The Australian Securities and Investments Commission (ASIC) is proposing to repeal the conditional Australian financial services licence (AFSL) relief currently available to foreign financial services providers (FFSPs) providing financial services to wholesale clients in Australia, and replace that relief with a new ‘foreign AFSL’ regime.
In our view, the proposed foreign AFSL regime represents a major shift in ASIC policy and, if implemented, may have a significant impact on FFSPs looking to enter, or continue to participate in, the Australian market.
On 1 June 2018, ASIC released Consultation Paper 301: Foreign financial services providers (CP 301), in which ASIC proposes to repeal:
and implement a modified AFSL regime for certain FFSPs providing financial services to wholesale clients in Australia.
Comments and submissions in response to CP 301 are due by 31 July 2018.
The existing relief was due to expire (or ‘sunset’) in September 2018. ASIC proposes to extend the relief until 30 September 2019, at which time it will be repealed. There will be a further 12 month transitional period to 30 September 2020 during which FFSPs can apply for their foreign AFSL.
ASIC has been reviewing the current relief framework since 2016. It is now proposing to repeal the relief because it considers that the relief “no longer strikes the appropriate balance between cross-border investment facilitation, market integrity and investor protection” envisaged by ASIC when the relief was introduced in 2003 and 2004. In particular, ASIC has raised the following concerns:
Under a foreign AFSL, FFSPs would be:
If ASIC decides to adopt the proposals in CP 301, it intends to issue specific guidance about the process for lodging applications for a foreign AFSL.