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Before granting an Australian Financial Services License (“AFSL“) or Australian Credit License (“ACL“), ASIC must be satisfied that an individual is a fit and proper person.
What is a Fit and Proper Person
A fit and proper person includes the following:
- any officers of a body corporate applicant;
- any partners or senior managers of a partnership applicant;
- any trustees or senior managers of a multiple trustee of a trust applicant;
- any controller of the applicant;
- if a controller is a body corporate, any officer of the controller; and
- If a controller is a partnership, any partner or senior managers of the controller.
What is a Company Officer?
A company officer includes all directors or secretaries of a company. Company officers also include persons who can make decisions that affect the whole company or a significant part of it (eg senior manager) or persons who can significantly affect the financial standing of an applicant such as a CEO, CFO or other senior staff. A receiver, administrator, liquidator and trustee are also defined as a company officeholder.
Requirements for submission of an AFSL / ACL application or variation to ASIC
For each fit and proper person, ASIC requires applicants to provide the following information:
If a fit and proper person has answered yes to any question contained under the Statement of Personal Information, ASIC requires a separate attachment that includes individual details regarding their past conduct or order.
Fit and Proper Person requirements under an ACL
Before granting an ACL, ASIC must be satisfied that a fit and proper person:
- is competent to operate a credit business. This is demonstrated by the person’s knowledge, skills and experience;
- has the attributes of good character, diligence, honesty, integrity and judgment;
- is not disqualified by law from performing their role in the applicant’s credit business; and
- either has no conflict of interest in performing their role in the applicant’s credit business, or any conflict that exists will not create a material risk that the person will fail to properly perform their role in the applicant’s credit business.
The applicant will be asked to identify the people who are involved in the management of the business and specify which of those people the applicant will be relying on to demonstrate that they are competent to engage in credit activities as a Responsible Manager. The applicant may also be asked to provide detailed information about their past conduct and their role in the applicant’s credit business. It is an offense to provide ASIC with false or misleading information and ASIC can refuse the ACL application if they think an applicant has provided such information.
During the assessment of the ACL Application, ASIC will take into account whether a banning order or disqualification order under the National Consumer Credit Act 2009 (Cth) is in force against the applicant or an order under the State criminal organizations act against a director, secretary or senior manager.
ASIC will also take into account whether a fit and proper person has been the subject of specific regulatory outcomes eg serious fraud.
Background Information
On 18 February 2020, the Financial Sector Reform (Hayne Royal Commission Response – Stronger Regulators (2019 Measures) Act 2020 amended the Corporations Act 2001 (Cth) (“Corporations Act“) to provide additional information to applicants when assessing applications for a license or variation.
ASIC has expanded upon its assessment of a wider range of people that constitute fit and proper persons as set out under section 913BA of the Corporations Act.
Further Reading:
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