The Australian Securities and Investments Commission (ASIC) has reissued Pro Forma 209 Australian financial services licence conditions (PF 209). The amendments to PF 209 are a result of the introduction of new regulations and changes to ASIC policy, including Policy Statement 166 Licensing: Financial requirements (PS 166) and Policy Statement 175 Licensing: Financial product advisers — Conduct and disclosure (PS 175). These changes come into effect immediately.
The following summary explains the nature and purpose of each amendment. Australian financial services (AFS) licensees who wish to take advantage of the changes outlined below must apply for a variation to their AFS licence using ASIC form FS03, requesting that the revised versions of all of the conditions and definitions listed below be imposed.
PF 209 and form FS03 are available via the Financial Services homepage on the ASIC website, www.asic.gov.au/fs.
Download a copy of Pro Forma 209
ASIC Policy Statements
SUMMARY OF AMENDMENTS TO PF 209
Authorisation
Condition 1:There are new authorisationsto cover licensees who provide financial services in relation to consumer credit insurance only.
The life insurance product authorisations have been expanded to include any products issued by a Registered Life Insurance Company that are backed by one or more of its statutory funds.
Base Level Financial Requirements
Condition 11: The amendment provides a licensee with an additional means of meeting the 3-month cash flow requirement in lieu of Option 1 or Option 2.
A licensee is now exempted from the requirement to prepare 3-monthly cash flow projections where an eligible provider provides an enforceable and unqualified commitment to pay an unlimited amount in respect of the licensee’s obligations for a period of 3 months.
ASIC will also amend Parts F and G of PS166 to reflect this change.
Financial Requirements for Foreign Exchange Dealers
Condition 18: This condition has been amended to reflect changes to financial requirements imposed on foreign exchange dealers applying for an AFS licence.
ASIC has changed its policy under PS 166 to permit all foreign exchange dealers to comply with an adjusted surplus liquid funds (ASLF) requirement reflecting Part F of PS 166 as an alternative to the $10 million tier one capital requirements under Part G.
Financial Requirements for Licensee Transacting with Clients
Condition 20:Minor amendment to add the word “monetary” before the word “liabilities” in the first line of the condition.
Audit Opinion on Financial Requirements
Condition 26:Adjusted to reflect changes to condition 11 and forthcoming changes to PS 166 in relation to the areas covered under the audit for the cash needs requirement of Base Level Financial Requirements.
External Dispute Resolution Schemes
Condition 30: The purpose of this amendment is to exempt a licensee from the requirement to be a member of an External Dispute Resolution Scheme (EDRS) until 11 March 2004, to the extent that there is no EDRS in place that covers complaints relating to the type of financial service provided by the licensee.
Agreement with Holder of Financial Product on Trust
Condition 32: This has been amended to exempt licensees who appoint sub-custodians from some of the requirements under the condition, where the licensee demonstrates by documentary evidence that compliance with these requirements is not practicable.
Protection of Underlying Land in Primary Production
Condition 43:ASIC has amended this condition for licensees of timber plantation schemes, to allow them up to 9 months after the issue of interests in the scheme to register the investors’ interests in the land under State or Territory land titles law. The purpose of the amendment is to ensure that the registration requirement imposed by this licence condition does not have the potential to deprive investors in timber plantation schemes of the benefits of the 12-month prepayment rule introduced by Treasury into taxation legislation in 2002.
Stockbroker Responsibility for Subsidiary Companies
Condition 55: This is a new condition that will apply to a stockbroker who elects to take responsibility for the acts and omissions of a subsidiary nominee company who provides custody services on its behalf.
Retention of Financial Services Guides, Statements of Advice and material relating to personal advice
Condition 56: This is a new condition that will be imposed on all licensees and will apply where a licensee provides financial product advice to retail clients. The condition applies the record keeping requirements set out in PS 175.
Definitions
consumer credit insurance – new definition to apply to licensees who are authorised to provide financial services in relation to consumer credit insurance only.
financial assets – definition amended so that it is now consistent with the definition of financial assets set out in Policy Statement 130 Managed investments: Licensing (PS 130).
Download a copy of
- Pro Forma 209
- Form FS03
- ASIC Policy Statements