AFS Licence Applications – is a DIY job?

Prepared  by Peter Hagias

We all know there are certain jobs around the home that anyone can bash out and save some cash. It’s a great feeling when you DIY, save some hard-earned cash and have a satisfactory result! On the flip-side there are always those jobs that even the most hardcore DIYers shouldn’t attempt. The cost (time, money and angst) versus benefit just doesn’t weigh up, they often end up costing more than if you had just given your local tradie a buzz.

Funnily enough, we see the same scenario in licensing. An increasing number of businesses are looking to gain independence and enjoy the reputational benefits of becoming self-licensed. A sound decision but, is it a DIY job or one for the experts in the trade? We are currently helping a significant number of businesses apply for their AFSL, some on a full service arrangement and others by reviewing their DIY applications. The top 5 issues we are currently seeing when reviewing DIY licence applications are:

  • Licensee’s are applying for the wrong authorisations or aren’t applying for all of the authorisations they need to properly conduct their business. A variation can be performed down the track to fix any issues, but variations take about the same time as applications, and so there is a time, stress and cost issue with not getting it right the first time.
  • The proofs aren’t completed correctly. Each proof has a particular purpose and is used by ASIC in assessing whether the licensee meets the key criteria required for it to carry on its own AFSL. Often the wrong message is conveyed, or the right message is not emphasised sufficiently, in proofs prepared by DIYers.
  • The wrong people are put forward as RMs. Any application must submit people who will be the licensee’s RMs. They are the people that are responsible for the licensee’s compliance.  They collectively must have the practical experience in each authorisation applied for. Often applications will chose the wrong people to be RMs or will not emphasise the relevant experience of the RM which would put his/her best case forward in the application process.
  • The wrong business structure is used. This is essential. How the business is/should be structured  may affect the authorisations you need. Going with a structure which technically doesn’t work from a legal perspective could require you to revise the authorisations you need by submitting a variation or requiring ASIC relief which again costs time and money.
  • Dealing with ASIC throughout the application process. The application will typically be subject to a round (or more) of requisitions and queries from ASIC. ASIC doesn’t teach applicants on how to answer their queries, and will usually be inclined to reject the application if they aren’t answered in the manner that they require.

These are just a few of the problems we are coming across when reviewing DIY applications and it is totally understandable that these mistakes are being made by DIYers. Licence applications are quite a complex process with several nuances that are only gleaned through the experience of applying. Unfortunately, ASIC have zero tolerance with these sorts of mistakes – their approach to the application process is not particularly collaborative; they won’t work with you to get your licence through. At the moment applications are typically taking anywhere from 3 to 9 months to process, so lodging an invalid licence application can certainly quickly waste a lot of time and money.

For those with the relevant knowledge and experience in licensing, DIY applications are absolutely an option. We have in these cases, reviewed and provided feedback on applications with good result. However, when tight timeframes or expertise are factors, or a fixed cost is required for a pre-determined budget,  we are seeing a spike in the amount of businesses completely outsourcing this job and saving time, money and stress.