Regulation Impact Statement – Australian Securities and Investments Commission
On 10 March 2020, the Australian Securities and Investments Commission (ASIC) announced a new framework for the regulation of foreign financial services providers (FFSPs) providing financial services to Australian wholesale clients.
FFSPs providing services to Australian wholesale clients have been able to avail themselves of relief from the Australian Financial Services Licensing regime provided by ASIC either where they are subject to equivalent overseas regulatory requirements or they have limited connection to Australia, such that they do not have a regular presence in Australia. ASIC identified instances where FFSPs were not complying with the existing relief conditions.
The new regulatory framework has two key elements:
- a new foreign Australian financial services (AFS) licensing regime for FFSPs, and
- licensing relief for providers of funds management financial services seeking to induce some types of professional investors.
The Office of Best Practice Regulation (OBPR) assessed the Regulation Impact Statement (RIS) prepared by the ASIC as compliant with the Government’s requirements, but not consistent with best practice. The OBPR considers that a higher standard of analysis was required in the RIS to be assessed as best practice. More details are provided in the OBPR’s assessment advice to the agency (linked below).
The RIS estimates average annual regulatory costs of the change at $22.5 million a year. The OBPR has agreed to the regulatory costs.