In June 2018, ASIC issued Consultation Paper 301 (“CP 301”) proposing they would extend the relief for foreign financial services providers (“FFSPs”) for an additional 12 months, until 30 September 2019. The purpose of the extension is to allow ASIC time to consult on proposals about the regulation of FFSPs.
Currently, there are two forms of ASIC relief currently available for FFSPs:
Sufficient equivalence relief (also known as the ‘passport exemption’); and
Limited connection relief.
Sufficient equivalence relief generally exempts FFSPs from the requirement to hold an AFS licence when providing specified services to wholesale clients only, where the FFSP is regulated by an overseas regulatory authority sufficiently equivalent to the Australian regulatory regime.
Limited connection relief generally exempts FFSPs from the requirement to hold an AFS licence when the FFSP is not within the jurisdiction, deals only with wholesale clients, and is carrying on a financial services business only by engaging in conduct that is intended to induce people in Australia to use its financial products.
ASIC received 36 submissions in response to the proposals set out in CP 301. They included tailored AFS licence conditions such as limitations on the range of representatives that can be appointed on the licence and modified notification requirements. ASIC will be engaging with industry participants over the next few months once they have reviewed the submissions in full.
If ASIC proceeds with the modified licensing regime, CP 301 proposes a further transition period of 12 months, to 30 September 2020.
New legislative instruments and updated regulatory guidance are due for release in September 2019. Watch this space for the future of FFSP regulation.
If you have any questions about the proposed changes for FFSPs, please contact Richard Beissel, Hillary Ray or a member of our Financial Services Team.