Time to explore the great southern land: Opportunities in Australia for UK financial services providers

If you are considering raising funds or providing other financial services in Australia, you may qualify for relief as a “Foreign Financial Services Provider” (“FFSPs”) due to having comparable obligations in your home jurisdiction. As a welcome development following its consultation in June 2021, the Australian Securities and Investments Commission (“ASIC”) announced that it would extend transitional relief for FFSPs for 12 months until 31 March 2023. This will enable FFSPs who have limited connection to Australia or have comparable financial obligations in other jurisdictions relief from holding an Australian Financial Services (“AFS”) licence. Similarly, ASIC will consult on options to create a fast-track licensing process for FFSPs who wish to establish more permanent operations in Australia…

We are seeing a number of FFSPs, such as UK providers, moving to provide financial services in Australia, and it comes as no surprise. This is a great opportunity for FFSPs to enter the Australian market. The Australian fund market is a large industry. At the end of December 2021, superannuation assets totalled A$3.5 trillion and from January to December 2020, there was a 14% increase in the total superannuation assets.

Am I eligible?

ASIC has provided guidance that outlines the relevant instruments that qualify as ‘sufficient equivalent relief’. We are happy to help you interpret those provisions. FFSPs are able to rely on this relief and may continue to rely on this relief until either the FFSP has been granted a foreign AFS licence that may commence before 31 March 2023 or the transitional period has ended on 31 March 2023 (whichever occurs first).  Entities that were granted individual relief by ASIC before 31 March 2020 do not have to notify ASIC to be able to rely on the transitional arrangements.

Applying for registration as a foreign company

There are some important compliance obligations to consider. One such obligation is to ensure that entities that are carrying on a business in Australia must register as a foreign company in Australia as under the Corporations Act 2001 Division 2 Part 5B.2. We can advise you on how to assess whether you will be carrying on a business in Australia and assist with the applicable regulatory filings.

An FFSP must also provide a letter of intent to provide financial services, supporting documents and a copy of the signed deed of covenant to ASIC by 31 March 2023 to qualify for licencing relief under the transitional arrangements.

If you are unable to rely on the sufficient equitable relief then you can apply for individual ‘case-by-case’ relief. This application process includes paying a fee, providing a signed declaration and questions for applicants as well as other additional documents.

Under both exemption regimes, a failure to comply with the conditions of the exemptions can result in civil penalty and pecuniary penalty orders.

Has there ever been a better time to explore the great Southern Land?

next steps

For more information, and any guidance or advice on Foreign Financial Services Providers, Cleveland & Co External in-house counsel™, your specialist outsourced legal team, are here to help.

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