On Tuesday 11 May 2021, Treasurer Josh Frydenberg delivered the Australian Federal Budget 2021-2022, which contained an announcement as to future changes to the licensing and relief regime for foreign financial service providers (FFSPs).
In particular, the Budget papers noted:
“The Government will consult on options to restore previously well-established regulatory relief for Foreign Financial Services Providers (FFSPs) who are licensed and regulated in jurisdictions with comparable financial service rules and obligations, or have limited connection to Australia, from holding an Australian Financial Service License, in order to reduce duplicate regulatory requirements. The relief is limited to FFSPs that deal with wholesale clients and professional investors.
The Government will also consult on options to create a fast-track licensing process for FFSPs who wish to establish more permanent operations in Australia. Fast-tracking is intended to shorten application timeframes and reduce barriers to entering the Australian market.”
While the prospect of a restoration of previous relief will be welcomed by many FFSPs, it also has the potential to significantly impact the new regulatory framework for FFSPs, in particular the new foreign Australian Financial Services (AFS) licence.
It remains to be seen what any new regime would mean for those FFSPs who have already been granted a foreign AFS licence, not to mention the many firms who are in the process of making their applications. The current timeline for expiry of the existing transitional sufficient equivalence relief and the limited connection relief is (at least for the time being) still the end of March 2022. That said, any consultation process on a new regime would potentially put pressure on that timetable given the need to develop and settle a new framework. Accordingly, firms either in the process of making foreign AFS licence applications or contemplating doing so would be well advised to keep a watching brief over future developments in this space.
A link to the Budget can be found here.