What Information Can ASIC Request During an AFSL Variation?

Introduction

When you apply to change the conditions on your Australian Financial Services Licence (AFSL), the Australian Securities and Investments Commission (ASIC) can ask you for more information before making a decision. This power comes from Section 914B of the Corporations Act 2001 (Cth) (‘Corporations Act’), and if you do not respond on time, your application may be treated as withdrawn.

AFSL lawyers advising on ASIC information requests and fit and proper requirements can help you understand what to provide and meet the deadline. In this article, we explain what ASIC can request, how the deadlines work and how to prepare.

Interactive Tool: See If Your AFSL Application Meets Section 914B Requirements

When Does Section 914B Apply?

Section 914B(1) of the Corporations Act applies when a financial services licensee lodges an application under Section 914A(2)(b) asking ASIC to:

• impose or add conditions on the licence; or
• vary or revoke existing conditions.

However, Section 914B(1) does not apply where the relevant power falls within the exception in Section 914A(5)(a), which concerns certain licence condition changes affecting authorised deposit-taking institutions (ADIs).

The application is made under Section 914A(2)(b), and must be lodged in the prescribed form together with any documents required by the regulations.

Section 914B does not apply where ASIC changes licence conditions on its own initiative. In that case, ASIC acts by written notice under Sections 914A(1) and 914A(2)(a), outside the Section 914B process. Section 914B(1) also excludes powers covered by Section 914A(5)(a).

These relate to conditions that would prevent an authorised deposit-taking institution (ADI) from carrying on its banking business, which are a matter for the federal Minister responsible for financial services, currently the Assistant Treasurer and Minister for Financial Services, rather than ASIC.

Where Section 914B applies, ASIC may give the applicant a written notice under Section 914B(3) requesting any of the following:

• information about matters relevant to the fit and proper person test in Section 913BA;
• an audit report on those matters, prepared by a suitably qualified person named in the notice; and
• if ASIC proposes to grant the application, a statement confirming whether there have been any material changes to the information already provided.

The notice will set a deadline for the response. If the requested material is not lodged in the prescribed form within that time, the application is taken to have been withdrawn under Section 914B(6). We explain each type of request, and how the deadlines work, in the sections below.

What Information Can ASIC Request Under Section 914B?

Information Relevant to the Fit and Proper Person Test

Subject to Section 914B(3)(a) of the Corporations Act, ASIC may request information about matters relevant to the fit and proper person test in Section 913BA of the Corporations Act. Under Section 914B(4)(a) of the Corporations Act, the request may relate to any person mentioned in Section 913BA(1).

Depending on the applicant’s structure, this can include the applicant, its officers, partners, trustees, senior managers and controllers, and the officers, partners, trustees or senior managers of a controller. 

Moreover, Section 913BB(2) of the Corporations Act establishes that ASIC must consider matters including:

• suspended or cancelled AFSLs;
• banning or disqualification orders;
• insolvency or bankruptcy history; and
• convictions for offences in the previous 10 years.

In this matter, ASIC’s Regulatory Guide 1 (RG 1.148–RG 1.149) identifies the supporting documents, called People Proofs, that ASIC uses for this assessment, such as national and overseas criminal history checks, bankruptcy checks and Statements of Personal Information. 

Under Part VIIC of the Crimes Act 1914 (Cth) (‘Crimes Act’), spent convictions generally do not need to be disclosed, and ASIC confirms in RG 1.158 that applicants are not obliged to disclose spent or quashed convictions. 

Audit Reports by a Suitably Qualified Person 

According to Section 914B(3)(b) of the Corporations Act, ASIC may request an audit report prepared by a suitably qualified person specified in the notice. The report must address matters relevant to ASIC’s assessment of whether the fit and proper person requirement in Section 913BA of the Corporations Act is satisfied.

However, this provision does not describe an unrestricted power to require an audit of the licensee’s entire business. The audit report must relate to the fit and proper person matters identified in Section 914B(3)(b) of the Corporations Act.

Statements About Material Changes

Under Section 914B(3)(c) of the Corporations Act, ASIC may request a statement if it proposes to grant the application. The statement must either identify material changes to information provided in or in connection with the application, or confirm that no such changes have occurred.

This declaration can relate to information supplied during the assessment process. Separately, ASIC’s Information Sheet 294 (INFO 294) states that, for new licence applications, ASIC’s requirements letter asks the applicant to confirm there have been no material changes before the final licence is granted. For variations, the legal basis for this statement is Section 914B(3)(c) of the Corporations Act.

How Does ASIC Request Additional Information?

Written Notice & Prescribed Lodgement Requirements

Under Section 914B(3) of the Corporations Act, ASIC may give the applicant a written notice requesting specified information, an audit report or a statement about material changes. The notice must require the requested material to be lodged with ASIC in a prescribed form and within the timeframe stated in the notice.

The deadline is set by ASIC in the written notice. To avoid the application being taken to have been withdrawn under Section 914B(6) of the Corporations Act, the applicant must:

• lodge the relevant material in the required form; and
• do so within the specified period.

AFSL application lawyers assisting with prescribed ASIC responses can help ensure the material is lodged correctly. If the requested material is not lodged in the prescribed form within the time specified in the notice, including any extension under Section 914B(5)(b), the application is taken to have been withdrawn under Section 914B(6) of the Corporations Act. 

Differences Between Formal Statutory Notices & Routine Queries

A formal notice under Section 914B(3) of the Corporations Act is different from routine questions asked during ASIC’s assessment process. ASIC may contact an applicant through its ordinary licensing procedures to request further information, supporting documents or responses that help the licensing analyst assess the application.

Routine requests can relate to the applicant’s business, processes, procedures and activities. INFO 294 advises applicants to respond promptly and within any timeframe given.

A routine query does not, by itself, have the specific statutory deemed-withdrawal consequence attached to a formal notice under Section 914B(3) of the Corporations Act.

Can ASIC Extend the Deadline to Provide Information?

ASIC Powers to Extend the Response Deadline

Under Section 914B(5)(b) of the Corporations Act, ASIC may extend the response period stated in a notice issued. ASIC must give the applicant a written notice of the extension before the original response period expires.

In this context, an applicant who cannot respond within the stated period may contact ASIC to discuss a possible extension. However, a request made after the specified date cannot be granted under Section 914B(5)(b) of the Corporations Act.

ASIC Powers to Withdraw an Information Request

In accordance with Section 914B(5)(a) of the Corporations Act, ASIC may withdraw a request made under Section 914B(3). The withdrawal must be communicated to the applicant by written notice within the period specified in the original notice.

This power allows ASIC to remove the request before the response period ends. If ASIC does not withdraw the request or extend the period within that timeframe, the applicant remains subject to the original requirements.

What Happens If an Applicant Fails to Provide the Requested Information?

Deemed Withdrawal Under Section 914B(6)

Under Section 914B(6) of the Corporations Act, an applicant is taken to have withdrawn the application if the requested information, audit report or statement is not lodged with ASIC in the prescribed form within the specified time.

Section 914B(4)(b) confirms that this consequence applies even if the applicant is unable to comply with the request. In addition, INFO 294 states that the application fee will not be returned if the application is taken to have been withdrawn. 

Differences Between Deemed Withdrawal & Application Refusal

A deemed withdrawal under Section 914B(6) of the Corporations Act is different from a refusal by ASIC. Compliant with Section 914B(2), ASIC may refuse a variation application if the fit and proper person test in Section 913BA is not satisfied for the applicant and the licence as proposed to be varied. 

This does not limit ASIC’s other grounds for refusal. Under Section 914B(9) of the Corporations Act, ASIC may refuse the application only after giving the applicant an opportunity to appear at a private hearing and make submissions.

Nevertheless, Section 914B(7) of the Corporations Act states that this hearing requirement does not apply when the application is taken to have been withdrawn under Section 914B(6) of the Corporations Act. A deemed withdrawal can therefore occur without the hearing process that applies before a formal refusal.

How Can AFSL Holders Prepare for ASIC Information Requests?

Maintenance of Accurate Fit & Proper Person Records

ASIC Regulatory Guide 1 (RG 1.146–RG 1.149) states that ASIC assesses fit and proper people against the matters in Section 913BB(2) of the Corporations Act and uses supporting People Proofs to do so. 

For variations, INFO 294 states that applicants must provide information about their fit and proper people, but uploading People Proofs is optional at lodgement, and ASIC may only need them for some of those people. These records may relate to officers, partners, trustees, senior managers and controllers, depending on the applicant’s structure.

Under RG 1.149, People Proofs must be no more than 12 months old when given to ASIC. They include:

• a national criminal history check, plus an overseas criminal history check for each country where the person has lived for more than 12 months in the last 10 years;
• a bankruptcy check for each overseas country where the person has lived for more than 12 months in the last 10 years; and
• a completed and signed Statement of Personal Information.

As a matter of good practice, licensees should keep these documents current so they can respond quickly to an ASIC request.

Documents must be in English or accompanied by a certified translation under RG 1.150. INFO 294 confirms that ASIC may request these documents during its assessment, including where they were not uploaded with the variation application. 

If ASIC makes that request by formal written notice under Section 914B(3)(a) of the Corporations Act, the deemed-withdrawal rule in Section 914B(6) applies to the deadline in the notice. 

Methods for Monitoring Material Changes & Tracking Deadlines

An applicant should maintain a clear record of information provided to ASIC and monitor whether any material changes occur during the variation process. As noted above, Section 914B(3)(c) of the Corporations Act allows ASIC to request a statement identifying those changes or confirming that none have occurred if ASIC proposes to grant the application.

INFO 294 advises applicants to respond promptly to requests and within any stated timeframe. A response register should record each request, required document, prescribed form and deadline. Under Section 914B(6) of the Corporations Act, if the requested material is not lodged in the prescribed form within the specified time, the application is taken to have been withdrawn. 

Conclusion

Section 914B of the Corporations Act gives ASIC a defined process for requesting information about fit and proper matters, related audit reports and material changes to an AFSL variation application. A formal notice must be answered in the prescribed form and within the stated timeframe, because Section 914B(6) of the Corporations Act treats the application as withdrawn if it is not, while Section 914B(5) of the Corporations Act allows ASIC to withdraw the request or extend the time within that period. 

For assistance with an AFSL variation, contact Click Legal’s AFSL variation and application lawyers. Our financial services lawyers can review the requested material, assess fit and proper records and help manage the response to ASIC clearly and on time.

Frequently Asked Questions