Hiring the Right Responsible Manager for an AFSL Application

Introduction

Securing an Australian Financial Services Licence (AFSL) requires an AFS licensee to demonstrate organisational competence under the Corporations Act 2001 (Cth). The Australian Securities and Investments Commission (ASIC) assesses this competency through the appointment of a responsible manager (RM) who is directly responsible for significant day-to-day decisions regarding the ongoing provision of financial services.

This article explains the AFSL application process for a financial services business so you can appoint a suitable candidate. It outlines how to assess a nominated RM, verify their knowledge and skills, and ensure they are fit and proper to maintain compliance.

Interactive Tool: See If Your Candidate Qualifies as a Responsible Manager

Understanding the Responsible Manager Role

Direct Responsibility & Day-to-Day Decisions

Under ASIC’s Regulatory Guide 105 (RG 105), a nominated RM is expected to have direct responsibility for significant day-to-day decisions about the ongoing provision of the relevant financial services. This plays a critical role in demonstrating compliance with Section 912A(1)(e) of the Corporations Act 2001 (Cth) that requires the AFS licensee to maintain competence to provide the financial services covered by its licence.

In practice, an RM’s responsibility involves:

• deciding how your financial services are delivered; and
• supervising the provision of those services.

The role is not for a figurehead, as ASIC expects the RM to be organisationally close to the actual delivery of financial services. Furthermore, as per RG 105.23 senior executives like a chief financial officer or a compliance manager may not meet the standard where they do not oversee the relevant operational decisions.

In addition, ASIC scrutinises arrangements where an RM appears to be appointed on paper only. A person cannot simply accept fees for the role without fulfilling the duties, as such an arrangement may mean the licensee cannot comply with its obligations under Section 912A(1)(e) and Section 913B(1)(b) of the Corporations Act (Cth). The purpose of an RM is to ensure genuine oversight and management of the financial service, not just to satisfy a licensing requirement.

Ensuring Collective Competency & Coverage

As per RG 105.8(b), RG 105.36 and RG 105.42, the team of nominated RMs must collectively possess the knowledge and skills to cover all financial services and financial products authorised under your AFS licence. ASIC assesses organisational competence at the licensee level, meaning the combined expertise of your RMs is what matters. Consequently, each financial product and service you offer must be matched by the skills and experience of at least one RM.

This requirement ensures there are no gaps in competency. For instance, if your AFS licence authorises you to advise on and deal in both life and general insurance products, you could meet this obligation in several ways, as follows:

• appoint one RM with expertise in life insurance and a second with expertise in general insurance; or
• nominate one RM with knowledge and skills in advising on both product types, and another with competence in dealing in both.

ASIC generally expects an AFS licensee to nominate at least two RMs under RG 105.49 and Regulatory Guide 1.174 (RG 1). This approach helps ensure comprehensive coverage across all authorised services and mitigates the risk of depending too heavily on a single individual’s competence. For a one-person advisory business, however, ASIC may accept a single RM.

Evaluating ASIC’s 5 Competency Pathways

Meeting Industry Standards & Individual Assessments (Options 1 & 2)

Under its RG 105.54, ASIC provides five options through which each nominated RM is expected to demonstrate appropriate knowledge and skills. A nominated RM must satisfy one of the five options.

Option 1 allows a candidate to qualify by meeting a widely adopted industry standard or a relevant standard set by Australian Prudential Regulation Authority (APRA). Furthermore, this must be paired with at least three years of relevant experience within the last five years.

By contrast, Option 2 is designed for experienced professionals who may lack formal qualifications. This pathway involves:

• Individual assessment: an assessment by an authorised assessor to confirm the candidate has knowledge equivalent to a diploma; and
• Experience requirement: a minimum of five years of relevant experience over the past eight years.

Combining University Degrees & Short Industry Courses (Options 3 & 4)

Options 3 and 4 focus on formal academic and industry-specific qualifications. To satisfy Option 3, an RM must hold a university degree in a relevant discipline, such as business, commerce, economics, or finance. In addition, this degree must be supplemented with a relevant short industry course and three years of applicable experience in the last five years.

Alternatively, Option 4 requires a candidate to have an industry or product-specific qualification that is equivalent to a diploma or higher. Similar to Option 3, that qualification must be relevant to the RM role and must be accompanied by three years of relevant experience within the past five years.

Using the Written Submission Pathway (Option 5)

Option 5 is a flexible, case-specific pathway for those who do not meet the criteria for the other four options. This pathway requires a detailed written submission to ASIC that explains why the person has the appropriate knowledge and skills for the role. Specifically, the submission must outline the RM’s:

• Role and responsibilities within the business;
• Relevant qualifications and courses completed;
• Experience over the past 10 years;
• Professional credentials or affiliations; and
• Reasons why the person is appropriate for the particular financial services and products sought.

The Step-by-Step RM Hiring Process

Alignment of Candidate Competencies with Licence Authorisations

RG 105.39–RG 105.42 requires applicants to demonstrate that their RMs collectively have appropriate knowledge and skills for every financial service and product covered by the proposed AFSL. As established, ASIC assesses organisational competence at the licensee level, meaning your team must collectively cover every authorisation on your licence without any gaps.

If a single RM does not have expertise across all areas, you may appoint others to achieve full coverage. Furthermore, for businesses that operate managed investment schemes, at least one RM must demonstrate an understanding of the investment and operational aspects of the assets under management.

Conducting Strict Fit & Proper Background Checks

Section 913BA of the Corporations Act 2001 (Cth) applies the statutory fit-and-proper-person test to the RM applicant, among others. Further, RG 1.182–RG 1.183 states that ASIC requires People Proofs for RMs and applies comparable probity checks when the RM is not already assessed under the statutory fit-and-proper test.

The essential checks and documents include:

• a national criminal history check, including relevant overseas criminal history checks;
• bankruptcy checks for each country in which the person has lived for more than 12 months in the preceding 10 years;
• a completed, signed Statement of Personal Information;
• qualification certificates; and
• information about the RM’s relevant roles, experience, and responsibilities.

In addition, ASIC will also consider any history of regulatory issues, such as previous licence suspensions or disqualifications from managing corporations. For persons subject to Section 913BA, these matters are expressly relevant under Section 913BB(2) of the Corporations Act 2001 (Cth).  It is important to note that under RG 1.149, People Proofs must generally be no more than 12 months old.

Assessing Capacity & Prior Regulatory Problems

A candidate’s capacity to fulfil the role is a critical consideration. As per RG 105.26–RG 105.27 and RG 1.179, an RM must have sufficient time available to oversee significant day-to-day decisions. Therefore, you should evaluate their overall business commitments, as multiple roles may prevent them from effectively performing their duties for your licence.

Factors that affect an RM’s capacity include the following:

• whether they are already an RM for other AFS licensees;
• the number of staff they must supervise; and
• any other professional roles they hold.

Investigating a candidate’s past is also a necessary step. If a potential RM was involved with another AFS licensee that faced regulatory action from ASIC, this history is highly relevant. While it may not automatically disqualify them, ASIC will consider it when assessing their suitability and your business’s overall organisational competence.

Internal Promotions vs. External Consultants

Promoting Internal Talent as RMs

Promoting existing employees, such as directors or senior staff, may make it easier to demonstrate genuine day-to-day involvement because the person is already embedded in the business. 

That said, it is a practical evidentiary advantage, not an ASIC rule or statutory preference for internal appointments. An RM does not need to be an employee, director, or officer of the licensee. The central issue is whether they have the required direct responsibility, knowledge, skills, and capacity.

Mitigating the Risks of Hiring External Consultants

Engaging an external consultant as an RM is a viable option, particularly for businesses that lack the necessary in-house expertise. However, the consultant must still satisfy ASIC’s direct-responsibility and capacity expectations under RG 105.22–RG 105.27. Further, it is important to not enter into “rent-a-name” arrangements with an RM, designed only to meet licensing requirements on paper.

To manage these risks, you must ensure any external RM is genuinely integrated into your financial services business. Key mitigation strategies include:

• Defining a clear role: The consultant’s agreement should explicitly detail their responsibilities, time commitment, and decision-making authority.
• Ensuring genuine involvement: The external RM must have real operational connection and influence over your day-to-day financial services.
• Avoiding over-commitment: Assess whether their other RM appointments create capacity or conflict concerns.
• Maintaining evidentiary records: Retain evidence showing how the consultant is involved in the relevant financial-services operations.

Learning from ASIC Enforcement Actions

The Financial Services Group Australia Case Study

ASIC provides clear examples of the consequences for failing to meet RM duties. In June 2025, ASIC cancelled the AFS licence of Financial Services Group Australia Pty Ltd (FSGA) and permanently banned its RM, Graham Holmes.

ASIC’s investigation found that Mr Holmes had accepted the RM role ‘on paper’ only. He received fees for the position but knew he was not fulfilling the required duties, which include having direct responsibility for significant day-to-day decisions.

Under Section 912A(1)(e) of the Corporations Act 2001 (Cth), an AFS licensee is required to maintain organisational competence. The RM arrangement with Mr Holmes was relevant to ASIC’s assessment of whether FSGA had maintained that competence.

ASIC stated that FSGA had failed to maintain competence and the enforcement action also highlighted broader licensee failings, including:

• A failure to ensure its representatives acted in the best interests of clients.
• Inadequate financial and human resources.
• A failure to maintain the competence to provide the financial services covered by the licence.

The MW Planning Licence Suspension Case Study

The case of MW Planning Pty Ltd as detailed in Media Release 25-299MR demonstrates the critical importance of succession planning for an RM. On 11 December 2025, ASIC suspended MW Planning’s AFSL after it failed to appoint a replacement RM following the banning of its existing RM, Robert John Tohill.

This failure meant the AFS licensee could not meet its organisational competence and human resources obligations. The situation underscores the risk for a financial services business that depends heavily on a single individual to demonstrate its competency to the regulator.

Furthermore, ASIC found that MW Planning had failed to lodge required financial statements and did not report its compliance failures to ASIC. The licence was initially suspended until June 2026, but the issues were not rectified, and ultimately this led ASIC to cancel the AFS licence permanently in May 2026.

The Global Financial Markets Pty Ltd Case Study

The importance of precisely matching a candidate’s expertise to the requested authorisations was affirmed in Global Financial Markets Pty Ltd and Australian Securities and Investments Commission [2017] AATA 1397 [27].

The Administrative Appeals Tribunal (AAT) upheld ASIC’s refusal to grant a licence because the nominated responsible manager could not demonstrate the specific ‘knowledge and skills’ required under RG 105. As a result, ASIC was not satisfied that the applicant was likely to comply with Section 912A of the Corporations Act (Cth).

The practical lesson is that general experience should be clearly connected to the particular services, products, compliance systems and supervisory responsibilities proposed under the AFSL.

Navigating the ASIC Nomination Process

Submitting ‘People Proofs’ via the ASIC Portal

For a new AFSL application, RG 105.95 requires the applicant to nominate RMs in the application and provide People Proofs showing that each RM meets an RG 105 pathway and that the RMs collectively cover the proposed services and products.

For an existing AFS licensee, Reg 7.6.04(1)(b) of the Corporations Regulations 2001 (Cth) requires notification of changes to registered information. ASIC’s current Regulatory Portal process requires notification of RM changes within 10 business days of the change occurring.

When adding a new RM through the current ASIC portal, the licensee is required to provide:

• a Statement of Personal Information;
• a criminal history check;
• competence information, including relevant roles during the preceding 10 years;
• qualification certificates; and
• overseas bankruptcy and police certificates where the person has lived outside Australia for more than 12 months during the preceding 10 years.

Managing Key Person Conditions & Succession Planning

If your financial services business is heavily dependent on the knowledge and skills of one or two individuals, ASIC may impose a ‘key person condition’ on your AFS licence. This condition, detailed in RG 105, names the specific RMs whose competence is critical to your organisational competence.

The departure of a named key person may require the licensee to notify ASIC, apply to vary the licence condition, nominate a replacement or explain why no replacement has been appointed, and demonstrate continuing organisational competence.

ASIC’s RG 1 example states that a licensee with a departing key person must lodge the variation application within five business days of the person ceasing to be an officer or ceasing to perform duties for the licensee. This separate key-person-condition process should not be confused with the general 10-business-day RM-change notification under Reg 7.6.04(1)(b) of the Corporations Regulations 2001 (Cth).

Conclusion

Appointing the right RM is a critical step in securing an AFSL and demonstrating organisational competence to ASIC. The process requires a thorough assessment of a candidate’s experience, qualifications, and character to ensure they can genuinely oversee your financial services business and maintain compliance.

To navigate the complexities of the AFSL application process and appoint a suitable RM, contact our AFSL application lawyers at Click Legal. Our team provides clear, fixed-fee legal support to help ensure your financial services business meets its regulatory obligations with confidence.

Frequently Asked Questions