Limited AFS Licence Application

What documents are included in the Cleardocs Limited AFS Licence Application package?

The document package includes:

• "Core proofs" — these are the essential documents that all applicants must prepare as part of their application
• "Non-core proofs" (additional proofs) — this is additional documentation of compliance policies and procedures that you must provide if requested by ASIC
• Question-by-question guidance on completing the online ASIC application form
• An Establishment Kit explaining all the steps in the application process, and ASIC guidance on how to prepare the required cash flow projection.

The package does not include lodgement of the ASIC form (see Can Cleardocs lodge my ASIC application form for me?). The applicant must do this online via the ASIC website. However, the Cleardocs document package includes step-by-step guidance on how to complete and lodge this form.

As with all Cleardocs products, you will need to assess whether the applicant meets all of the requirements for a limited AFS licence and that the documents you create using this product reflect the applicant's business.

Users who would like a licensing expert to check their documents before lodgement can choose an optional review service from licensing expert SMART Compliance for an extra fee (see Can someone check my documents before I lodge?).

What information do you need to order the Limited AFS Licence Application product through Cleardocs?

You can download our checklist of the information required to order the Limited AFS Licence Application product.

Who needs to apply for a limited AFS licence (also known as a limited AFSL)?

Anyone who plans to give advice about SMSFs after 30 June 2016 and does not hold an AFS licence should consider applying for a limited AFS licence (also known as a limited AFSL).

Currently, the "accountants' exemption" in the Corporations Regulations 2001 allows recognised accountants to give advice about SMSFs without holding an AFS licence. However, this exemption will be repealed from 1 July 2016. Those who wish to continue giving SMSF advice from that date will need to hold an AFS licence (full or limited) or become an authorised representative of an AFS licensee.

What is a "limited" AFS licence?

The limited AFS licence was introduced to replace the accountants' exemption (see Who needs to apply for a limited AFS licence?). It is a narrower type of licence than a full AFS licence because it only permits the holder to give advice about SMSFs and related areas.

When do I need to lodge my application?

Applicants must lodge their application with ASIC by 30 June 2016 in order to take advantage of the transitional application process. You will not be able to order the Cleardocs Limited AFS Licence Application product after 30 June 2016.

It's possible to apply for the licence after 30 June 2016, but the application process becomes more complex.

Note: ASIC previously advised that applicants should have lodged their application with ASIC by 1 March 2016 in order for their application to be assessed in time for 1 July 2016 (when the accountants' exemption ends: see Who needs to apply for a limited AFS licence?). Therefore, if you apply now you may not receive your licence by 1 July. Applicants should therefore apply as soon as possible to ensure they receive their licence at the earliest possible time.

Which accountants (and accounting practices) can use the Cleardocs Limited AFS Licence Application product?

At this time, you can only use the Cleardocs product if each responsible manager who you nominate in your application is a "recognised accountant". A recognised accountant is an accountant who holds a certificate of public practice (sometimes known as a public practice certificate) from any of these accounting bodies:

• Chartered Accountants Australia and New Zealand (formerly the Institute of Chartered Accountants Australia)
• CPA Australia
• Institute of Public Accountants

The Cleardocs product is suitable where the applicant is a business operated through a corporate or partnership structure. At this time, the product is not suitable for an applicant who is a sole trader or trustee of a trust.

If your responsible managers are not all "recognised accountants", you can still apply for a limited AFS licence but you can't use this Cleardocs product.

What licence authorisations does the Cleardocs Limited AFS Licence Application product cover?

The Cleardocs product can cover all of the authorisations available under a limited AFS Licence, if the applicant wishes (and assuming the applicant meets the relevant training requirements).

The Cleardocs product assumes that the applicant will apply for these authorisations:

• Give "financial product advice" about SMSFs.
• Give "financial product advice" about a client's existing superannuation holdings to the extent required for:
  • recommending that they establish an SMSF; or
  • giving them advice about contributions or pensions.
• Arrange to deal in an interest in an SMSF (including applying for, acquiring, varying, issuing or disposing of such an interest).
• "Class of product" advice: superannuation products.

For maximum business flexibility, this product assumes that the applicant will potentially provide the above services to both wholesale and retail clients.

Optionally, Cleardocs users may also choose to apply to be authorised to give "class of product" advice about any or all of these classes of product:

• Securities
• General insurance products
• Life risk insurance products
• Basic deposit products
• Simple managed investment schemes.

If you are authorised to give "class of product" advice in a product area, you can give your clients financial advice about those products as a class, but you can't make recommendations about a particular product within that class.

Applicants must ensure that they have appropriate knowledge (ie training and qualifications) in relation to all of their chosen authorisations. See What knowledge/qualifications do I need? for more information.

What knowledge/qualifications do I need?

The "responsible managers" nominated by the entity applying for the licence must be able to show appropriate knowledge (ie training and qualifications) in relation to the financial services to be provided under the licence. This is an essential requirement that must be met in order for ASIC to grant the licence.

There are 5 possible options for demonstrating a responsible manager's knowledge. These are described in ASIC Regulatory Guide 105 Licensing: Organisational competence. You can only use the Cleardocs Limited AFS Licence Application product if all of your responsible managers can rely on either:

• Option 3: University degree in a relevant discipline and short industry course; or
• Option 4: Industry- or product-specific diploma (or higher).

Options 3 and 4 are the most common options for accountants applying for a limited AFS licence. If your responsible managers wish to rely on another option, you can still apply for a limited AFS licence but you can't use this Cleardocs product.

Note: The knowledge requirements apply to all licence authorisations you apply for. If you wish to be authorised to offer "class of product" advice, your responsible managers must also have appropriate knowledge of your chosen product classes. ASIC states that it does not necessarily expect each of the applicant's responsible managers to individually have knowledge in all of the authorisations that the applicant seeks — therefore, it's possible to have several responsible managers who, between them, have the required knowledge.

Do I need to demonstrate experience?

Applicants whose responsible managers are recognised accountants and who apply for a limited AFS licence before 1 July 2016 do not need to demonstrate experience.

We are aware that ASIC may ask each responsible manager to confirm the positions they have held over the past 10 years. This appears to be outside ASIC's scope to assess, but it may simply be a means for ASIC to confirm that each responsible manager has been advising clients about superannuation under the current accountants' exemption.

How do I demonstrate that I meet the "cash needs" requirement in RG 166?

Applicants must be able to show that they have sufficient cash resources to meet their anticipated expenses (the "cash needs" requirement). There are 5 possible options for demonstrating this. These are described in ASIC Regulatory Guide 166 Licensing: Financial requirements. You can only use the Cleardocs Limited AFS Licence Application product if you intend to rely on either:

• Option 1: Reasonable estimate projection plus cash buffer; or
• Option 2: Contingency-based projection.

These are the most common options for accountants applying for a limited AFS licence. If you wish to rely on another option, you can still apply for a limited AFS licence but you can't use this Cleardocs product.

Applicants who use the Cleardocs product will need to prepare a projection based on one of the options above. As part of your document package, Cleardocs sets out the ASIC guidance on your chosen option.

Can I get an external accountant to certify that I meet all the relevant financial requirements?

As an alternative to preparing your own cash needs projection (see How do I demonstrate that I meet the "cash needs" requirement in RG 166?), it is possible to have an external accountant confirm that you comply with all relevant financial requirements (provided this is accompanied by a statutory declaration by you).

However, the Cleardocs Limited AFS Licence Application product assumes that your accounting practice will prepare its own cash needs projection, rather than engaging an external accountant.

If you wish to engage an external accountant, you can still apply for a limited AFS licence but you can't use this Cleardocs product.

Can Cleardocs lodge my ASIC application form for me?

At this time, Cleardocs is unable to lodge the relevant ASIC form (FS01) on behalf of its users. ASIC generally requires this form to be completed online, and online providers such as Cleardocs are not able to connect to this portal.

However, the Cleardocs Limited AFS Licence Application package includes question-by-question guidance on completing the ASIC form.

How do I lodge my application?

The application process has two main parts: completing an online ASIC form, and emailing "core proofs" (see What are "core" proofs and "non-core" proofs?) and other supporting documentation to ASIC. The Cleardocs Limited AFS Licence Application product guides you through all the steps involved.

What is the ASIC fee for lodgement?

The ASIC fee for lodging a limited AFS licence application form online (Form FS01) is:

• For an individual: $883
• For a company or partnership: $1,588

What are "core" proofs and "non-core" proofs?

Core proofs are the supporting documents that all applicants must provide to ASIC as part of their initial licence application. They need to cover topics such as the nature of the business operated by the applicant, the competency of its responsible managers, and its financial resources.

Non-core (or "additional") proofs are not required to be provided to ASIC as part of the initial application. However, ASIC may ask an applicant to provide some of these during the assessment stage. These proofs tend to demonstrate the applicant's internal processes (eg in areas such as risk management, compliance arrangements and dispute resolution).

What other documents do I need to gather?

Besides core proofs, applicants must provide ASIC with several supporting documents (eg signed statements by responsible managers, certificates of qualifications and certain financial statements). The Cleardocs Limited AFS Licence Application product includes a detailed Establishment Kit checklist to guide you through all the documents required.

It's worth noting early that ASIC requires you to provide a national criminal history check for each responsible manager you nominate. These can take some time to obtain, so those wishing to apply for a limited AFS licence should start obtaining these as early as possible.

Responsible managers who have lived in another country for 1 year or more in the last 10 years, or who have overseas qualifications, need to supply additional documentation. This is explained in the detailed Establishment Kit that is included in the Cleardocs Limited AFS Licence Application product.

Do I need to get business references for each responsible manager?

Applicants whose responsible managers are recognised accountants and who apply for a limited AFS licence before 1 July 2016 do not need to get business references for their responsible managers.

Can someone check my documents before I lodge?

Yes. If you wish, licensing expert SMART Compliance can check your core proof documents for an extra fee of $330 (inc GST). (Please note that this does not include review of any other documents.)

Simply choose this option when completing the Cleardocs question and answer interface and this will be added to your order. When your order is complete, SMART Compliance will be notified and sent a copy of your documents. SMART Compliance will review these and contact you within 2 business days to discuss these.

How long should it take to hear back from ASIC?

This varies, depending on ASIC staffing, the volume of applications received and the quality of the information the applicant provides. It can take several weeks to hear from an ASIC analyst.

Where can I get more information?

ASIC has published several publications about applying for a limited AFS licence. The key references are Regulatory Guides 1, 2 and 3 (on AFS licence applications generally) and ASIC Information Sheet 179 (on the limited licence). These are available from the ASIC website. Accountants should also refer to their professional accounting body for guidance.