
“The barriers of entry to getting a licence, in our view, have not been robust enough. And then on the other hand, the ability to take away a licence is more difficult than it should be, which is the opposite of the combination that you would wish,” he said.
“We believe that having more rigorous tests before a licence is granted can create an ability to not back a licence if we do not think the firm is equipped to satisfy the requirements.
“It would allow us, to in effect, knock some of the poor players out at the entry gate rather than down the track.”
However, others would argue that the current system in place is not exactly a smooth process.
Speaking to ifa, financial services lawyer Sophie Gerber, who is a director at Sophie Grace Compliance and Legal, said it has been taking longer than usual lately to receive an AFSL.
She said she has about 20 to 25 clients still waiting for ASIC to approve their licences.
“That’s 20 to 25 businesses that could be up and running,” Ms Gerber said. “These people want to set up their business but [ASIC is] basically stopping them.”
“It’s not about how much money [the applicants waiting] are losing. It’s about how much capital they’re currently sitting on which could be injected into the economy if they were licensed to spend it.”
Further, Ms Gerber said while she is not against ASIC increasing the barriers to entry, she hopes the regulator will begin to articulate the extra requirements earlier in the process.
“They come back to us with requirements after weeks or months of the application being with them,” she said.
“If we were able to tell clients upfront what ASIC is looking for then they could make the relevant preparations. But when you’ve been waiting for months for a response, and get asked questions we couldn’t help the clients prepare for in advance, is really difficult.”
Ms Gerber added that the AFSLs she is after relate to “funds management, issuing small credit contracts, out-of-the-box style businesses”. The AFSLs for independent financial planners move along quickly, she said.
Making a licence hard to get wont change anything. More important is those who have a licence now but should not of got one. From my point of view there are too many licencees who will happily put on represenatives for a cut in revenue however do no supervision whatsoever of what is happening under their licence. When they do find problems…it take sfor ever to remove if ever the offender in many cases they have joined other Licencees in the meantime. In short, ASIC need more funds to police the laws they already have, it is almost as if some licencess know ASIC is constrained and are prepared to takje a chance they wont get caught.
Basically, ASIC want to stop IFA’s and small players from entering the AFS landscape and that will make it easier for them to manage the bigger players. Once that happens they can freely police the ‘BIG 4’ issuing infringement notices galore and fining every AFS licensee for every little mistake they make – mistakes including statements that are “likely to mislead” such as an advertising typo.
Just another typical communist agenda cloaked in Labor clothing
No worries….loads of regulation, higher barriers to entry….just like the taxi industry. Look what happened!
the process of application via ASIC is light weight and needs reforming for sure. Some aspects that could improve include a face to face interview with the applicant and secondly the acceptance of applications from RM’s that have governance and risk management skill not necessarily history of product and advice. Thirdly external annual compliance reports should be mandatory and they should be sent to ASIC without amendment. This would improve all facets including ASIC’s role.