ob体育 has issued Consultation Paper 336聽Financial requirements: Treatment of lease assets (CP 336).
CP 336 seeks industry feedback on ob体育鈥檚 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.
ob体育鈥檚 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:
- ob体育 Class Orders [CO 13/760] 鈥� Financial requirements for responsible entities and operators of investor directed portfolio services,
- [CO 13/761] 鈥� Financial requirements for custodial or depository service providers,
- [CO 12/752] 鈥� Financial requirements for retail OTC derivative issuers,
- the standard conditions in ob体育 Pro Forma 209 鈥� 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 ob体育 legislative instruments.
On 7 July 2020, ob体育 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.