Major AFS licensing change on horizon for foreign financial services providers

In brief - From 1 April 2020 a new AFS licensing regime for foreign financial services providers (FFSPs) will be introduced

The new AFS licensing regime is a significant compliance event for financial institutions. It will replace current Class Orders (and other relief instruments) which provide regulatory relief for some FFSPs from the requirement to hold an AFS licence on the basis of:

• 'Passport' or 'Sufficient Equivalence Relief' - where an FFSP provides financial services to Australian wholesale clients only and is regulated by an overseas regulatory regime that is sufficiently equivalent to the Australian regulatory regime;
• 'Limited Connection Relief' - which provides an exemption for a FFSP that is 'only engaged in inducing, or intending to induce, a person in Australia to use its financial services'