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Information for Foreign Financial Services Providers (FFSPs): Dissecting ASIC RG 176

ASIC's streamlined AFSL application process for foreign financial services providers (FFSPs) from "sufficiently equivalent regulatory regimes" makes it easier for such FFSPs to do business in Australia.

Background

Issued in March 2020, ASIC's Regulatory Guide RG 176 Foreign Financial Services Providers applies to FFSPs that wish to provide financial services to wholesale clients or professional investors in Australia.

The guide provides guidance regarding when an FFSP may be eligible to apply for a modified form of an AFS licence – known as a "Foreign AFS Licence". It details how to apply for a foreign AFS licence, along with when an FFSP may be eligible for other AFS licensing relief when providing ‘funds management financial services’ to certain types of professional investors in Australia.

"Sufficiently equivalent regulatory regimes" explained

The foreign AFS licensing scheme is a modified regime for FFSPs, including FinTechs, that are authorised in a "sufficiently equivalent regulatory regime to Australia" to provide financial services to wholesale clients, and wish to provide those services in Australia.

They are exempt from certain provisions in Chapter 7 of the Corporations Act 2001 on the basis that they are subject to sufficiently equivalent requirements that would achieve similar regulatory outcomes. They are expected to comply with relevant obligations imposed by the foreign regime for the financial services they provide.

The foreign AFS licensee must carry on a business in the relevant foreign jurisdiction, to ensure the licensee is subject to regulatory oversight in that jurisdiction. It must reasonably believe that it would not contravene any laws of its home jurisdiction relating to the provision of financial services, if it were to provide these in its home jurisdiction.


Specified "sufficiently equivalent regulatory regimes"


To be eligible to apply for a foreign AFS license, an FFSP must hold a relevant authorisation in an overseas regulatory regime that is specified in ASIC Corporations (Foreign Financial Services Providers - Foreign AFSL Licensees) Instrument 2020/198.


These regimes are as follows:

  • Denmark - if regulated by the Danish Financial Services Authority.

  • France - if regulated by: (i) the Autorite des marches financiers of France; or (ii) Autorite de controle prudential et resolution of France.

  • Germany - if regulated by the Bundesanstalt fur Finanzdienstleistunsaufsciht (BaFin).

  • Hong Kong - if regulated by the Securities and Futures Commission.

  • Luxembourg - if regulated by the Commission de Surveillance du Secteur Financier.

  • Ontario, Canada - if regulated by the Ontario Securities Commission.

  • Singapore - if regulated by the Monetary Authority of Singapore.

  • Sweden - if regulated by the Finanspinspektionen.

  • United Kingdom - if regulated by the Financial Conduct Authority.

  • United States - if regulated by: (i) the Federal Serve and Office of the Comptroller of the Currency; or (ii) US Securities and Exchange Commission.


Provisions that do not apply to foreign AFS licensees


Foreign AFS licensees from the above jurisdictions are exempt from certain provisions in Chapter 7 of the Corporations Act. These provisions include, but are not limited to, the following:

  • s912A(1)(d): Have adequate resources,

  • s912A(1)(e): Maintain the competence to provide the financial services.

  • s912A(1)(f): Ensure that representatives are adequately trained.

  • s912AAC: Meet minimum standards for custodial or depsitory service providers.

  • s912AAD: Have agreements with sub-custodians to hold custodial property.

  • s912AC: Have adequate financial resources for custodial or depository service providers.

Non-eligible FFSPs


If an FFSP is not eligible for a foreign AFS licence or for funds management relief , and no other licensing exemption applies, it must hold a standard AFS licence in order to carry on a financial services business in Australia. It must comply with all the applicable general obligations under s912A, and all the applicable provisions of the Act and the Corporations Regulations.

Note:


This article was originally published on Gen Advisory's website on 15 April 2020.


This article is of a general nature and not intended to address the objectives, financial situation or needs of any particular individual or entity. It is provided for information purposes only and does not constitute professional or legal advice.


Should you have any questions regarding this article, please get in touch with the Gen Advisory team.


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