The Australian Securities and Investments Commission (ASIC) is under-resourced and is taking longer to deal with Australian Financial Services Licence applications, according to legal firm, The Fold.
The firm has warned clients that the days of a two-day turn-around with respect to license applications are over and that applicants should more realistically be expecting six-month turn-arounds as an acceptable minimum.
It said ASIC had informed the firm that the longer approval periods were owed to ASIC’s view that the licensing process represented a critical gatekeeper function in keeping bad apples out of the industry but also because the licensing division had been tasked with dealing with three new sectors – accountants, platform-based managed discretionary account (MDA) providers, and crowd-sourced funding intermediaries.
“At the same time, insufficient funding has been allocated to the division,” The Fold said. “As a result, staff numbers have been reduced from 35 to 25.”
The legal firm’s commentary said that for many years, ASIC had claimed to assess license applications and variations within 28 days but that this had increased to 60 days around two years’ ago and that the 60-day time-frame had now blown out to as much as seven months.
“Bowing to the inevitable, ASIC has altered its service level targets for assessing AFS and credit license applications,” it said. “We have now been conditioned to expect 70 per cent of applications to be assessed within 150 days and 90 per cent within 240 days,” it said.
The firm said that the situation was making it more difficult for businesses launching new products and services into the market and that, indeed, “some innovative businesses are exploring launching in other jurisdictions”.
