ASIC changes requirements for use of lease assets
The Australian Securities and Investments Commission (ASIC) has changed the financial requirements for some types of the Australian financial services (AFS) licensees by allowing them to use lease assets to satisfy their licence financial requirements.
These changes would mean that certain AFS licensees would be able to include, where the licensee was a lessee, a right-of-use asset in the calculation of their net tangible assets and, where the right-of-use asset was a current asset, adjusted surplus liquid funds and surplus liquid funds.
ASIC also modified existing AFS licence conditions so that a right-of-use asset would be deemed to not be an excluded asset.
Under s 912A(1)(d) of the Corporations Act 2001, an AFS licensee was 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 AFS licence.
To implement the changes, ASIC updated the following documents:
- ASIC Class Order [CO 13/760] – Financial requirements for responsible entities and operators of investor directed portfolio services,
- ASIC Class Order [CO 13/761] – Financial requirements for custodial or depository service providers,
- ASIC Class Order [CO 12/752] – Financial requirements for retail OTC derivative issuers,
- the standard licence conditions in ASIC Pro Forma 209 – Australian financial services licence conditions, and
- ASIC Regulatory Guide 166 – Licensing: Financial requirements.
The regulator previously issued a temporary no-action position for AFS licensees in relation to potential breaches of the financial requirements that arose from recent changes to the accounting treatment of lease assets, however the no-action position would no longer apply.
Recommended for you
TAL has introduced four new courses to its Risk Academy focused on ethical dilemmas as part of Ethics Month to help advisers meet their CPD requirements.
Unadvised Australians believe they need $2 million to retire comfortably, according to Colonial First State, a wide variance compared to advised individuals which estimate $1.3 million.
Financial advisers can now access Vanguard’s diversified managed account strategies on HUB24 and Netwealth, marking a “significant expansion” through new distribution channels.
The heads of two financial advice licensees have joined the board of the Financial Services Council as it looks to deepen its engagement with the space and strengthen its representation.