Licensing and disclosure: Making the transition to the FSR regime

LICENSING AND DISCLOSURE: MAKING THE TRANSITION TO THE FSR REGIME
SECTION 1.1: LICENSING — WHAT IS THE TRANSITION PERIOD?
Industry participants should not rely on ASIC’s power to extend the 2year
transitional period. Rather, they should plan for an early or timely
transition. As indicated in the Explanatory Memorandum to the
Financial Services Reform (Consequential Provisions) Bill 2001 (see
paragraph 4.61), it is envisaged that we will only extend the 2-year
transitional period in very limited situations, such as in circumstances
beyond the control of the person concerned.
Note: See also our forthcoming FSR policy statement on Licensing:
Discretionary powers and transition. We aim to publish this document before
1 December 2001.
Current financial service providers and new activities
1.1.4 Under the transitional provisions, in general, there is no
transition period for current financial service providers to the
extent they engage in new activities after FSR commencement
(that is, activities that are not the providers’ regulated activities
as set out in s1430(1) of the transitional provisions). Current
financial service providers will need to obtain an AFS licence
for those new activities before they undertake them.
1.1.5 Under regulation 10.2.38, the transition period for those
solicitors and accountants in public practice before FSR
commencement who:
(a) would be subject to the requirement to hold an AFS
licence; and
(b) after FSR commencement, first conduct an investment
advice business;
is the same as for current financial service providers: see
paragraph 1.1.1 of this guide.
Note 1: Investment advice business has the meaning given by s77 of the old
Corporations Act.
Note 2: At the end of the transition period, solicitors and accountants will be
subject to the new regulatory regime unless they receive the benefit of the
relevant exemptions in s766B(5) and regulation 7.1.29.
These exemptions are different from the investment advice business exemption
in s77 of the old Corporations Act and should be carefully considered before
they are relied upon.
Australian Securities and Investments Commission — October 2001
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