ASIC consults on foreign financial services providers relief proposals

ASIC has today released a consultation paper proposing a modified licensing regime for foreign financial service providers carrying on a financial services business in Australia with wholesale clients. These foreign providers are global investment banks or wholesale managed funds. This approach would provide ASIC with a broader range of tools to regulate the activities of foreign providers in Australia.

CP 301 sets out our proposal to enable foreign providers to apply for a modified form of Australian financial services (AFS) licence (foreign AFS licence). Currently foreign providers of services to wholesale clients are not required to hold an AFS licence in some circumstances under ASIC relief.

Providers holding a foreign AFS licence will be exempt from certain licensee provisions under the Corporations Act. This is on the basis that there are similar regulatory outcomes achieved through the regime applying to the foreign provider in its home jurisdiction.

This follows ASIC’s review of the regulatory settings behind our foreign providers relief. The review identified some supervisory and regulatory concerns about the operation of the relief.

We have also taken action in response to failures to comply with the terms of the relief by certain foreign providers of investment banking services.

ASIC considers that it is important for foreign providers to adhere to fundamental conduct obligations in our AFS licensing regime that govern how financial services are provided to Australian wholesale clients and promote market integrity.

The current foreign provider licensing relief is due to sunset on 27 September 2018.  We will extend the current relief for 12 months until 30 September 2019 while we consult with stakeholders.

The consultation paper proposes a further transition period of 12 months to 30 September 2020 if ASIC proceeds with foreign AFS licensing.

ASIC invites submissions on CP 301 by 31 July 2018.

For reference:


Current relief for foreign financial services providers

Our proposed foreign AFS licence would replace two types of current relief.

Sufficient equivalence relief

In 2003 and 2004, ASIC made seven class orders that conditionally exempted foreign providers from the requirement to hold an AFS licence where they are regulated under overseas regulatory regimes that ASIC has assessed as sufficiently equivalent to the Australian financial services regimes.

Limited connection relief

In 2003, we issued Class Order [CO 03/824] Licensing relief for financial services providers with limited connection to Australia dealing with wholesale clients which provides licensing relief to foreign providers with a limited connection to Australia providing financial services to wholesale clients. The relief covers a foreign provider inducing an Australian wholesale client to use the relevant financial services provided by the foreign provider.

© Australian Securities & Investments Commission. Reproduced with permission.