Step 3 - Assessment
After an application is lodged
APRA will review the information provided in your application and may request additional information, and have meetings with you to review aspects of your operations on-site. APRA will make its expectations clear and straightforward, through clear communication of policies and rules.
A responsible supervisor will be allocated to you. The responsible supervisor will be involved in assessing the application along with the licensing team, and will generally be the supervisor once a licence is granted.
Assessment of application
In assessing the application, APRA will seek to understand the risks your business will face and your capabilities in addressing those risks. APRA will need to be confident that if you are granted a licence your business will be financially sound, you will manage your risks effectively, meet fit and proper expectations, have a sound risk culture and not pose a risk to financial safety or the stability of the financial system.
Proposed new institutions can vary widely in their impact and complexity. Consistent with APRA’s risk-based approach, the depth of the assessment will be proportionate to the risks involved within your institution.
Timeframe for approval
The time taken to obtain a licence may vary. It depends on the quality of application lodged, the complexity of the proposed arrangements and how responsive you are to APRA’s requirements and requests throughout the assessment period. As a guide, it may take APRA from three to 18 months to assess an application.
While your licence application is pending, it is important you notify APRA of any material changes to the supporting information you have lodged. As an example, you must notify APRA any changes to the composition of the board and management. Failure to notify APRA can delay your application or possibly result in it being declined.
Members of the licensing team, in consultation with supervision and risk specialists, will make a recommendation to approve or decline your application. The final decision to licence your business is made by a decision-maker who is independent of the licensing team.
If your application is approved, APRA will advise in writing of its decision and will include your licence. Your licence will set out the date from which it takes effect, and any restrictions or conditions to which you are subject.
License with conditions
Depending on the nature of your business, APRA may impose conditions on your licence. Some types of licensees such as registrable superannuation entity (RSE) trustees and foreign authorised deposit-taking institutions (ADIs) have standard additional conditions added to their licence.
When an application is declined
APRA will advise its decision to decline your application in writing. You will be advised of the reasons and will be given the opportunity to discuss this with APRA.
In addition, if your business has a limited business model, APRA is likely to focus its assessment on your ability to meet the aspects of the prudential framework relevant to the proposed business, and may not assess some aspects that would be applicable to a broader service institution. Given this, APRA may impose conditions on your licence which limit the lines of business you can offer to those in your original licence application.
If you have conditions on your licence limiting the lines of business you can offer, you may continue to operate indefinitely within the bounds of those conditions. However, you can approach APRA at a later stage to consider amending or removing conditions if you wish to expand your business. As when you applied for your licence, you would need to demonstrate you can meet the aspects of the prudential framework relevant to your new expanded business model prior to APRA granting consent for the conditions to be amended or removed.
For more information email the APRA Licensing team at licensing [at] apra.gov.au.