ASIC Allows Certain AFS Licensees to Use Lease Assets

Australian financial regulator the Australian Securities and Investment Commission (ASIC)​ announced that it has changed the financial requirements for some types of Australian financial services (AFS) licensees related to the treatment of leased assets.

The changes will permit certain AFS licensees to include, where the licensee is a lessee, a right-of-use asset in the calculation of their net tangible assets and, where the right-of-use asset is a current asset, adjusted surplus liquid funds and surplus liquid funds.

ASIC has updated the following in order to implement the changes:

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.

In addition, ASIC has modified existing AFS licence conditions so that a right-of-use asset is deemed to not be an excluded asset.

The changes were made after industry feedback on the proposals in Consultation Paper 336 Financial requirements: Treatment of lease assets (CP 336). 

The feedback was generally supportive of the proposals in CP 336, and ASIC has implemented the proposals with minor adjustments only. Affected AFS licensees should review their financial requirement calculations in light of the changes. The changes have immediate effect.

Report 689 Response to submissions on CP 336 Financial requirements: Treatment of lease assets (REP 689) highlights the key issues raised in the submissions to CP 336 and details ASIC’s responses to those issues.

At the end of March 2021, Fazzaco has reported on ASIC's CFD product intervention order coming into effect​.