Today, ASIC issued a temporary no-action position for Australian financial services (AFS) licensees in relation to potential breaches of the financial resource requirements that arise from recent changes to the accounting treatment of lease assets. The no-action position will apply until further notice.
AFS licensees are required to maintain adequate resources, including financial resources, to provide services under the terms of their licences. ASIC recognises that some AFS licensees may face difficulty in complying with their financial resource requirements because, following changes to the accounting standards for leases, lessees are required to recognise lease liabilities and a right-of-use asset for all leases. While the lease liabilities are taken into account for the purposes of an AFS licensee’s financial resource requirements, the right-of-use assets are now generally treated as intangible assets and do not count towards meeting those requirements.
By issuing the temporary no-action position, ASIC:
- will allow licensees to use right-of-use lease assets to count towards their financial resource requirements; and
- will not take regulatory action against licensees in relation to past breaches of financial resource requirements, when the breach arises from right-of-use lease assets not being able to be counted towards meeting those requirements.
ASIC plans to consult on proposals to change the financial resource requirements to enable an AFS licensee to include a right-of-use lease asset when calculating whether it meets its financial resource requirements.
Detailed information on the no-action position is available at:
