When the Federal Government election was called back in May, the Bill containing the proposed new licensing exemptions for FFSPs lapsed. As the new Government is yet to reintroduce that Bill or to announce its position on the regime that should apply to FFSPs, ASIC has extended the transitional relief for FFSPs from the need to hold an Australian financial services (AFS) licence and has delayed the start of the funds management financial services relief until 1 April 2024.
More information in relation to the lapsing of the previously proposed FFSP licensing exemptions (contained in the Treasury Laws Amendment (Streamlining and Improving Economic Outcomes for Australians) Bill 2022). The consequences of this for the Australian regulatory landscape can be found in our previous alert, Uncertainty renewed for foreign licensing relief.
While we welcome the extension of the FFSP exemptions, it is disappointing that ASIC has not amended the transitional regime to allow new FFSPs to rely on the 'sufficient equivalence' relief. This means that FFSPs which were not relying on that relief before 1 April 2020 need to either rely on the ‘limited connection’ relief or apply for a AFS licence if they wish to commence providing financial services in Australia.
Further details about the extension is below.
The instrument
The ASIC Corporations (Amendment) Instrument 2022/623 (Amending Instrument) has been made to give effect to the extension of the transitional period. Specifically, it amends the following ASIC instruments (which contain the existing 'sufficient equivalence / passporting' relief, the 'limited connection' relief and the 'CSSF-regulated FFSP' relief) to insert the 31 March 2024 end-date:
- ASIC Corporations (Repeal and Transitional) Instrument 2016/396;
- ASIC Corporations (Foreign Financial Services Providers – Limited Connection) Instrument 2017/182; and
- ASIC Corporations (CSSF-Regulated Financial Service Providers) Instrument 2016/1109.
This means that FFSPs who currently rely on, or wish to rely on, the 'limited connection relief' to provide financial services to wholesale clients in Australia can continue to do so until 31 March 2024.
Similarly, this extension allows FFSPs that currently rely on the 'sufficient equivalence' relief for FFSPs regulated by the UK FCA, the US SEC, the Singapore MAS and the HK SFC (among others) to continue relying on that relief to service Australian wholesale clients until 31 March 2024. However, unlike the 'limited connection' relief, the 'sufficient equivalence' relief is not able to be relied upon by a FFSP that is not already currently relying on that relief.
Funds management relief further delayed
The Amending Instrument also delays the commencement of the ASIC Corporations (Foreign Financial Services Providers – Funds Management Financial Services) Instrument 2020/199 for 12 months until 1 April 2024. This instrument was created to give licensing relief to FFSPs that provide 'funds management financial services' to certain categories of Australian professional investors. You can find more information about the funds management relief in Foreign financial services regime – your questions answered.
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