In June 2018, the Australian Securities & Investments Commission (ASIC) issued an announcement affecting foreign financial services providers (FFSPs) that rely on “passport” class order relief or on “limited connection” relief from the requirement to hold an Australian financial services licence (AFSL) in order to provide financial services in Australia to wholesale clients. At the end of 2018, ASIC announced that it will be proceeding with the proposal to repeal passport relief and limited connection relief, and will implement a new regime which will require FFSPs to apply for a foreign AFSL.
Throughout 2018, ASIC conducted a consultation on the proposed modified licensing regime for FFSPs carrying on a financial services business in Australia (see our previous insight here). During the consultation period, ASIC extended the operation of the passport class order relief and limited connection relief to 30 September 2019, to allow sufficient time to review the consultation submissions and engage further with industry participants.
After reviewing the consultation submissions, ASIC has decided to proceed with the proposal for a new foreign AFSL regime and repeal:
- ASIC Corporations (Repeal and Transitional) Instrument 2016/396 and ASIC Corporations (CSSF-Regulated Financial Services Providers) Instrument 2016/1109, which relate to FFSPs providing financial services on the basis that their home regulatory regime has been assessed by ASIC as having a licensing regime that is sufficiently equivalent to Australia’s regime; and
- ASIC Corporations (Foreign Financial Services Providers—Limited Connection) Instrument 2017/182, which relates to FFSPs providing financial services that are limited to inducing wholesale clients to use the provider’s financial services.
Passport relief and limited connection relief will cease from 30 September 2019. FFSPs relying on either relief will have 12 months to transition to a foreign AFSL or satisfy licensing requirements in some other way.
ASIC plans to release in the first half of 2019 a draft Regulatory Guide and draft instruments relating to the foreign AFSL regime. We will provide a further update when this information is available.