What you need to know
- ASIC has indicated to industry that it will proceed with the proposal in Consultation Paper CP301 to remove the existing AFSL exemption for offshore providers regulated in substantially equivalent jurisdictions.
- Instead of the exemption, offshore providers will be able to apply for a modified form of licence (AFSL). ASIC will consult further on this proposed regime in the first half of 2019.
- ASIC has indicated that the "limited connection relief" (known as Class Order 03/824) may continue in some form, subject to further consultation by ASIC.
Newsflash
On 19 December 2018, ASIC indicated by email to the respondents of Consultation Paper 301 Foreign financial services providers (CP 301) that ASIC intends to proceed with its proposal to implement a modified Australian financial services licensing regime ("foreign AFSL") for eligible foreign financial service providers (FFSPs) that are regulated in sufficiently equivalent jurisdictions – that is, those who previously relied on the FFSP Class Order exemption.
ASIC plans to release in the first half of 2019 a further consultation on the foreign AFSL regime, to be accompanied by a draft Regulatory Guide and draft legislative instruments to implement the regime. We understand that this further consultation will include details of the transitional arrangements.
ASIC also indicated that it will conduct further consultation on ASIC's new proposals for some form of the limited connection relief (Class Order 03/824), as a result of the feedback it received on CP 301.
For a refresh on the proposals under CP 301, see our Financial Services Update dated 4 June 2018.
Next steps
Keep an eye out for ASIC's further consultation on the limited connection relief and foreign AFSL regime. We will let you know as soon as it is released.
For those currently relying on the FFSP Class Orders, there are things you can be doing now to prepare for the transition to the new regime. These include:
- revisit your cross-border activity guidelines for Australia;
- assess whether other exemptions might be available to you (including, potentially, the limited connection exemption);
- assess whether it may be appropriate to restructure the way in which you service Australian customers and counterparties, to take advantage of other exemptions; and
- consider how you might comply with the obligations which will apply to you if you were to obtain a foreign AFSL (and the extent to which those obligations might differ to those applicable to you in your home jurisdiction).
Our team advises many financial services providers who service the Australian market from offshore through their global platforms. We would be very happy to assist you with your assessment of, and preparations for, the new regime.
Authors: Jonathan Gordon, Partner; Corey McHattan, Partner; Lisa Simmons, Partner; and Nicky Thiyavutikan, Senior Associate.
