On 11 October 2024, the Australian Securities and Investments Commission (ASIC) published Report 797, titled Licensing and Professional Registration Activities: 2024 Update. The report outlines ASIC’s licensing and registration activities over the 2023–24 financial year, providing insights for Australian Financial Services (AFS) licensees, credit licensees, auditors, service providers, and other professionals in the financial services sector.
This report also covers ASIC’s performance in processing 1,531 licensing and registration applications from July 2023 to June 2024, marking a 2% increase from the previous year. ASIC finalised 874 AFS licence applications and 372 credit licence applications, reflecting slight decreases from the previous year. The report also discusses regulatory actions, including cancellations and suspensions of 239 AFS licences and 204 credit licences.
In addition to addressing general licensing trends, ASIC outlines several reforms and amendments set to impact the sector. A major reform is the introduction of a new AFS licensing portal scheduled for early 2025, designed to streamline application processes and improve user experience. ASIC also highlights proposed reforms related to the regulation of digital (crypto) assets, buy-now-pay-later (BNPL) services, and making advancements in payment systems, all of which may require new or additional licensing under ASIC’s jurisdiction.
ASIC’s performance during the period was largely in line with its service charter, meeting most targets in processing applications within prescribed timeframes. The report also outlines ASIC’s approach to improving stakeholder engagement, with efforts to modernise professional registers and seek feedback through user surveys.
This paper proposed a regulatory framework aimed at addressing consumer risks in the crypto ecosystem while still promoting innovation. The reform seeks to define “digital asset facilities” as a new category of financial products under the Australian Financial Services (AFS) licensing regime. This change means that entities dealing in digital assets that meet the definition of a financial product will be required to apply for and hold an AFS licence or rely on available exemptions. ASIC also mentioned its intention to update Information Sheet 225 Crypto-assets (INFO 225), which provides guidance on when crypto-assets might be considered financial products and, therefore, subject to AFS licensing requirements to focus on consumer protection and ensure proper licensing of digital asset platforms.
The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024, currently before the Senate, proposes that BNPL providers will need to hold a credit licence under the National Credit Code. There is a regulatory shift for BNPL providers, who, under the proposed law, will be required to apply for and obtain a credit licence in order to continue offering BNPL services.
The reform includes transitional arrangements allowing BNPL providers to continue operating while their licence applications are processed, provided they submit their applications within the allowed timeframe. Once passed, this legislation will bring BNPL under the same regulatory scrutiny as other credit providers, ensuring higher consumer protection standards and compliance with credit laws.
In December 2023, Treasury published the Payments System Modernisation: Regulation of Payment Services Providers consultation paper. The proposed amendments and reform aims to bring many currently exempt payment service providers under the AFS licensing regime. The new rules will require these providers to apply for an AFS licence and comply with the relevant financial requirements.
The reform suggests that the AFS licensing requirement would take effect 18 months after the enabling legislation is passed, with transitional provisions allowing payment service providers to continue operating if they lodge a licence application within six months of the legislation’s commencement.
This reform is relevant in the context of fintech innovations, as it broadens the regulatory framework to include more payment services, ensuring consistent oversight and consumer protection in the growing digital payments sector.
In October 2023, ASIC modified the reportable situations regime, which applies to AFS and credit licensees. The regime requires licensees to notify ASIC about certain reportable situations, including breaches of core obligations under the Corporations Act 2001 and the National Consumer Credit Protection Act 2009.
The reform, introduced through ASIC Corporations and Credit (Amendment) Instrument 2023/589, reduces the burden on licensees by removing the requirement to report specific breaches (e.g., those involving misleading or deceptive conduct). Furthermore, the notification period for certain situations was extended from 30 days to 90 days, giving licensees more time to report circumstances similar to previously reported issues. This change aims to streamline the reporting process and reduce unnecessary administrative burdens while maintaining regulatory oversight where needed.
The Financial Accountability Regime (FAR), which imposes responsibility and accountability frameworks on banking entities and their executives, will be extended to the insurance and superannuation sectors starting in March 2025. FAR was initially introduced for authorized deposit-taking institutions (ADIs) in March 2024 and is jointly administered by ASIC and the Australian Prudential Regulation Authority (APRA). Under FAR, executives in these industries will be required to comply with new standards of accountability, and both ASIC and APRA will be empowered to enforce these obligations. The reform aims to ensure stronger governance and accountability across the broader financial sector.
ASIC has introduced a new beta version of the Professional Registers Search, which provides users with a streamlined platform to verify the credentials and regulatory standing of various professionals. This tool allows for verification of AFS and credit licensees, authorized representatives, and registered company and SMSF auditors. The professional registers initiative represents a move toward greater transparency and accessibility, enabling the public and industry stakeholders to verify professional qualifications and regulatory status efficiently. This is part of ASIC’s broader effort to modernize its digital infrastructure and improve stakeholder engagement.
From February 2024, amendments made by the Treasury Laws Amendment (2023 Measures No. 1) Act 2023 will require financial advisers providing personal advice to retail clients on relevant financial products to be registered with ASIC. This includes relevant providers, excluding provisional relevant providers. ASIC has published guidance through Information Sheet 276 FAQs: Registration of Relevant Providers (INFO 276) and Information Sheet 277 Registration of Relevant Providers: Guidance on Making Declarations (INFO 277). These documents offer clarity on the new registration requirements and how licensees can comply. This reform is intended to enhance oversight of financial advisers, ensuring that those providing personal advice are properly registered and subject to ASIC’s regulatory framework.
A revised regulatory regime for Foreign Financial Services Providers (FFSPs) was introduced in 2020, allowing them to apply for an AFS licence under a streamlined process. In 2023, the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 (FFSP Bill) was introduced to Parliament, proposing new exemptions from the AFS licensing requirements for FFSPs, including an exemption from the fit and proper person test. If passed, the new regime will take effect on 1 April 2025, with transitional relief extended until 31 March 2026. This reform offers flexibility for FFSPs operating in Australia, balancing regulatory requirements with international business needs.
(Source: https://download.asic.gov.au/media/0cdbgeqi/rep797-published-11-october-2024.pdf, https://asic.gov.au/about-asic/news-centre/news-items/asic-issues-2023-24-update-on-licensing-and-professional-registration-activities/?altTemplate=betanewsroom)
