Introduction
Navigating the Australian financial services landscape requires compliance with strict regulatory requirements. If you’re planning to offer financial services in Australia, understanding the Australian Financial Services (AFS) licence application process is essential. This comprehensive guide will walk you through everything you need to know about obtaining an AFS licence in 2025.
Table of Contents
Understanding the AFS Licence Requirement
An Australian Financial Services licence is a legal authorisation issued by the Australian Securities and Investments Commission (ASIC) that permits businesses and individuals to provide financial services to Australian consumers. The licensing regime exists to protect consumers and maintain the integrity of Australia’s financial system.
Under the Corporations Act 2001, any person or business that carries on a financial services business must hold an AFS licence unless they qualify for an exemption. The definition of “financial service” is broad and captures many business activities that involve financial products.
Who Needs an AFS Licence?
ASIC requires you to hold an AFS licence if your business engages in any of the following activities:
Providing financial product advice – This includes giving recommendations or statements of opinion intended to influence decisions about financial products. Financial planners, investment advisers, and wealth management professionals typically fall into this category.
Dealing in financial products – If you buy, sell, issue, or apply for financial products on behalf of clients, you need a licence. This covers stockbrokers, forex dealers, and cryptocurrency exchange operators.
Making a market – Businesses that regularly quote buy and sell prices for financial products, facilitating trading between parties, require licensing.
Operating registered managed investment schemes – Fund managers who pool investor money to invest in assets like property, shares, or other securities must be licensed.
Providing custodial or depository services – If you hold financial products or beneficial interests in financial products on trust for clients, licensing is mandatory.
Offering traditional trustee company services – Companies providing estate planning, trustee, and executor services need appropriate authorisation.
Common businesses requiring an AFS licence include accounting firms offering financial advice, insurance brokers, banks, financial planning practices, superannuation trustees, and fintech companies dealing with financial products.
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The AFS Licence Application Process
Step 1: Conduct a Self-Assessment
Before beginning the application process, conduct a thorough self-assessment to determine your exact licensing needs. Consider which financial services you’ll provide, what financial products you’ll deal with, and who your target client base will be. ASIC offers different licence authorisations depending on your business activities, so clarity at this stage prevents delays later.
Review ASIC’s regulatory guides, particularly RG 1 AFS Licensing Kit: Part 1 – Applying for and varying an AFS licence and related documentation. These resources outline ASIC’s expectations and requirements in detail.
Step 2: Familiarise Yourself with ASIC’s eLicensing System
ASIC’s eLicensing portal is the only method for submitting AFS licence applications. This online system guides applicants through the application process step by step. Before starting your formal application, spend time exploring the portal, understanding the information requirements, and reviewing example applications if available.
Create an account on the eLicensing system and familiarise yourself with the interface. The system will prompt you for specific information at each stage, but understanding the overall process beforehand helps ensure smooth progression.
Step 3: Prepare Your Documentation
The documentation requirements for an AFS licence application are extensive and require careful preparation. You’ll need to provide:
Organisational information – Details about your business structure, ownership, and governance arrangements. This includes company registration documents, trust deeds (if applicable), and organisational charts showing your business structure.
Personal information – Comprehensive details about key personnel, including directors, responsible managers, and significant shareholders. Each individual must provide proof of identity, employment history, and professional qualifications.
Financial resources – Evidence that you have adequate financial resources to operate your business and meet compensation arrangements. This includes audited financial statements, cash flow projections for at least 12 months, and details of your capital structure.
Competence evidence – Proof that you and your key personnel possess the necessary skills, knowledge, and experience to provide the proposed financial services. This may include relevant tertiary qualifications, professional certifications, and detailed employment histories demonstrating industry experience.
Compliance arrangements – A comprehensive compliance plan outlining how your business will meet its ongoing obligations under the Corporations Act and related legislation. This should detail your compliance monitoring processes, internal audit procedures, and breach reporting systems.
Risk management framework – Documentation showing how you’ll identify, assess, and manage risks associated with providing financial services. This includes operational risks, compliance risks, and financial risks.
Conflict of interest management – Detailed arrangements for identifying and managing conflicts of interest that may arise in your business operations.
Professional indemnity insurance – Evidence of adequate professional indemnity insurance cover, or a commitment to obtain such cover before commencing operations.
Step 4: Submit Your Application and Pay Fees
Once your documentation is complete, submit your application through the eLicensing portal. As of 2025, the application fees are $825 for individual applicants and $1,485 for corporate, partnership, or trustee applicants. These fees are non-refundable, regardless of whether your application succeeds.
Step 5: ASIC’s Assessment Process
After submission, ASIC conducts an initial assessment, typically responding within two to four weeks. However, complex applications may take considerably longer. ASIC will review your application to ensure you meet the requirements under Section 913B of the Corporations Act, which includes being adequately trained and competent, having adequate financial resources, and being able to comply with licence obligations.
During this phase, ASIC may request additional information or clarification. Respond promptly and thoroughly to any requests to avoid delays. Common requests include more detailed compliance documentation, additional evidence of financial resources, or clarification about proposed business activities.
Step 6: Draft Licence Conditions
If ASIC is satisfied with your application, you’ll receive a draft letter of acceptance outlining proposed licence conditions. These conditions specify exactly what financial services you’re authorised to provide and may include additional requirements specific to your business.
Review these conditions carefully and ensure you can meet all requirements before accepting the licence. This is also the stage where you must finalise arrangements like professional indemnity insurance if not already in place.
Step 7: Final Licence Grant
Once all conditions are satisfied and ASIC completes its assessment, your AFS licence will be formally granted. You’ll receive your licence number and can commence providing financial services within the scope of your authorisations.
Maintaining Your AFS Licence
Obtaining your licence is only the beginning. AFS licence holders have ongoing obligations including lodging annual financial statements, maintaining adequate professional indemnity insurance, reporting significant breaches, and conducting annual compliance audits. Staying informed about regulatory changes and maintaining robust compliance systems is essential for continued operation.
Getting Professional Assistance
The AFS licence application process is complex and time-consuming. Many applicants benefit from engaging commercial lawyers or compliance consultants who specialise in financial services regulation. Professional guidance can help avoid common pitfalls, ensure complete documentation, and streamline the application process.
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