AUSTRALIA Trends and Developments Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison
On 1 April 2020, ASIC released a new regula - tory framework for the foreign AFSL regime. This framework repealed the passport relief and limited connection relief previously available to FFSPs. In their place, a new funds management relief was introduced. The transitional period for the class order relief was extended, and a new foreign AFSL regime was confirmed. In the 2021–22 Federal Budget, the Govern - ment announced it would “consult on options to restore previously well-established regulatory relief” from holding an AFSL for FFSPs licensed and regulated in jurisdictions with comparable financial services rules and obligations to, or lim - ited connection with, Australia. In addition, the Government indicated that it would consult on options to create a “fast track” licensing process for FFSPs that wish to establish more permanent operations in Australia. This announcement created uncertainty for the new FFSP regulatory framework introduced by ASIC, which was set to commence on 1 April 2022. The reforms were subject to criticism, and the Government undertook further consultations towards the end of 2021 and into early 2022. In February 2022, the Treasury Laws Amend - ment (Streamlining and Improving Economic Outcomes for Australians) Bill 2022 (the “2022 Bill”) was introduced into the Australian Parlia - ment, providing two exemptions for FFSPs from the requirement to hold an AFSL, as follows. • A new comparable regulator exemption sought to replace the passport relief but with some changes, including the fact that it would apply to all types of regulated financial services and products provided to wholesale clients. It would also apply to a broader range
of regulators approved (by the Government and not ASIC) as sufficiently equivalent. • A new professional investor exemption was designed to replace the limited connection relief but would require FFSPs to notify ASIC before relying on the exemption. However, when the Government called an elec - tion in May 2022, the 2022 Bill, containing the above proposed new exemptions, lapsed. On 7 August 2023, the Treasury announced new proposals to provide FFSPs with exemptions from the requirement to obtain an AFS licence by virtue of the Treasury Laws Amendment (Meas - ures for Future Bills) Bill 2023 (the “August 2023 Bill”), for which consultation closed in Septem - ber. The proposed legislation was akin to that previously tabled in Parliament, but with a few notable changes: • the August 2023 Bill proposed to give the Government the power to stop FFSPs rely - ing on the professional investor exemption in relation to dealings in financial products traded on prescribed markets (“dealing exclu - sion”); • a new exemption was proposed for making a market for derivatives that can be traded on a prescribed market; • an additional condition would apply to all the exemptions to require that financial services are provided efficiently, honestly and fairly (with certain carve-outs); and • an additional power would be conferred on ASIC to cancel an exemption on the grounds that the person is not providing financial ser - vices efficiently, honestly and fairly. In November 2023, the proposed reforms to the FFSP licensing regime were introduced to Par - liament in the form of a new bill, the Treasury
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