The Australian Securities and Investments Commission (ASIC) has amended the reporting requirements under the class orders (Class Orders) which provide certain foreign financial service providers conditional exemptions from the need to hold an Australian financial services licence (AFSL).
The previous requirement to notify ASIC on a 6 monthly basis of “notifiable regulatory changes” and “notifiable regulatory actions”, or to lodge a “nil” report, has been removed.
Some foreign financial service providers rely on an individual instrument of relief rather than on class order relief. The reporting requirements under those instruments will not change until ASIC varies the relief instrument. Generally, providers relying on such an instrument will need to write to ASIC to seek a variation of the instrument to bring it in to line with the changes made to the class order relief.
Reporting obligations remain and are triggered by changes in regulatory status or investigations, enforcement or disciplinary action
A foreign financial service provider relying on a Class Order must now report to ASIC as soon as practicable and in any event within 15 business days after the body became aware or should reasonably have become aware of:
- significant changes to its regulatory status and each significant exemption or relief from regulation;
- each significant investigation, enforcement or disciplinary action taken by an overseas regulatory body.
Reporting is to be in such form if any as ASIC may from time to time specify in writing.
Reporting is also required where there has been a material breach of a Class Order. In addition, ASIC policy has additional reporting obligations not set out in the Class Orders.
Reporting investigations may be contrary to foreign law
The obligation to report to ASIC details of “significant investigations” may conflict with legal obligations imposed by foreign law or regulators on the foreign financial service provider such as laws that make it an offence to disclose the details of any investigation.
We have raised this issue with ASIC and suggested that the Class Orders be amended to provide that notification need not be given if it would be a breach of foreign law to do so. In the meantime, foreign financial service providers relying on the Class Orders should carefully consider their position if any investigation action is taken against them by an overseas regulatory body.