ASIC extends transitional relief for Foreign Financial Services providers
On 11 June 2021, ASIC announced that it would extend the transitional period of relief for foreign financial services providers (FFSPs) by 12 months (under ASIC Corporations (Amendment) Instrument 2021/510).
Practically, this means that FFSPs will not be required to comply with the proposed new foreign licensing regime by 1 April 2022, and can continue to rely on, or in some instances seek to apply for temporary licensing relief, until 31 March 2023.
It is important to note that ASIC's announcement remains subject to the outcome of the Australian Government’s consultation about the regulation of FFSPs, as per their 2021 - 2022 Australian Federal Budget announcement on 11 May 2021 (summarised here).
What does this extension mean for you?
- Limited Connection Relief - FFSPs will now be able to rely on the Limited Connection Relief until 31 March 2023. This relief does not require an application to ASIC.
- Sufficient Equivalence Relief - FFSPs who had the benefit of a Sufficient Equivalence Relief instrument as at 31 March 2020, will now be able to continue to rely on this until 31 March 2023, without needing to notify ASIC.
- The Funds Management Relief - this instrument was proposed as part of the new licensing regime to replace the Limited Connection Relief (as described in our previous publications when the regime was unveiled and in response to FAQs and updates to the timetable over time). This will now not come into effect until 1 April 2023.
- The Foreign AFSL - this instrument was proposed as part of the new licensing regime to replace the Sufficient Equivalence Relief (as described in our previous publications when the regime was unveiled and in response to FAQs and updates to the timetable over time). This instrument has been effective throughout the transitional period (i.e. since 1 April 2020) and ASIC has not announced any amendments to this instrument at this time. ASIC has provided some indication as to how it intends to treat Foreign AFSLs, which we summarise below.
What is ASIC's approach?
Pending any legislative changes or other announcements that arise following the Australian Government’s consultation, ASIC has indicated that:
- it will pause its assessment of Foreign AFSL applications that have already been lodged by FFSPs.Although, ASIC may upon request, continue with the assessment of an application;
- Where FFSPs cannot rely on the existing Sufficient Equivalence Relief or Limited Connection Relief during the transitional period, ASIC will consider new applications for:
- individual temporary licensing exemptions; and
- a domestic or Foreign AFSL
- FFSPs that have been or are granted a Foreign AFSL will be able to continue to operate their financial services business in Australia under the licence issued by ASIC.
Sufficient Equivalence Relief
This refers to the following relief instruments:
- [CO 03/1099] UK regulated financial service providers;
- [CO 03/1100] [CO 03/1100] US SEC regulated financial service providers;
- [CO 03/1101] US Federal Reserve and OCC regulated financial service providers;
- [CO 03/1102] Singapore MAS regulated financial service providers;
- [CO 03/1103] Hong Kong SFC regulated financial service providers;
- [CO 04/829] US CFTC regulated entities;
- [CO 04/1313] German BaFin regulated financial service providers; and
- ASIC Corporations (CSSF-Regulated Financial Services Providers) Instrument 2016/1109
Limited Connection Relief
This refers to the ASIC Corporations (Foreign Financial Service Providers - Limited Connection) Instrument 2017/182
Get in touch
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.