Aggregated News From Investment Management Regulators

ASIC consults on the treatment of lease assets in satisfying AFS licence requirements

Report/Flag

Please complete the required fields.



ASIC has issued Consultation Paper 336 Financial requirements: Treatment of lease assets (CP 336).

CP 336 seeks industry feedback on ASIC’s proposal to change the treatment of lease assets in the calculation of financial requirements applicable to Australian financial services (AFS) licensees.

Following the introduction of accounting standard AASB 16 Leases (AASB 16), some AFS licensees may face difficulty in complying with their financial requirements because intangible assets, excluding deferred tax assets, are not included in satisfying such requirements.

ASIC’s proposal will allow AFS licensees to include a right-of-use lease asset in their calculation of net tangible assets, adjusted surplus liquid funds and surplus liquid funds.

The proposal provides a solution to an impediment that some AFS licensees face in meeting their financial requirements. This will give licensees the regulatory certainty they need when it comes to meeting their licence conditions.

The proposal involves changes to:

  • ASIC Class Orders [CO 13/760] – Financial requirements for responsible entities and operators of investor directed portfolio services,
  • [CO 13/761] – Financial requirements for custodial or depository service providers,
  • [CO 12/752] – Financial requirements for retail OTC derivative issuers,
  • the standard conditions in ASIC Pro Forma 209 – Australian financial services licence conditions, and
  • The existing conditions of each AFS licence.

Industry has until 26 February 2021 to provide feedback on CP 336.

Download

Background

Under s 912A(1)(d) of the Corporations Act 2001, an AFS licensee is generally required to maintain adequate resources, including financial resources, to provide the financial services that it is authorised to provide under the terms of its licence. These financial requirements are specified in each AFS licence and are based on PF 209 and various ASIC legislative instruments.

On 7 July 2020, ASIC issued a temporary no-action position for AFS licensees in relation to potential breaches of the financial requirements that arise from recent changes to the accounting treatment of lease assets (20-158MR). This no-action position sets out the relevant financial requirements and applies until further notice.

This news item was originally published by the Australian Securities and Investments Commission (ASIC AU). For more information, please see the Source Link.

Regulator Information

Abbreviation: ASIC
Jurisdiction: Australia

Recent Articles

Grand Trust Holdings United Kingdom

We believe this firm may be providing financial services or products in the UK without our authorisation. Find out why you should be wary...

Announcement for the referral of a suspicion of violating Article (49) of the Capital Market Law and Article (2) of the Market Conduct Regulations...

In line with the Capital Market Authority's (CMA) responsibilities to protect the citizens and investors from unfair or unsound practices, and aiming to achieve...

Guidance on Application for Registration of a Virtual Assets Service Provider

Guidance Attachment: guidance_-_application_for_vasp_registration.pdf This news item was originally published by the British Virgin Islands Financial Services Commission (BVIFSC VG). For more information, please see the Source Link.

Virtual Assets Service Providers Guide to the Prevention of Money Laundering, Terrorist Financing and Proliferation Financing

Guidance Attachment: vasp_aml_cft_guidance.pdf This news item was originally published by the British Virgin Islands Financial Services Commission (BVIFSC VG). For more information, please see the Source...

Get the latest from Regulatory.News in your inbox!

×