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The Importance of Selecting the Right Responsible Manager for Your AFSL Application

7Newswire

Every organisation looking to provide financial products and services in Australia is required by law to apply for an Australian Financial Services Licence (AFSL), unless an exemption applies. The selection of a suitable Responsible Manager (RM) for your application is one of the most important steps towards an AFSL.The individual selected to act as an RM can influence not only the fate of an application but also an organisation’s chances of operating in accordance with the law.

The Role of the RM

The most significant position in an AFSL application is the RM. This individual must ensure that the organisation maintains all of its competencies as defined by regulatory requirements. The RM must oversee compliance, risk management, and client services at a company level.

Meeting Regulatory Requirements

For example, the regulatory rules, (RG 105 AFS Licensing: Organisational Competence), specify the knowledge and skills that should be possessed by all Responsible Managers who apply for an RM position. RM candidates are expected to demonstrate a sufficient depth of experience to cover all the functions for which they apply. The competency standard must still be met when the firm goes live, and failure to be fully compliant with these competency requirements can cause the AFSL application to be delayed or rejected.

Assessing RM Candidates

Identifying the right RMs goes far beyond simply appointing competent staff who know the business; it’s imperative for organisations to make sure that their RMs are  trained in financial services regulations, can manage their obligations appropriately and possess sufficient communication skills to support the role. It is also paramount that the selected individual is an experienced communicator and has the ability to work with all levels of internal and external stakeholders. This could mean the difference between a troubled relationship with the industry regulator or a mutually respectful collaboration. As a point of first reference, a detailed reference check and background check can give a good indication of a person’s past conduct, performance, collaborative style and reputation.

Connecting with Potential RM Candidates

Organisations can also benefit from support in the nomination process, which involves the evaluation of the individuals’ qualifications and matching them to the specific eligibility requirements for the licence. The use of consultants with experience in these processes can help better align the requirements. Organisations can also leverage industry networks and professional associations to identify available and qualified candidates who fit within the organisations’ competencies, strategies and aspirations.

Preparing Proof Documents

Proof documents are an integral part of this licensing process, and must be provided together with the application form. From this perspective, there are certain standard proof documents that must always be provided, known as ‘core proof documents’. These include a description of business activities and the relevant organisations that are applying for the licence, as well as proof of their financial position, such as a balance sheet, profit and loss account, an audit report, and/or a financial statement. Some licences require the submission of additional proof documents, depending on the type and scope of the authorisations sought. The proper preparation and completion of these documents is of great importance for a successful AFSL application.

Compliance with Regulatory Standards

Compliance with regulatory standards must be ensured within every stage of the process. RMs establish compliance frameworks, operational procedures and training programmes so that their organisation adheres to regulatory requirements. The responsibility for this rests with RMs who are specifically chosen, and are willing to adhere to a strictly held ethos of regulatory compliance.

Completing and Lodging the Application

When all relevant proof documents have been completed,  a company needs to complete and lodge the application form with the Australian Securities and Investments Commission (ASIC). With so many items involved and no margin for error, tremendous care is required to complete the form. An experienced consultant can assist in the completion and lodging of the application form to minimise the risk of errors or omissions. It is helpful to work with a consultant who can make sure the form conforms to regulatory requirements, reducing the likelihood of rejection due to mistakes, and facilitate a smooth corporate licensing process. Upon submission of the application form, the applicant must email ASIC all the proof and other supporting documents.

Liaising with Regulatory Authorities

Throughout the licence application process, ASIC ( may enquire about specifics or exceptions, which typically require precision and accuracy in response. Quick and incisive responses to such enquiries are key to an efficient application process.

Identifying and selecting RMs with the right experience, competency and capability will enhance the chances of getting an AFSL and may well contribute to the long-term success of the AFSL entity in the financial services industry.