AFSL Variation: What Happens If You Don’t Respond to ASIC? 

Introduction

When an Australian Financial Services Licence (AFSL) holder applies to vary their licence, the Australian Securities and Investments Commission (ASIC) may ask for further information before making a decision. Not all of these requests carry the same weight. If ASIC issues a formal written notice under Section 914B(3) of the Corporations Act 2001 (Cth) (‘Corporations Act’) and the requested material is not provided on time, the application may be deemed withdrawn.

This article explains when deemed withdrawal applies, what it means for a licensee’s existing authorisations and the practical steps AFSL holders can take to avoid it.

Interactive Tool: Check If Your AFSL Variation Is At Risk of Withdrawal

When Does Failing to Respond to ASIC Put an AFSL Variation at Risk?

A licensee applies to vary its AFSL conditions under Section 914A(2)(b) of the Corporations Act. Under Section 914B(2), ASIC may refuse the application if the fit and proper person test in Section 913BA of the Corporations Act is not satisfied in relation to the applicant and the licence as proposed to be varied. That said, this is not the only ground for refusal because Section 914B(2) does not limit ASIC’s other powers to refuse.

Informal ASIC Information Requests

In practice, ASIC may ask, usually informally, for further material about:

• responsible managers;
• fit and proper individuals;
• proposed authorisations; and
• the applicant’s supporting information.

ASIC’s Regulatory Guide 1 (RG 1) states, at RG 1.134–RG 1.135, that ASIC assesses whether the applicant and certain associated people are fit and proper, and that ASIC also applies this assessment to nominated responsible managers.

Further, at RG 1.137, ASIC states it considers whether responsible managers have the knowledge and skills to provide the proposed financial services.

This is part of the organisational competence obligation in Section 912A(1)(e) of the Corporations Act. A responsible manager falls within Section 913BA only if they also hold a role listed there, such as officer or senior manager.

Formal Information Requests Under Section 914B

Under Section 914B(3) of the Corporations Act, ASIC may give the applicant a written notice requesting information, an audit report or a statement to be lodged in the prescribed form within the timeframe stated in the notice. Failure to respond can result in deemed withdrawal under Section 914B(6).

The requested information must be relevant to the matters ASIC is required to consider under Section 913BB(2) of the Corporations Act when determining whether the fit and proper person test under Section 913BA has been satisfied.

In addition to information, the written notice may require:

• an audit report prepared by a suitably qualified person specified by ASIC in the notice; and
• if ASIC proposes to grant the application, a statement identifying material changes, or confirming that no material changes have occurred in information previously provided.

Under Section 914B(4)(a) of the Corporations Act, the request may concern any person mentioned in Section 913BA in relation to the applicant and the proposed variation.

Consequences of a Failure to Respond to an ASIC Information Request

Automatic Withdrawal of an AFSL Variation Application

Under Section 914B(6) of the Corporations Act, an AFSL variation application is taken to have been withdrawn if the applicant does not lodge the information, audit report or statement requested under Section 914B(3) of the Corporations Act in the prescribed form and within the specified timeframe.

A late response, or one not in the prescribed form, may therefore have the same result as no response.

The consequence applies to non-compliance with the formal written notice, not to every unanswered communication from ASIC. The application is treated as withdrawn once the statutory conditions in Section 914B(6) of the Corporations Act are met.

Does Deemed Withdrawal Apply If an AFSL Holder Cannot Provide the Information?

Section 914B(4)(b) of the Corporations Act confirms that Section 914B(6) of the Corporations Act applies even if the applicant is unable to comply with the request.

This means that an inability to provide the requested information does not, by itself, prevent the application from being deemed withdrawn. In practice, the applicant must consider the notice and its timeframe carefully because the statutory consequence is linked to non-compliance with the formal request.

Extensions of Time to Respond to ASIC

Statutory Deadlines for ASIC Responses

A formal notice under Section 914B(3) of the Corporations Act specifies the time for lodging the requested information, audit report or statement with ASIC. Section 914B frames the notice as a request rather than a legal duty, so not responding is not an offence.

However, the material must be lodged in the prescribed form within that stated period to avoid the consequence in Section 914B(6) of the Corporations Act, as explained above.

Consistent with this, ASIC’s assessment guidance states that responses should be complete and submitted promptly within the timeframe given. If the applicant does not comply with a formal notice within the specified period, Section 914B(6) of the Corporations Act provides that the variation application is taken to have been withdrawn.

How ASIC Can Extend Deadlines or Withdraw Requests

Under Section 914B(5) of the Corporations Act, ASIC may withdraw an information request or extend the response period by written notice to the applicant. Nevertheless, ASIC must issue that written notice before the timeframe in the original notice expires.

For this reason, an applicant that cannot provide the requested material by the stated date should contact ASIC before the deadline and discuss an extension. INFO 294 confirms that an extension cannot be granted once the date in the notice has passed.

This reflects Section 914B(5) of the Corporations Act, which gives ASIC a discretion (not an obligation) to extend, and only by written notice issued before the deadline. A request for more time does not, by itself, stop the clock.

Consequences of a Deemed Withdrawal for AFSL Holders

Loss of Application Fees & Termination of the Application

As a result of the deemed withdrawal described above, the variation application ends. Under Regulation 3(1) and Schedule 1, Items 3 and 4 of the Corporations (Fees) Regulations 2001 (Cth), (‘Corporations Fees Regulations’) an application fee is payable when an AFSL holder applies to vary its licence conditions under Section 914A(2)(b) of the Corporations Act. ASIC’s INFO 294 states that the application fee will not be refunded if the application is deemed withdrawn.

A business that still requires the proposed licence variation may need to submit a new application and pay a new application fee. Similarly, INFO 294 states that if an applicant chooses to withdraw an application after ASIC has accepted it for lodgement, the application fee will not be returned.

Absence of Hearing Rights & Impact on Existing Licence Authorisations

Under Section 914B(7) of the Corporations Act, the right to a hearing before refusal under Section 914B(9) does not apply when an application is deemed withdrawn under Section 914B(6).

ASIC’s INFO 294 also confirms that there is no right to appeal the deemed withdrawal. This is different from an ASIC decision to refuse an application, which may be reviewed by the Administrative Review Tribunal under Section 1317B(1) of the Corporations Act.

Existing Australian financial services licence authorisations remain unchanged; deemed withdrawal does not automatically cancel or suspend the authorisations already held. 

Section 914B(6) of the Corporations Act only affects the variation application; it does not change the conditions or authorisations on the existing licence. However, ASIC may separately vary licence conditions under Section 914A or suspend or cancel an AFSL where the relevant grounds in Section 915B or 915C are satisfied.

Differences Between Deemed Withdrawal & ASIC Refusal

Grounds, Hearing Rights & Review Options Compared

A refusal occurs when ASIC determines that the application should not be granted. Under Section 914B(2) of the Corporations Act, ASIC may refuse an AFSL variation application if the fit and proper person test in Section 913BA is not satisfied.

ASIC may also consider concerns about the licensee’s ability to provide the proposed services, including its obligation to maintain organisational competence under Section 912A(1)(e), when assessing the variation.

Under Section 914B(9) of the Corporations Act, ASIC may only refuse an application to vary licence conditions after giving the applicant an opportunity to appear, or be represented, at a private hearing and make submissions.

Under Section 914B(9) of the Corporations Act, ASIC must give an AFSL variation applicant an opportunity to appear, or be represented, at a private hearing and make submissions before refusing the application.

The applicant may:

• attend the private hearing, or be represented;
• make written submissions; or
• use both opportunities to address ASIC’s concerns.

ASIC’s INFO 294 describes a delegate-led refusal process for AFS licence applications. A final ASIC decision refusing a variation application may also be reviewed by the Administrative Review Tribunal under Section 1317B(1) of the Corporations Act.

Deemed withdrawal, by contrast, is not a decision on the merits. The application ends by operation of Section 914B(6) of the Corporations Act once a formal notice is not complied with, so the hearing process described above does not apply and, as noted earlier, there is no appeal right.

In practice, an applicant facing refusal still has an opportunity to address ASIC’s concerns, whereas missing a formal deadline ends the application without one.

What Should AFSL Holders Do When ASIC Requests Information?

Check Whether the Request Is Formal and Confirm the Deadline

First, identify whether ASIC has made an informal request for information or issued a formal written notice. An informal request may allow ASIC to assess the application using the information already available, while a notice under Section 914B(3) of the Corporations Act sets a deadline that, if missed, leads to deemed withdrawal under Section 914B(6).

To that end, the compliance team should record:

• the type of request received;
• the information or documents required; and
• the response deadline stated by ASIC.

If the request is a formal notice, treat the stated date as fixed. ASIC cannot extend the period once that date has passed, so any request for more time needs to be made well before it.

Prepare a Complete Response or Request an Extension

Responses should address each question and include all requested supporting documents; AFSL application lawyers can assist with preparing that material. ASIC states that correct and complete information can help avoid returned applications, further requests and delays during the assessment process.

If the deadline is approaching: where the requested material cannot be lodged in full and in the prescribed form by the stated date, the applicant should contact ASIC as soon as possible, and before that date, to discuss an extension.

Under Section 914B(5) of the Corporations Act, ASIC may extend the timeframe or withdraw the request by written notice, but the notice must be issued before the original period expires. Communication about an application can take place through the ASIC Regulatory Portal or with the ASIC staff member assessing the application.

Until ASIC issues that written notice, the original deadline still applies, so work on the response should continue in the meantime.

If the deadline has already passed: ASIC can no longer extend the period. If the requested material was not lodged in the prescribed form in time, the application is taken to have been withdrawn under Section 914B(6) of the Corporations Act. At this stage, the applicant should:

• confirm whether the request was a formal written notice under Section 914B(3), as an unanswered informal request does not automatically lead to deemed withdrawal;
• confirm the status of the application with ASIC;
• if the variation is still needed, prepare a new application that addresses the matters ASIC raised, noting that a new application fee will be payable; and
• seek advice from AFSL lawyers before taking further steps.

Conclusion

Not every unanswered ASIC request puts an AFSL variation application at risk, but a formal written notice under Section 914B(3) of the Corporations Act does. If the requested material is not lodged in the prescribed form within the stated period, the application is deemed withdrawn, even if the licensee was simply unable to comply. The application fee is not refunded, there is no hearing or right of appeal, and pursuing the variation means lodging a new application and paying a new fee. Existing AFSL authorisations, however, remain unchanged.

Because ASIC can only grant an extension before the original deadline passes, it is important to act early. If you have received a request from ASIC, contact the AFSL application lawyers at Click Legal for advice on preparing a complete response and seeking an extension in time. Click Legal provides clear, commercial advice to financial services businesses dealing with AFSL variation applications.

Frequently Asked Questions