The revised Foreign Financial Services Provider Bill was introduced on 17 February 2022 in the House of Representatives.
As expected, the revised Bill contains the three proposed exemptions previously consulted on: (a) professional investor exemption, (b) comparable regulator exemption, and (c) the fit and proper person text exemption. The revised Bill remains similar to the consultation however some changes/clarifications have been made:
The professional investors exemption: this exempts FFSPs from the legal requirement to hold an AFS licence where they provide financial services from outside Australia to a professional investor. The Bill includes language clarifying when a financial service may be provided during one or more marketing visits to Australia undertaken by one or more representatives of the person (provided that the total length of marketing visits that the FFSP may make in any financial year is no more than 28 calendar days). The requirement to provide notice to ASIC of reliance on this exemption remains.
The comparable regulator exemption: here the exemption from holding an AFS licence is provided to an FFSP (the revised Bill now confirms it can be either a foreign company or a partnership) which is regulated in a comparable regulator jurisdiction. Unlike the professional investor exemption, the FFSP is able to provide services to the broader class of “wholesale clients”. The requirement to maintain a local agent in Australia remains. But the FFSP must now only maintain “adequate” oversight over its representatives who provide each of the financial services “in reliance on the exemption and ensure that its representatives who provide each of those kinds of financial service in reliance on the exemption are adequately trained, and are competent, to provide that kind of financial service.”
The fit and proper test exemption: this exemption is relevant for an FFSP (which again must be a foreign company or partnership, and still does not extend to any Australian affiliates of the applicant) in a comparable regulator jurisdiction that wants to go ahead and obtain an AFS licence without having to comply with the fit and proper person checks.
The Bill does not propose the establishment of a publicly searchable register of FFSPs relying on these exemptions and still uses the current Corporations Act definition of “professional investor” and “wholesale client”. ASIC must still be notified of reliance on all of these exemptions, however, the Bill now clarifies that ASIC can be notified 15 Business Days before or after commencement of the relevant financial service.
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