Financial Services Reform Act 2001 (122 of 2001)
Schedule 1 Financial Services and Markets
Part 1 Main amendments
Corporations Act 2001
1 Chapter 7 - Part 7.6 - Division 4
Division 4 - Australian financial services licences
Subdivision A - How to get a licence
913A Applying for a licence
A person may apply for an Australian financial services licence by lodging an application with ASIC that:
(a) includes the information required by regulations made for the purposes of this paragraph; and
(b) is accompanied by the documents (if any) required by regulations made for the purposes of this paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
913B When a licence may be granted
(1) ASIC must grant an applicant an Australian financial services licence if (and must not grant such a licence unless):
(a) the application was made in accordance with section 913A; and
(b) ASIC has no reason to believe that the applicant will not comply with the obligations that will apply under section 912A if the licence is granted; and
(c) the requirement in whichever of subsection (2) or (3) of this section applies is satisfied; and
(ca) the applicant has provided ASIC with any additional information requested by ASIC in relation to matters that, under this section, can be taken into account in deciding whether to grant the licence; and
(d) the applicant meets any other requirements prescribed by regulations made for the purposes of this paragraph.
Note: ASIC must not grant an Australian financial services licence to a person contrary to a banning order or disqualification order (see Division 8).
(2) If the applicant is a natural person, ASIC must be satisfied that there is no reason to believe that the applicant is not of good fame or character.
(3) If the applicant is not a single natural person, ASIC must be satisfied:
(a) that:
(i) if the applicant is a body corporate - there is no reason to believe that any of the applicant’s responsible officers are not of good fame or character; or
(ii) if the applicant is a partnership or the trustees of a trust - there is no reason to believe that any of the partners or trustees who would perform duties in connection with the holding of the licence are not of good fame or character; or
(b) if ASIC is not satisfied of the matter in paragraph (a) - that the applicant’s ability to provide the financial services covered by the licence would nevertheless not be significantly impaired.
(4) In considering whether there is reason to believe that a person is not of good fame or character, ASIC must (subject to Part VIIC of theCrimes Act 1914) have regard to:
(a) any conviction of the person, within 10 years before the application was made, for serious fraud; and
(b) whether the person has held an Australian financial services licence that was suspended or cancelled; and
(c) whether a banning order or disqualification order under Division 8 has previously been made against the person; and
(d) any other matter ASIC considers relevant.
Note: Part VIIC of theCrimes Act 1914includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
(5) However, ASIC may only refuse to grant a licence after giving the applicant an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC in relation to the matter.
913C Licence numbers
ASIC must give each Australian financial services licence a unique licence number when it is granted, and must notify the licensee of that number.
Subdivision B - The conditions on the licence
914A The conditions on the licence
(1) Subject to this section, ASIC may, at any time, by giving written notice to a financial services licensee:
(a) impose conditions, or additional conditions, on the licence; and
(b) vary or revoke conditions imposed on the licence.
Note: Subsection 923B(3) restricts the circumstances in which ASIC can impose a condition authorising a person to assume or use a restricted word or expression under that section.
(2) ASIC may do so:
(a) on its own initiative; or
(b) if the licensee lodges with ASIC an application for ASIC to do so, which is accompanied by the documents, if any, required by regulations made for the purposes of this paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
(3) ASIC may only impose conditions or additional conditions, or vary the conditions, on the licence after giving the licensee an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC in relation to the matter.
This subsection does not apply to ASIC imposing conditions when a licence is granted.
(4) If the licensee, or a related body corporate, is a body (the APRA body ) regulated by APRA, other than an ADI (within the meaning of theBanking Act 1959), then the following provisions apply:
(a) ASIC cannot:
(i) impose, vary or revoke a condition on the licence that, in ASIC’s opinion, has or would have the result of preventing the APRA body from being able to carry on all or any of its usual activities (being activities in relation to which APRA has regulatory or supervisory responsibilities); or
(ii) vary a condition so that it would, in ASIC’s opinion, become a condition that would have a result as described in subparagraph (i);
unless ASIC has first consulted APRA about the proposed action;
(b) if ASIC imposes, varies or revokes a condition on the licence and paragraph (a) does not apply to that action, ASIC must, within one week, inform APRA of the action that has been taken.
(5) If the licensee, or a related body corporate, is an ADI (within the meaning of theBanking Act 1959), then the following provisions apply:
(a) subject to paragraphs (b) and (c), the powers that ASIC would otherwise have under this section:
(i) to impose, vary or revoke a condition on the licence that, in ASIC’s opinion, has or would have the result of preventing the ADI from being able to carry on all or any of its banking business (within the meaning of theBanking Act 1959); or
(ii) to vary a condition so that it would, in ASIC’s opinion, become a condition that would have a result as described in subparagraph (i);
are instead powers of the Minister;
(b) the following provisions apply in relation to a power to which paragraph (a) applies:
(i) the procedures for the exercise of the power are the same as would apply if ASIC could exercise the power, except that the Minister must not exercise the power unless he or she has first considered advice from ASIC on the proposed action, being advice given after ASIC has consulted APRA about the proposed action;
(ii) ASIC (rather than the Minister) must still conduct any hearing required under paragraph (3)(a) and receive any submissions under paragraph (3)(b);
(c) if ASIC imposes, varies or revokes a condition on the licence and paragraph (a) does not apply to that action, ASIC must, within one week, inform APRA of the action that has been taken.
(5A) A failure to comply with a requirement of subsection (4) or (5) to consult or inform APRA about, or to consider advice from ASIC about, an imposition, variation or revocation of a condition does not invalidate the action taken.
(6) ASIC must ensure that the licence is subject to a condition that specifies the particular financial services or class of financial services that the licensee is authorised to provide.
(7) The financial services or class of financial services may be specified by reference to particular financial products, or classes of financial products.
(8) The licence is subject to such other conditions as are prescribed by regulations made for the purposes of this subsection. However, ASIC cannot vary or revoke those conditions.
Subdivision C - When a licence can be varied, suspended or cancelled
915A Varying licences
(1) ASIC may vary an Australian financial services licence to take account of a change in the licensee’s name if the licensee lodges with ASIC an application for the variation, accompanied by the documents, if any, required by regulations made for the purposes of this subsection.
Note 1: The conditions on the licence can be varied under section 914A.
Note 2: For fees in respect of lodging applications, see Part 9.10.
(2) ASIC must give written notice of the variation to the licensee.
915B Immediate suspension or cancellation
Licence held by a natural person
(1) ASIC may suspend or cancel an Australian financial services licence held by a natural person, by giving written notice to the person, if the person:
(a) ceases to carry on the financial services business; or
(b) becomes an insolvent under administration; or
(c) is convicted of serious fraud; or
(d) becomes incapable of managing their affairs because of mental or physical incapacity; or
(e) lodges with ASIC an application for ASIC to do so, which is accompanied by the documents, if any, required by regulations made for the purposes of this paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
Licence held by a partnership
(2) ASIC may suspend or cancel an Australian financial services licence held by a partnership, by giving written notice to the partnership, if:
(a) the partnership ceases to carry on the financial services business; or
(b) a creditor’s petition or a debtor’s petition is presented under Division 2 or 3 of Part IV of theBankruptcy Act 1966 against the partnership; or
(c) one or more of the partners is convicted of serious fraud; or
(d) the partnership lodges with ASIC an application for ASIC to do so, which is accompanied by the documents, if any, required by regulations made for the purposes of this paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
Licence held by a body corporate
(3) ASIC may suspend or cancel an Australian financial services licence held by a body corporate, by giving written notice to the body, if the body:
(a) ceases to carry on the financial services business; or
(b) becomes an externally-administered body corporate; or
(c) is a responsible entity of a registered scheme whose members have suffered, or are likely to suffer, loss or damage because the body has breached this Act; or
(d) lodges with ASIC an application for ASIC to do so, which is accompanied by the documents, if any, required by regulations made for the purposes of this paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
(4) ASIC may suspend or cancel an Australian financial services licence held by the trustees of a trust, by giving written notice to the trustees, if:
(a) the trustees of the trust cease to carry on the financial services business; or
(b) a trustee who is a natural person:
(i) becomes an insolvent under administration; or
(ii) is convicted of serious fraud; or
(iii) becomes incapable of managing their affairs because of physical or mental incapacity; or
(c) a trustee that is a body corporate becomes an externally-administered body corporate; or
(d) the trustees lodge with ASIC an application for ASIC to do so, which is accompanied by the documents, if any, required by regulations made for the purposes of this paragraph.
Note 1: For fees in respect of lodging applications, see Part 9.10.
Note 2: If there is only one trustee, subsection (1) will apply (if the trustee is a natural person), and subsection (3) will apply (if the trustee is a body corporate).
915C Suspension or cancellation after offering a hearing
(1) ASIC may suspend or cancel an Australian financial services licence (subject to complying with subsection (4)) in any of the following cases:
(a) the licensee has not complied with their obligations under section 912A;
(aa) ASIC has reason to believe that the licensee will not comply with their obligations under section 912A;
(b) ASIC is no longer satisfied of the matter in whichever of subsection 913B(2) or (3) applied at the time the licence was granted (about whether the licensee, or the licensee’s representatives, are of good fame or character);
(c) a banning order or disqualification order under Division 8 is made against the licensee;
(d) a banning order or disqualification order under Division 8 is made against a representative of the licensee and ASIC considers that the representative’s involvement in the provision of the licensee’s financial services will significantly impair the licensee’s ability to meet its obligations under this Chapter.
(2) ASIC may also cancel an Australian financial services licence (subject to complying with subsection (4)) if:
(a) the application for the licence was false in a material particular or materially misleading; or
(b) there was an omission of a material matter from the application.
(3) An Australian financial services licence is suspended or cancelled by ASIC giving written notice to the licensee.
(4) However, ASIC may only suspend or cancel an Australian financial services licence under this section after giving the licensee an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC on the matter.
915D Effect of suspension
(1) A suspended Australian financial services licence has no effect while it remains suspended.
(2) Subsection (1) has effect subject to section 915H.
915E Revocation of suspension
ASIC may at any time revoke the suspension of an Australian financial services licence by giving written notice to the licensee.
915F Date of effect and publication of cancellation or suspension
(1) A variation, suspension, revocation of a suspension, or cancellation, of an Australian financial services licence takes effect when the written notice of that action is given to the licensee.
(2) As soon as practicable after the notice is given to the licensee, ASIC must:
(a) publish a notice of the action in theGazette; and
(b) if the licensee is a participant in a licensed market or a licensed CS facility - give written notice of the action to the operator of the market or facility.
A notice under this subsection must state when the action took effect.
915G Statement of reasons
A notice of suspension or cancellation given to a licensee under this Subdivision must be accompanied by a statement of reasons for the action taken.
915H ASIC may allow licence to continue in effect
In the written notice of suspension or cancellation that ASIC gives to the licensee, ASIC may specify that the licence continues in effect as though the suspension or cancellation had not happened for the purposes of specified provisions of this Act in relation to specified matters, a specified period, or both.
915I Special procedures for APRA-regulated bodies
(1) If a financial services licensee, or a related body corporate, is a body (the APRA body ) regulated by APRA, other than an ADI (within the meaning of theBanking Act 1959), the following provisions apply:
(a) ASIC cannot suspend or cancel the licensee’s licence if doing so would, in ASIC’s opinion, have the result of preventing the APRA body from being able to carry on all or any of its usual activities (being activities in relation to which APRA has regulatory or supervisory responsibilities), unless ASIC has first consulted APRA about the proposed action;
(b) if ASIC suspends or cancels the licensee’s licence and paragraph (a) does not apply to that action, ASIC must, within one week, inform APRA of the action that has been taken.
(2) If:
(a) a financial services licensee is an ADI (within the meaning of theBanking Act 1959); or
(b) a related body corporate of a financial services licensee is an ADI (within the meaning of theBanking Act 1959), and cancellation or suspension of the licensee’s licence would, in ASIC’s opinion, have the result of preventing the ADI from being able to carry on all or any of its banking business (within the meaning of theBanking Act 1959);
the following provisions have effect:
(c) subject to paragraph (d), the powers that ASIC would otherwise have under this Subdivision to cancel or suspend the licensee’s licence, or to subsequently revoke a suspension to which this subsection applied, are instead powers of the Minister;
(d) the procedures for the exercise of a power to which paragraph (c) applies are the same as would apply if ASIC could exercise the power, except that the Minister must not exercise the power unless he or she has first considered advice from ASIC on the proposed action, being advice given after ASIC has consulted APRA about the proposed action;
(e) ASIC (rather than the Minister) must still conduct any hearing required under paragraph 915C(4)(a) and receive any submissions under paragraph 915C(4)(b).
(3) A failure to comply with a requirement of subsection (1) or (2) to consult or inform APRA about, or to consider advice from ASIC about, a cancellation or suspension, or a revocation of a suspension, of a licence does not invalidate the action taken.
915J Variation, suspension and cancellation only under this Subdivision
An Australian financial services licence cannot be varied, suspended or cancelled otherwise than under this Subdivision.
Note: The conditions on the licence can be varied under section 914A.