ASIC’s RG 1: A Practical Guide to Applying for or Varying an AFSL

Introduction

Issued by Australian Securities and Investments Commission (ASIC) in June 2025, Regulatory Guide 1 (RG 1) explains ASIC’s approach to assessing applications for an Australian Financial Services Licence (AFSL) and variations to existing licences. It also identifies the information and documentation applicants must provide.

RG 1 applies to new AFSL applicants, existing licensees seeking to vary their authorisations, and foreign financial services providers. In this article, we explain how ASIC assesses AFSL applications and variations, focusing on key requirements for authorisations, responsible managers, fit and proper people, financial resources and supporting documents.

Interactive Tool: See If You’re Ready to Apply for or Vary Your AFSL

ASIC’s Approach to AFSL Applications

Assessment of the Applicant

Under Section 913B(1)(b) of the Corporations Act 2001 (Cth) (‘Corporations Act’), ASIC must be satisfied that it has no reason to believe the applicant will not comply with the obligations that will apply under Section 912A if the licence is granted. RG 1.8 states that ASIC considers the following:

• Competence: the applicant’s competence to provide the proposed financial services;
• Financial resources: sufficient financial resources, where applicable;
• Risk management: adequate risk management systems;
• Fit and proper requirements: compliance with the applicable requirements;
• Dispute resolution and compensation: appropriate arrangements for retail clients; and
• Ongoing obligations: the ability to comply with its other obligations as an AFS licensee.

Under Section 913B(1) of the Corporations Act, read with Sections 913BA and 913BB, ASIC must also be satisfied that there is no reason to believe the applicant, or the relevant people associated with it, are not fit and proper.

For a variation, ASIC considers whether the applicant has the capacity and competence to provide the additional financial services or products covered by the requested change.

Understanding ASIC’s Risk-Based Procedure

ASIC’s assessment of financial resources depends on the financial services and products proposed, together with the nature, scale, and complexity of the business. RG 1.207 explains that these factors affect the financial requirements an applicant may need to meet.

ASIC’s financial requirements support effective financial risk management, while the broader risk management obligation under section 912A(1)(h) of the Corporations Act requires applicants to maintain adequate risk management systems, as outlined in RG 104. 

Requests for Further Information

ASIC may request clarification or supporting material after accepting an application for assessment. RG 1.192 states that the requested responses and documents will depend on what ASIC considers relevant to deciding whether the application should be granted.

Under Section 913B(3) of the Corporations Act, ASIC may give written notice requiring an applicant to provide:

• information;
• an audit report; or
• a statement about material changes to information already lodged.

If the applicant does not provide the requested material in the required form and time, the application is taken to have been withdrawn under Section 913B(4B) of the Corporations Act.

Possible AFSL Outcomes

Under Section 913B(1) of the Corporations Act, ASIC must grant an AFS licence if, and only if, the requirements are met, including: 

• the application was made in accordance with Section 913A; 
• the fit and proper person requirements; and 
• that ASIC has no reason to believe the applicant will not comply with the obligations that will apply under Section 912A.

Under Section 914A of the Corporations Act, ASIC may impose conditions on a licence. ASIC’s practice, described in RG 1, is to impose a key person condition where the business depends heavily on one or more responsible managers.

Under RG 1.175–RG 1.176, that condition can require notification if the key person leaves and the nomination of another suitably qualified responsible manager.

ASIC must refuse an application containing materially false or misleading information, or a material omission, under Section 913B(2) of the Corporations Act. Lodging false or misleading information with ASIC may also be an offence under Section 1308.

Selecting & Varying AFSL Authorisations

Selecting the Scope of Your Licence

RG 1.45 explains that your AFS licence authorisations determine:

• the financial services you can provide;
• the financial products those services may relate to;
• the obligations that apply to you as a licensee.

RG 1.46 states that applicants should assess each proposed business activity to identify whether it is a financial service and which authorisation is required.

RG 1.47 states that you should apply only for authorisations covering the financial services and products you intend to provide if the licence is granted. If you are unsure which authorisations to seek, we recommend obtaining legal advice. Seeking authorisations on a “just in case” basis may increase the application fee, industry funding levies and the time ASIC needs to assess the application.

Variations to Existing Licence Authorisations

RG 1.9 states that a variation may be required when an existing financial services business changes. ASIC assesses whether the licensee has the capacity and competence to provide any additional financial services or products, or whether changes to other licence conditions are appropriate.

RG 1.38 identifies business expansion as one situation where a variation is likely to be needed. This can include:

• adding financial services or products; or
• extending services to different client types, such as retail clients.

Demonstrating Organisational Competence & Fit & Proper People

The Role of Responsible Managers 

‘Responsible manager’ is not a term defined in the Corporations Act. It is the mechanism ASIC uses to assess compliance with Section 912A(1)(e). RG 1.167–RG 1.171 describes responsible managers as the people who manage the financial services business and make significant day-to-day decisions about providing financial services. 

Under RG 105, ASIC assesses the organisational competence obligation in Section 912A(1)(e) of the Corporations Act by examining the knowledge and skills of these people.

Applicants should nominate only people who are directly responsible for significant day-to-day decisions. The number of responsible managers depends on the nature, scale, and complexity of the business.

Demonstrating Competence 

ASIC expects each responsible manager to meet one of the five options in Section C of RG 105 for demonstrating appropriate knowledge and skills. The responsible managers must also collectively cover all financial services and products included in the proposed authorisations.

The relevant experience must relate to the services and products the applicant seeks to provide. RG 105.39–RG 105.40 recognises that experience gained under another licence authorisation may be relevant, but the applicant must demonstrate why that experience provides appropriate knowledge and skills for the new authorisations.

To show how your responsible managers collectively cover each proposed authorisation, our AFSL Table of Organisational Competence Template (Formerly B1.3) helps you spot gaps before lodging.

Who May Be Assessed Under the Fit & Proper Test

Section 913BA of the Corporations Act, as explained in RG 1.141–RG 1.145, applies to the applicant and specified people connected with its management or control. The people assessed may include:

• officers of a body corporate;
• partners or trustees of a partnership or multiple trustee;
• senior managers of a partnership or trust;
• the individual applicant; and
• controllers of the applicant, including relevant officers, partners, trustees and senior managers.

‘Control’ has the meaning given in Section 50AA of the Corporations Act, which is the capacity to determine the outcome of decisions about an entity’s financial and operating policies. 

These include prior licence suspension or cancellation, banning and disqualification orders, relevant convictions within the previous 10 years, insolvency history, and any other matter ASIC considers relevant. RG 1.139 states that ASIC considers competence, character, diligence, honesty, integrity, judgement, legal disqualification and material conflicts of interest.

Information ASIC Considers for Fit & Proper People

Under RG 1.146–RG 1.150, ASIC considers the matters required by Section 913BB(2) of the Corporations Act and requires information and supporting documents for each relevant fit and proper person. ASIC requires (as an administrative requirement under RG 1, rather than a statutory one) that these People Proofs be no more than 12 months old and include:

• a national criminal history check, including overseas checks where required;
• a bankruptcy check for each relevant country of residence; and
• a completed and signed Statement of Personal Information.

RG 1.150 states that documents must be in English or accompanied by a certified translation. RG 1.148 also confirms that People Proofs are required for responsible managers, even where they are assessed separately from the people covered by Section 913BA of the Corporations Act.

Financial Resources & Other General Licence Requirements 

Meeting the Financial Requirements

Under Section 912A(1)(d) of the Corporations Act, a licensee must have available adequate resources (including financial, technological and human resources). ASIC imposes its specific financial requirements as licence conditions under Section 914A, as explained in RG 1.206–RG 1.213. The applicable requirements depend on the financial services and products offered, together with the nature, scale, and complexity of the business.

RG 1 identifies three possible components:

• base-level financial requirements;
• a surplus liquid funds requirement where the licensee holds client money or property; and
• an adjusted surplus liquid funds requirement where the licensee transacts with clients as principal.

The financial resource obligation in Section 912A(1)(d) of the Corporations Act does not apply to a body regulated by the Australian Prudential Regulation Authority (APRA).

Compensation & Risk Management Obligations

Applicants providing financial services to retail clients must address dispute resolution and compensation arrangements. Under Section 912A(1)(g) and Section 912A(2) of the Corporations Act, the dispute resolution system must include:

• an internal dispute resolution procedure that complies with the standards and requirements made or approved by ASIC, under Section 912A(2)(a); and
• membership of the Australian Financial Complaints Authority (AFCA) scheme.

RG 1.230–RG 1.235 states that ASIC will only issue the licence if the applicant is an AFCA member.

Under Section 912B of the Corporations Act, retail client compensation arrangements are also required, with professional indemnity insurance being the primary method described in RG 1.236–RG 1.242 and RG 126. The arrangements must satisfy the requirements in Regulation 7.6.02AAA of the Corporations Regulations, or be approved by ASIC, under Section 912B(2). 

As noted above under Section 912A(1)(h) of the Corporations Act, applicants must maintain adequate risk management systems unless an APRA-related exception applies. RG 1.226–RG 1.229 states that those systems should address risks specific to the business and reflect its nature, scale, complexity, and risk profile.

Documents & Information RG 1 Expects

Core Application Information Required

Under Section 913A of the Corporations Act, an application must include the information, and be accompanied by the documents, required by the regulations. RG 1.36–RG 1.37 expects applicants to describe how their financial services business operates. The information should cover:

• financial services and products;
• income sources and the estimated proportion of income from each service or product;
• expected business growth;
• retail or wholesale clients;
• distribution channels and service delivery methods;
• Australian and overseas operations;
• compliance supervision and monitoring; and
• outsourced functions and service providers.

ASIC also recommends diagrams showing the business model, significant supporting entities, outsourced services, and relevant transaction and money flows.

To draw this information together for an application or variation, our AFSL Business Description Template (Formerly A5) provides a structured starting point.

Additional Information ASIC May Request

ASIC may request further material after accepting an application for assessment, as described above under Section 913B(3) of the Corporations Act. Materials requested may include updated financial statements, cash flow projections, or additional proofs for complex authorisations, such as foreign exchange activities. Applicants should respond in the prescribed form and within the time stated in ASIC’s notice.

What RG 1 Does Not Cover in Detail & Practical Takeaways

Cross-References to RG 105 & Organisational Competence

RG 1 Applying for and varying an AFS licence gives an overview of how ASIC assesses organisational competence but directs applicants to RG 105 AFS licensing: Organisational competence for further detail.

As discussed above, each responsible manager must meet one of the five options in Section C of RG 105 and must collectively cover all financial services and products included in the proposed authorisations, as explained in RG 105.54.

Specialist Licensing Guidance for Specific Services

RG 1 does not set out every requirement that may apply to a proposed financial services business; instead, it directs applicants to specialist guidance dealing with particular services, products, and licence obligations. Relevant guides include:

• RG 166 AFS licensing: Financial requirements, for detailed financial resource requirements;
• RG 271 Internal dispute resolution, for retail client complaint procedures; and
• RG 126 Compensation and insurance arrangements for AFS licensees, for compensation arrangements and professional indemnity insurance.

RG 1.42, RG 1.43 and RG 1.211 identify these cross-references so applicants can locate the guidance that relates to their proposed authorisations.

Practical Takeaways for AFSL Applicants & Licensees

Applicants should compare their proposed business activities with the authorisations they seek, and apply only for those covering the financial services and products they intend to provide (see RG 1.47 above).

People Proofs should also be prepared early. As discussed above (RG 1.148–RG 1.149), these documents are required for relevant fit and proper people and responsible managers and must be no more than 12 months old.

Conclusion

ASIC RG 1 Applying for and varying an AFS licence explains how ASIC assesses applications, variations, people, authorisations, resources and supporting documents. It provides an overview of ASIC’s approach under the Corporations Act, while directing applicants to more detailed guidance where specific obligations apply.

For help assessing your proposed authorisations or preparing an AFS licence application or variation, contact Click Legal’s AFSL application and variation lawyers. Our team can help you understand what ASIC expects, identify relevant supporting material and present your business information clearly. Reach out to Click Legal to discuss your licensing requirements and reduce avoidable delays during the assessment process.

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