Licenses you might need to consider
Australian Financial Services Licence (AFSL)
If your business provides financial services, an AFSL is essential. Section 766A of the Corporations Act 2001 lists what is a Financial Service. A person (a company, partnership trust or individual), provides a Financial Service if they:
| (a) provide financial product advice (general or personal); or | (b) deal in a financial product (this is the transacting activity); or |
| (c) make a market for a financial product (this involves regularly stating prices as a principal, where the customer can reasonably expect to transact at those prices in over-the-counter (OTC) transactions); or | (d) operate a registered scheme (as a trustee, called a Responsible Entity); or |
| (da) operate the business and conduct the affairs of a Corporate Collective Investment Vehicle (CCIV); or | (e) provide a custodial or depository service; or |
| (ea) provide a crowd-funding service; or | (eb) provide a claims handling and settling service; or |
| (ec) provide a superannuation trustee service; or | (1A) provide a traditional trustee company service (where the person is a trustee company). |
A financial service is provided with respect to a financial product. There are three ways that the law describes financial products: the general definitions (eg. making a non-cash payment), specific definitions (eg. derivatives, securities), and specific exclusions (eg. consumer credit).
Digital Asset Facilities (DAFs) are likely to become financial products if the Treasury’s recent consultation becomes law. It’s likely that exposure draft legislation will be released in early 2025. See our submission to the consultation here.
We can guide you through what authorisations you require, what exemptions you may be able to rely on, and your options with respect to licensing, which may include:
 |
Act within legislative exemptions |
 |
Buy a licence |
 |
Apply for a licence |
 |
Rent a licence (this is called becoming an ‘authorised representative’) |
Australian Credit Licence (ACL)
For businesses considering offering credit to consumers, obtaining an ACL is crucial. Our expert advice can help you know which credit activities you may be providing, and how to meet the corresponding obligations (such as responsible lending obligations) under the National Consumer Credit Protection Act 2009. There are 6 different credit activities, set out in section 6 of the NCCP Act.
Registrable Superannuation Entity (RSE) Licence
If your business offers certain types of superannuation (including pension) products, you may need an RSE licence. We can assist in obtaining an RSE licence and help you navigate APRA’s stringent compliance and prudential requirements. See this APRA page for guidance on RSE licences.
Authorised Deposit-taking Institution (ADI) Licence
Becoming an ADI allows your business to operate as a bank. Our team offers guidance through APRA’s rigorous licensing requirements, helping you navigate APRA’s expectations, including those set out in prudential standards and guides (for example, see APRAs standard CPS220 and guide CPG220 here, which deal with Risk Management. Applying for bank licences is not commonplace – but we have experience in this area.
APRA Licensing for General Insurers
An APRA licence for general insurers is mandatory if you conduct “insurance business” in certain situations. We can help you apply for and obtain an APRA licence for this purpose (it’s sometimes overseas insurers entering the Australian market that we advise or assist in this regard). See APRA’s guidance on licensing for general insurers to understand more about this.
APRA Licensing for Life Insurers
We can advise you on whether your intended activities constitute carrying on a life insurance business in Australia which may trigger the need for an AFSL, and which certainly triggers the need for an APRA licence. See this APRA page for guidance on APRA licensing for life insurers.
APRA licensing for providers of Purchased Payment Facilities (PPFs)
PPFs are a widely misunderstood or ignored legal framework in Australia. If you hold a store of value that allows payment to be made to another person on behalf of a user of the PPF, you may be offering a PPF. At the time of writing (late 2024), there are only two licensed PPF providers in Australia: Paypal and Wise. If your business operates a stored value facility, you need to look at this issue. There are wide exemptions which apply to much of the industry – but those exemptions are not simple to implement. We have deep experience liaising on behalf of clients with ASIC, the Reserve Bank of Australia, APRA, and banks, so as to negotiate eligibility for exemptions to the PPF regime. This regime is subject to proposed reforms, with exposure draft consultation arriving as soon as the end of 2024. This APRA page includes a copy of the Council of Financial Regulators’ report (to our knowledge, we were one of Australia’s only law firms who participated in the CFR consultation before this report was prepared) as well as guidelines on authorisation of PPF providers.
Licensing for Digital Asset Facility Providers
As the digital asset space evolves, Australia has proposed a licensing framework for businesses that facilitate the primary issue, trading in, or control of, digital assets. Treasury is currently calling them “digital asset facility providers”. As a financial services regulatory law firm, we are very active in this industry, liaising with ASIC and Treasury both in their industry consultations, and bilaterally. We try and stay ahead of regulatory developments and will assist you in preparing for upcoming licensing obligations, ensuring your business meets the necessary regulatory frameworks as they are introduced. We have already helped other crypto asset service providers (including crypto funds, global digital asset groups, derivative or futures platforms, and what AUSTRAC calls “Digital Currency Exchanges”) obtain certain AFSLs for various products they have launched.
