Key exemptions, conditions and timelines under the proposed regime 10 min read
Following two dissolutions of Parliament and one pandemic, the Australian Government on 26 November 2025, for a third time, re-introduced the proposed exemptions for foreign financial service providers (FFSPs) regarding the need to hold an Australian financial services licence (AFSL). This time, the exemptions are proposed to be made by way of Schedule 2 of the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025 (New Bill). ASIC has also extended the transitional relief for FFSPs by an additional 12 months, now due to expire on 31 March 2027.
In this Insight, we summarise the key features of the New Bill, compare the proposed exemptions with the current relief regime, and consider the steps FFSPs should be taking now in light of the extended transition period.
Key takeaways
- After nearly a decade of false starts, the government has again moved to legislate a permanent licensing framework for FFSPs, replacing ASIC’s patchwork of temporary relief.
- The proposed regime would formalise three core AFSL exemptions and a narrower funds management carve‑out, while introducing clearer eligibility thresholds and ongoing compliance obligations.
- Transitional relief has been extended to 31 March 2027, preserving the status quo in the short term but sharpening the focus on transition planning.
- If enacted, the reforms would reduce regulatory uncertainty for offshore providers servicing Australian wholesale markets, albeit with increased transparency and supervisory engagement.
- FFSPs should use the 12‑month commencement lead time to reassess licensing strategy, exemption reliance and operational readiness under the new regime.
Brief background to the FFSP licensing relief regime
Almost 10 years have passed since ASIC first proposed licensing reforms for FFSPs in 2016. Below is a refresher of the key events since that time:
- In September 2016, ASIC released Consultation Paper CP 268 (Licensing relief for foreign financial services providers with a limited connection to Australia) seeking feedback on repealing the limited connection relief with a one-year transition period.
- Between June 2018 and March 2020, ASIC consulted on and released a new regulatory framework for FFSPs, namely to: (i) extend the transitional period for the sufficient equivalence and the limited connection relief; (ii) introduce a new foreign AFSL regime; and (iii) introduce a new licensing exemption for foreign fund managers.
- In May 2021, the Government announced its intention to consult on options to restore the sufficient equivalence and the limited connection relief, and options to create a fast-track licensing process for FFSPs.
- In February 2022, the Government introduced the Treasury Laws Amendment (Streamlining and Improving Economic Outcomes for Australians) Bill 2022 to Parliament, proposing the comparable regulator, professional investor and market maker exemptions, and a fast-tracked process for FFSPs to apply for an AFSL by providing an exemption from the 'fit and proper person' tests. This bill was not passed before the dissolution of Parliament in 2022 and therefore lapsed (see our previous Insight).
- In November 2023, the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, which became the Treasury Laws Amendment (Miscellaneous Measures) Bill 2024 (Previous Bill) re-introduced the initial bill. The Previous Bill was not passed before the dissolution of Parliament following the announcement of the 2025 federal election and therefore lapsed (see our previous Insight).
- On 26 November 2025, the New Bill re-introduced the proposed AFSL exemptions for FFSPs on substantially the same terms as the Previous Bill.
- ASIC's transitional arrangements allow FFSPs that currently rely upon the limited connection relief and sufficient equivalence relief, or an individual relief instrument issued on the same terms as the sufficient equivalence relief, to continue to provide financial services to Australian wholesale clients. ASIC has recently extended these transitional arrangements until 31 March 2027, under ASIC Corporations (Foreign Financial Services Providers) Instrument 2025/798 (see our previous Insight).
Overview of the proposed FFSP licensing framework
Save for two minor changes,1 the New Bill substantially mirrors the reforms proposed in the Previous Bill. If the New Bill is passed:
- there will be three new licensing exemptions for FFSPs, namely the 'professional investor exemption', the 'comparable regulator exemption' and the 'market maker exemption'.
- a new ASIC instrument, ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199 will come into effect and provide a licensing exemption for FFSPs providing certain fund management services.
- the process for FFSPs to apply for an AFSL will be fast-tracked by exempting such FFSPs from the 'fit and proper person' tests if they are authorised to provide financial services in a comparable overseas regulatory regime.
The following tables provides an overview of each of these reforms:
Professional investor exemption
| Topic | New Bill | Current regime |
|---|---|---|
| Eligibility |
The new professional investor exemption is available where the FFSP, subject to other eligibility criteria:
Notably, this now includes 'financial services' broadly, rather than limiting the applicability of the exemption to a specific list of financial services. |
The new professional investor exemption will replace the existing professional investor exemption under s911A(2E) of the Corporations Act. The existing professional investor exemption applies only to FFSPs dealing in, providing advice on, or making a market in derivatives, foreign exchange contracts, carbon units, Australian carbon credit units or eligible international emission units to professional investors.2 |
| Marketing visits |
Each representative of the FFSP may provide financial services in Australia if such financial service is provided by the representative during any visit to Australia on a marketing visit, provided the total length of such marketing visits to Australia by that representative during a financial year does not exceed 28 calendar days. |
The existing exemption does not expressly specify any parameters relating to marketing visits by representatives of an FFSP. |
| Conditions |
An FFSP that relies on the professional investor exemption must comply with the following conditions:
|
These conditions do not apply under the existing exemption. |
Comparable regulator exemption
| Topic | New Bill | Current regime |
|---|---|---|
| Eligibility |
The new comparable regulator exemption applies where an FFSP provides financial services only to wholesale clients and holds equivalent authorisations granted by a comparable regulator. The financial services can be provided from within Australia or from the comparable jurisdiction. Subject to the Minister's decision, the initial list of comparable regulators and jurisdictions will be as follows:
This list adopts the regulatory authorities specified in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198, which allows FFSPs regulated by certain regulators to apply for a foreign AFSL. |
The new comparable regulator exemption will replace the existing sufficient equivalence relief. The existing sufficient equivalence relief (including relevant individual relief instruments that were issued on the same terms as the sufficient equivalence relief) applies where an FFSP provides certain financial services only to wholesale clients and is regulated by an overseas regulatory regime that is sufficiently equivalent to the Australian regime. ASIC has assessed the United Kingdom, United States, Singapore, Hong Kong, Germany and Luxemburg to have sufficiently equivalent regulatory regimes. |
| Conditions |
In addition to the obligations imposed on FFSPs relying on the professional investor exemption, FFSPs relying on the comparable regulator exemption must also:
|
FFSPs relying on the existing exemption must comply with similar conditions, which may vary depending on the individual relief instrument issued by ASIC. |
Funds management relief
| Topic | New Bill | Current regime |
|---|---|---|
| Eligibility |
An FFSP that does not have a place of business in Australia and is carrying on a financial services business in Australia only because it 'engages in inducing, or intending to induce, a person in Australia to use its financial services', does not have to hold an AFSL in respect of certain funds management financial services provided to eligible Australian users. 'Eligible Australian users' are defined as a sub-set of professional investors that include, amongst others, responsible entities of registered schemes, trustees of approved deposit funds, pooled superannuation trusts and superannuation funds (in each case with net assets of at least $10 million), and trustees of wholesale equity schemes. In reliance on this relief, FFSPs may deal in, provide financial product advice in relation to, make a market in (as a result of redeeming or buying back financial products), or provide a custodial or depository service either: (i) in respect of offshore fund financial products; or (ii) in respect of financial products under a portfolio management mandate, to eligible Australian users. This relief is intended to enable offshore fund managers who do not have a presence in Australia to continue to offer investments in funds to Australian institutional investors. |
The new funds management relief will replace the existing limited connection relief, but will be narrower in its scope. The existing limited connection relief applies where an FFSP is deemed to be carrying on a financial services business in Australia only because it 'engages in inducing, or intending to induce, a person in Australia to use its financial services' and provides financial services only to wholesale clients in Australia.
|
| Conditions |
In addition to similar obligations to appoint a local agent, consent to information sharing and comply with ASIC directions or requests for assistance, ASIC imposes the following further conditions on FFSPs who rely on the funds management relief:
|
Not applicable. |
Market maker exemption
| Topic | New Bill | Current regime |
|---|---|---|
| Eligibility |
The new market maker exemption is available where the FFSP, subject to other eligibility criteria:
|
No current equivalent relief. |
| Conditions |
In addition to submitting to the jurisdiction of Australian courts, an FFSP that relies on the market maker exemption must comply with substantially the same conditions as those relying on the professional investor exemption, save for providing notice to recipients of the financial services. |
Not applicable. |
Fit and proper tests exemption
| Topic | New Bill | Current regime |
|---|---|---|
| Eligibility |
An FFSP that is able to rely on the comparable regulator exemption is exempt from the fit and proper person tests when making an application for or varying an AFSL. |
A person who applies for an AFSL (or for a variation of an AFSL) must satisfy the fit and proper person tests set out in the Corporations Act. Practically, this includes a national criminal history check, a bankruptcy check and a tailored 16-question ‘Statement of Personal Information’ questionnaire. |
For a detailed outline of these exemptions, see also our previous Insights here and here.
What's next?
On 26 February 2026, the Senate Economics Legislation Committee (Committee) issued its report on the New Bill. Ultimately, the Committee recommended that the Senate pass the New Bill, but encouraged the Assistant Treasurer to consider whether the amendments raised by submissions to the Committee and to Treasury during the consultation process would improve the operation of Schedule 2.
The New Bill currently sits with the House of Representatives at the second reading stage. Having regard to the comments made by the Senate Economics Legislation Committee, the New Bill may be amended before it is considered and debated by the House of Representatives.
FFSPs that are currently relying on the exemptions from the ASIC transitional arrangements can continue to do so until 31 March 2027, unless otherwise extended.6 FFSPs intending to provide financial services in Australia should consider whether they are able to rely on the existing transitional relief, or if they will be required to apply for a standard or foreign AFSL. If passed, the New Bill will come into effect 12 months after the date it receives Royal Assent. This means that ASIC and industry will have 12 months to ensure a smooth transition from the current regulatory relief to the new regime provided for by the New Bill.
Footnotes
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The New Bill contains two minor changes from the Previous Bill following industry submissions, namely: (i) the removal of s911H(3) which had expressly provided that assistance to ASIC may include the FFSP showing ASIC its books or giving ASIC a copy of its books; and (ii) FFSPs relying on the professional investor exemption do not have to agree to the jurisdiction of the Australian courts and laws for any proceedings brought by ASIC or another Commonwealth body.
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See s911A(2E) of the Corporations Act as inserted notionally by regulation 7.6.02AG of the Corporations Regulations. The Explanatory Memorandum indicates that the proposed new professional investor exemption would 'replace' this exemption. We expect that upon the passage of the New Bill, regulation 7.6.02AG will be amended to remove the notional s911A(2E).
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An FFSP that has failed to comply with a condition of the relevant exemption is required to notify ASIC within 30 business days, regardless of significance. However, we note that a number of submissions made to the Senate Standing Committees on Economics have recommended including a ‘materiality threshold’ such that the FFSP is only required to notify ASIC of significant breaches.
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The New Bill adopts the process for appointing a local agent as set out in Part 5B.2 of the Corporations Act. However, this Part of the Corporations Act deals with the registration of foreign companies, and the provisions related to the local agent appointment are set out in a context where an FFSP intends to lodge a foreign company registration application. It is unclear, on the face of the New Bill, whether all FFSPs will need to register as a foreign company (even if they are not carrying on a business in Australia) to rely on the comparable regulator exemption. We expect to see further clarity in the text of the New Bill or from ASIC during the 12-month transition period, if the New Bill is passed.
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A list of signatories can be found here.
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FFSPs granted a foreign AFSL will be able to continue to operate their financial services business in Australia under the licence issued by ASIC. The relevant ASIC instrument, ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198 has a sunset date of 1 April 2030.