ASIC has reached out to respondents to Consultation Paper 301 Foreign financial services providers (CP 301), including industry bodies to provide an update on this relief.
At a high level, ASIC has indicated that it will be proceeding with its proposal to introduce a modified AFS licence for foreign financial services providers (FFSP) that currently rely on 'sufficiently equivalent' relief under class orders. ASIC is still developing the framework for this modified AFS licence and has indicated that it may also consider some form of limited connection relief rather than repealing this exemption in its entirety as originally proposed.
ASIC is still considering the potential for grandfathering for FFSPs that are currently operating in Australia as well as the appropriate transitional period for FFSPs to apply for and be granted an AFS licence. However, we understand that a final position has not been reached for these issues.
ASIC has indicated that it is working towards releasing a further consultation paper and updated regulatory guide by April 2019. ASIC is also expected to publish its response to submissions received on CP 301 at the same time.
In September 2018, ASIC extended current relief for certain FFSPs in sufficiently equivalent jurisdictions until 30 September 2019. This means that ASIC will need to finalise its modified licence regime prior to this date (noting the proposed transition period discussed below) or an additional extension will need to be granted.
For background, the key proposals put forward by ASIC in CP 301 were:
- repeal of the 'sufficient equivalence' relief on 30 September 2019, as well as any individual relief issued on similar terms;
- repeal of the 'limited connection' relief on 30 September 2019 although ASIC has now indicated it is considering a proposal for some form of limited connection relief;
- implementation of a modified AFSL regime for FFSPs in the sufficiently equivalent jurisdictions (and under which FFSPs not from a sufficiently equivalent jurisdiction can apply for sufficient equivalence and, if eligible, a foreign AFSL), to enable them to apply for and maintain a modified form of foreign AFSL. Applications for a foreign AFSL would need to be made during a 12 month transitional period ending on 30 September 2020; and
- the modified AFSL regime would impose a number, but not all, of the requirements imposed on the holder of a standard AFSL (including the obligation to ensure financial services are provided honestly, efficiently and fairly; acceptable conflicts of interest arrangements; adequate risk management systems; breach reporting and the obligation to comply with certain Australian financial services laws).
We are working closely with the relevant industry bodies on this issue and will keep you updated of any developments.
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