ASIC vs FCA: Two Tier-1 Rulebooks Compared.

For three years after the European product intervention, an Australian Financial Services licence was the standard workaround. Firms shut out of high leverage in Europe pointed clients at an ASIC-regulated entity, kept a tier-1 badge on the website, and carried on. ASIC ended that arrangement with a product intervention order effective 29 March 2021, and the marketing angle disappeared overnight.

What is left is a genuine comparison between two demanding regimes with different architecture. The differences now sit in client money, in complaints, and in how each authority decides you are fit to hold the licence.

The product rules converged

The Australian order caps retail leverage across asset classes, with the tightest cap on major currency pairs and progressively lower limits on minors, indices, commodities, equities and crypto-assets. It requires negative balance protection, standardises margin close-out so that positions are liquidated at a defined equity level, and bans inducements such as trading credits offered to open an account.

Read that list next to the UK rules and you are reading the same intervention with different drafting. Both were built on the same evidence about retail outcomes in leveraged CFDs, and the UK version traces back to the same ESMA measures we cover in ESMA leverage caps. The order was originally time-limited and has since been extended, so anyone assuming it will lapse and restore 200:1 should plan the business on the assumption it will not.

Who counts as a client you can sell more to

Both regimes let a firm offer more to clients who fall outside the retail perimeter, and both define that perimeter differently.

Australia's wholesale test is largely financial. It rests on certified net assets or income above set thresholds, or on the size of the individual investment, with an accountant's certificate doing much of the work. The UK elective professional test is a mixed one: a client has to satisfy criteria covering trading frequency, portfolio size and relevant experience, and the firm has to assess and record that assessment.

The practical effect is that a wealthy but inexperienced client passes more easily in Australia than in the UK. A firm running both entities cannot use one onboarding flow, and it cannot recycle the certificate from one regime as evidence in the other.

Client money and what happens when a firm fails

Australia rewrote its client money rules in 2018 so that retail derivative client money can no longer be used by the issuer for working capital or to meet its own hedging obligations. That closed the most damaging practice in the sector and brought the treatment of client funds closer to the UK's, where segregation, daily reconciliation and the selection of eligible institutions are set out in detail. The mechanics of both are the ones we describe in client fund segregation.

The divergence is in the backstop. In the UK, eligible claims against a failed authorised firm can be met by the Financial Services Compensation Scheme up to a per-person limit. Australia routes disputes through the Australian Financial Complaints Authority, whose determinations bind the firm, and a client whose firm has collapsed depends on a narrower set of arrangements than the FSCS. For a client comparing two brokers, that difference is worth more than any spread comparison.

Getting the licence, and keeping it

The Australian model turns on responsible managers. You nominate named individuals whose qualifications and experience cover every authorisation you are asking for, and ASIC tests that coverage rather than testing the company in the abstract. If a responsible manager leaves, the firm has a real problem that day, not at the next annual review. The UK's regime spreads the same idea across statements of responsibility for senior managers, with individual accountability written down and attributable.

Both authorities expect audited accounts, ongoing capital reporting and evidence that the compliance function is doing something other than existing. Both maintain public registers, which is the first place a client should look and the subject of how to check a broker licence. And both have shown willingness to act on marketing that oversells leveraged products, which catches firms whose affiliates run creative they have never reviewed.

Choosing between them

If your clients are Australian, the AFS licence is the only serious answer, and there is no cross-border shortcut worth taking. If your clients are British, the same logic applies in reverse. The interesting cases are firms serving Asia-Pacific more broadly, where an Australian entity has historically carried weight with clients and with counterparties, and firms serving Europe, where neither licence passports and the real comparison is the one in FCA vs CySEC.

What neither licence provides is a shortcut on operations. Segregated accounts, transaction records, complaint logs and capital returns all have to come out of systems that were built to produce them, which is why we treat the reporting layer of a Broker CRM as part of the licence rather than a nice extra. The regulator's questions arrive with a deadline, and reconstructing an answer from spreadsheets is how a manageable review turns into an expensive one. For the wider view of each regime alone, start with ASIC regulation explained.

"Firms used to shop for the highest leverage a tier-1 badge would allow. That trade is gone. Now you are shopping for a supervisor you can live with for ten years, which is a different question entirely."

— Roman Onta, Executive Director, SINGUARD

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