/>iOn 30 November 2023, the Australian Government tabled a Bill proposing Australian Financial Services Licence (AFSL) exemptions for FFSPs in Australia.
The Bill’s proposed exemptions would replace the current limited connection relief exemption and class order relief for certain FFSPs which are due to expire on 31 March 2025. Two significant exemptions are contained within the Bill and these are:
1. Professional investor exemption
FFSPs may be exempt where:
they provide a financial service only to professional investors and from a place outside Australia (though representatives are permitted in Australia for marketing visits of up to 28 days annually);
the FFSP’s head office and principal place of business are located at one or more places outside Australia; and
the FFSP reasonably believes providing the same or substantially the same financial service would not contravene any law from where the financial services are provided.
Unlike the current law, FFSPs would be eligible for this exemption for all categories of financial services and products. However, this may be subject to future regulation.
FFSPs must adhere to certain conditions, such as complying with reasonable requests for assistance from ASIC and submitting to the Australian courts’ jurisdiction.
2. Comparable regulator exemption
FFSPs who provide financial services to wholesale clients, and maintain and administer authorisations, registrations or licences necessary to legally provide the same, or substantially the same, financial service in a comparable jurisdiction by a comparable regulator (as identified by ASIC) may also be entitled to this exemption.
However, FFSPs must consent to information sharing between ASIC and its comparable regulator, have an agent in Australia, and notify ASIC of any significant action or investigation undertaken against it by any authority in a place outside Australia.
For both exemptions, FFSPs must do all things necessary to provide financial services within Australia efficiently, honestly and fairly. Failure to adhere to obligations may result in a civil penalty, imposition of additional conditions or cancellation of an exemption.
Next steps
Parliament will likely address the Bill in February 2024. If passed, the exemptions will operate from 1 April 2025. Prior to this date, FFSPs will need to make a decision about the most appropriate regulatory structure for their Australian business. The suggested timeframe for making that decision is during Q2 (if they are looking to obtain a foreign AFSL) or Q3 of 2024 if they are seeking to rely on one of the relevant exemptions.
