Following public consultation, ASIC has temporarily remade Class Order [CO 03/824] Licensing relief for foreign entities with limited connection to Australian wholesale clients in the ASIC Corporations (Foreign Financial Services Providers – Limited Connection) Instrument 2017/182. The new instrument continues to provide licensing relief for foreign financial service providers with limited connection to Australia providing financial services to wholesale clients, for a period of 18 months. Class Order [CO 03/824] was due to expire ('sunset') on 1 April 2017.
The instrument has been remade following public consultation: see Consultation Paper 268 Licensing relief for foreign financial services providers with a limited connection to Australia (CP 268), released in September 2016.
Effect of instrument extending relief
The relief provided under ASIC Corporations (Foreign Financial Services Providers – Limited Connection) Instrument 2017/182 is extended until the expiry of the suite of 'passport' relief provided to foreign providers under ASIC Corporations (Repeal and Transitional) Instrument 2016/396 on 27 September 2018.
The feedback received on CP 268 highlighted the importance of the interrelationship between [CO 03/824] and the suite of 'passport' relief provided to foreign providers.
This extension of relief will allow ASIC to undertake a comprehensive review of the underlying policy settings applicable to all foreign providers relief. This review comes as a result of market and regulatory developments since the relief was first granted and a number of ongoing international and domestic reviews.
In particular, we will seek detailed information from industry about the use of [CO 03/824] and the impact of a repeal, including the types of products and services offered, the jurisdictions involved and the number of clients affected.
This consultation will be carried out over the next 12 months. We expect industry to actively engage in this process. Without that engagement and information to review, ASIC's expectation is it is likely that [CO 03/824] will be repealed at the end of the rollover period.
Background
In September 2016, ASIC temporarily extended its suite of 'passport' relief for certain foreign financial services providers from the requirement to hold an Australian financial services licence for another two years in ASIC Corporations (Repeal and Transitional) Instrument 2016/396 (refer: 16-328MR ASIC extends foreign financial service provider class orders for two years and consults on related class order).
The relief was originally provided to attract additional investment and liquidity to Australian markets by addressing the duplicated regulatory burden arising from compliance with Australia's regulatory regime, where certain foreign financial services providers were already subject to sufficiently equivalent regimes in their home jurisdictions.
Sunsetting class orders
Under the Legislation Act 2003, all class orders are repealed automatically or 'sunset' after a period of time (mostly 10 years) unless we take action to preserve them. This ensures that legislative instruments like class orders are kept up to date and only remain in force while they are fit for purpose and relevant.
All government organisations are responsible for considering whether the legislative instruments they have made that are due to sunset will be relevant after their sunset date.