In recent years, the regulation of foreign financial services providers (FFSPs) has been surrounded in uncertainty. Partner Elliott Stumm shares the history, what is now proposed, and some differences with the old relief regime.
For some time (since 2003), ASIC provided relief from the requirement to hold an AFS licence for certain foreign FFSPs.
The relief fell into two streams:
Under the relief, FFSPs could, subject to conditions, conduct a financial services business in Australia without the need to hold an AFS licence.
Going back to early 2019, we have reported on various developments in this area, including a process of consultation by ASIC, where the regulator was looking at repealing the existing relief, and introducing a modified AFS licensing regime for FFSPs.
A new category of foreign AFS licence was finally introduced in 2020, but there was a two-year transitional period commencing on 1 April 2020, which was subsequently extended to 1 April 2023. After 1 April 2023, FFSPs would have been required to apply for a foreign AFS licence (or full AFS licence), unless they could rely upon alternative relief.
The Federal Government then put the brakes on the new regime, announcing in its 2021/2022 Budget that it would begin to consult on options to possibly restore the previous relief which had been enjoyed by many FFSPs.
In late 2021, Federal Treasury released draft legislation – Treasury Laws Amendment (Measures for Consultation) Bill 2021: Licensing Exemptions for Foreign Financial Service Providers.
This draft legislation contains the Government’s proposed revised position on the regulation of FFSPs.
The Government is proposing to introduce three measures:
The new exemptions have some differences with the old relief regime, for example:
We can assist you in understanding the proposed new requirements for FFSPs. Contact our Funds Management team.