To avoid conflicting legal obligations, ASIC has clarified the obligation of foreign financial services providers exempted from the obligation to hold an Australian Financial Services licence to notify ASIC of significant enforcement of disciplinary actions or investigations.
In June 2012, ASIC updated Regulatory Guide 176 Licensing: Discretionary powers – wholesale foreign financial services providers (RG 176), which outlines when ASIC will allow foreign financial services providers (FFSPs) to be granted conditional relief from holding an Australian Financial Services (AFS) licence. As part of the refinements, ASIC imposed a new obligation on exempted FFSPs to notify ASIC of significant enforcement or disciplinary actions or investigations as soon as practicable after they become aware of such actions.
The new obligation potentially required exempt FFSPs to contravene foreign laws, to the extent those foreign laws prohibited the exempt FFSPs from disclosing details of any investigations.
ASIC has acknowledged that this was an unintended consequence of the refinements, and has introduced a new class order. While exempt FFSPs are still required to notify ASIC of significant enforcement actions, an exception exists. Where an exempt FFSP has taken reasonable steps to enable notification to be given to ASIC, and is prohibited by law from giving such notification, it is not required to comply with the obligation, but only to the extent of the prohibition.
According to the explanatory memorandum, reasonable steps might involve:
- informing the overseas regulatory authority that the FFSP is subject to the class order; and
- requesting the overseas regulatory authority to consent to the notification to ASIC.