A Guide to the A5 Business Description in Your AFSL Application

Introduction

To apply for an Australian Financial Services Licence (AFSL), applicants must complete Form FS01 and provide core proof documents to ASIC. This application process is necessary for those seeking authorisation to provide financial services and products in Australia and operate a financial services business. ASIC assesses these applications to ensure applicants meet the requirements for holding an AFSL.

For AFSL applicants, a key core proof document is the A5 Business Description. This document provides ASIC with an overview of the applicant’s financial services business and is essential for ASIC to understand the operations of the business and assess organisational competence. The A5 Business Description helps ASIC understand the types of financial services and products the applicant intends to provide under the AFSL.

Purpose and Significance of the A5 Business Description

The “A5 Business Description” outlines the applicant’s proposed business, detailing the financial services and products offered, income generation methods, and anticipated business growth. It serves as a core proof document for your AFSL application.

This description directly addresses question A5 in Form FS01, the ‘Application for AFS Licence’. Form FS01 is the mandatory application form, and question A5 specifically requires a detailed business description.

Furthermore, the A5 Business Description is crucial for ASIC’s assessment process as it outlines the types of financial services you intend to offer and how your business will function under the AFSL framework. Its primary significance lies in demonstrating to ASIC that you have a well-defined business model and are prepared to operate within the regulatory requirements of an AFSL.

Key Components of an Effective A5 Business Description

Overview of Your Financial Services Business

To effectively communicate your business operations to ASIC, your A5 Business Description must include a comprehensive overview of your financial services business. This overview should provide ASIC with a clear understanding of your business model and how you intend to operate. It is essential to detail several key aspects of your business in this section to ensure all necessary information is captured.

Your overview should specify:

• Types of financial services and products offered: Clearly outline the specific financial services you will provide under your AFSL and the types of financial products you will be dealing with or advising on.
• Income generation methods: Explain how your business will generate revenue from the financial services and products you offer. Detail whether your income will be derived from fee-for-service arrangements, commissions, buy-sell spreads, or a combination of these.
• Client types: Describe your target clientele, indicating whether you will be primarily serving retail clients, wholesale clients, or a mix of both. Further specify the typical financial goals of these clients when they utilise your services or products.
• Business growth strategies: Articulate your plans for business expansion and provide an estimate of how quickly you anticipate your business will grow in the near term and future.
• Financial service and product delivery methods: Detail how you will deliver your financial services and products to clients. Specify whether services will be provided through a call centre, face-to-face interactions, an online platform, or other means.
• Distribution channels: If you are a product issuer, clearly describe the distribution channels you intend to use to get your financial products to clients. This includes detailing whether you will utilise authorised representatives, partnerships with other AFS licensees, or direct-to-consumer methods.
• Multiple business locations: Indicate whether your business operations will extend beyond your principal place of business. If operating from multiple locations, specify where these locations are situated, whether within Australia or internationally, and describe how you will maintain supervision and compliance across all sites.
• Outsourced functions: Disclose whether any financial service-related functions will be outsourced. If outsourcing, specify which functions, identify who will perform these outsourced functions, and indicate the locations from which these functions will be performed.

Organisational Chart and Structure

Including a detailed organisational chart is a critical component of your A5 Business Description. This chart visually represents the structure of your business and helps ASIC understand your operational framework. The organisational chart should clearly illustrate several key elements of your business structure.

Your organisational chart must include:

• Employee numbers: Indicate the total number of employees within your organisation and specify the number of staff in each functional area.
• Responsible manager positions: Clearly identify the positions held by each of your nominated responsible managers and their reporting lines within the organisation.
• Compliance personnel: Show the position of the person responsible for overseeing compliance with your AFSL obligations and their reporting lines.
• Reporting lines: Illustrate the reporting lines within your organisation to demonstrate the flow of authority and responsibility.
• Partnership or Trust details: If your business is structured as a partnership, include the names of all partners in the organisational chart. Similarly, if operating as trustees of a trust, provide the names of all trustees.

Completing Your A5 Business Description Proof

Preparing and Tailoring Your Business Description

When preparing your A5 Business Description proof, it is crucial to tailor the document to accurately reflect your specific business operations. Generic information should be avoided to ensure the description effectively communicates the necessary details to ASIC. Your A5 Business Description needs to be specifically designed to showcase the unique aspects of your business and the financial services you intend to provide. It is important to note that providing generic or outdated core proofs may delay the processing of your application, or ASIC may not even accept them for lodgement.

To effectively tailor your business description, consider including details such as:

• Specific Types of Financial Services and Products: Clearly outline the financial services and products you will offer.
• Business Model: Describe how you generate income and the strategies you will employ for business growth.
• Unique Business Aspects: Highlight what sets your business apart from others in the industry.

By focusing on these business-specific details, you can ensure your A5 Business Description is both relevant and compelling for ASIC’s review.

Submission and Lodgement of Core Proofs via ASIC MOVEit Portal

Submitting your A5 Business Description proof, along with other core proof documents, must be done through the ASIC MOVEit portal. ASIC will provide instructions on how to access and use the ASIC MOVEit portal after you submit your online application form. It is important to note that ASIC no longer accepts emailed copies of these documents, and using the ASIC MOVEit portal ensures secure and efficient lodgement.

When submitting your documents via the ASIC MOVEit portal, it is essential to adhere to the specified document naming conventions. Using the correct document names, as outlined in ASIC’s instructions, streamlines ASIC’s internal processes. This efficient processing helps avoid delays in the assessment of your application by reducing the need for manual administrative handling of your proof documents.

Conclusion

The A5 Business Description is a critical component of your AFSL application. It serves as a foundational document that provides ASIC with a comprehensive understanding of your financial services business. This core proof, directly linked to question A5 in Form FS01, is essential for ASIC to properly assess your business model and the financial services you intend to offer.

Given the critical nature of the A5 Business Description in the AFSL application process, careful and accurate preparation is paramount. Should you require assistance in ensuring your A5 Business Description effectively meets ASIC’s requirements and accurately reflects your business operations, our expert AFSL application lawyers at AFSL House are available to provide tailored guidance and support. Book a free initial consultation with us today to discuss how we can assist you in navigating the complexities of your AFSL application and help you prepare a robust and compliant A5 Business Description.

Frequently Asked Questions