A very brief history
The commencement of the Financial Services Reform Act 2001 (Cth) on 10 March 2004 saw a very broad provision introduced into the Australian Corporations Act that deemed a person to carry on a financial services business in Australia if they engaged in conduct intended to induce people in Australia to use the financial services they provided, regardless of where else their conduct had an impact. That deeming provision was so broad that it in effect deemed most foreign financial service providers (FFSPs) with clients in Australia to be within the territorial reach of the AFSL regime, therefore needing to either hold an Australian financial services licence (AFSL) or be covered by a exemption. In the lead up to 10 March 2004, this firm worked with large foreign participants and the Australian Securities and Investments Commission (ASIC) to develop a series of ASIC class order instruments to exempt certain FFSPs from holding an AFSL – which became known as the “sufficient equivalence relief”. ASIC also issued relief known as the “limited connection relief”, which applied in a narrow range of circumstances. That relief became subject to sunsetting.
Approximately 10 years ago, ASIC changed its policy for FFSPs and decided not to renew the limited connection relief or sufficient equivalence relief. However, that change was put on hold and the relief was repeatedly extended on a temporary basis pending the outcome of proposals to be developed by the Federal Government.
10 years later the Australian Federal Parliament passed, on 1 April 2026, the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2026 (the Bill). Schedule 2 to the Bill introduces a new statutory framework for FFSPs seeking to provide financial services in Australia without holding an AFSL.
The passage of the Bill is very welcome news. It marks the end of a prolonged period of regulatory uncertainty for offshore banks, broker-dealers, asset managers, private equity funds, hedge funds, venture capital funds and other FFSPs already providing, or considering providing, financial services in Australia.
The stated objective of the new statutory framework is to provide Australian investors with access to global financial markets and attract additional investment and liquidity into Australian financial markets. The Bill seeks to achieve this objective by amending the Corporations Act to provide three new AFSL exemptions for FFSPs. Details of these new exemptions are set out below.
The Bill will commence 12 months from the date it receives Royal Assent. As at the date of this article, the Bill has not yet received Royal Assent.
Fundamental change to the law for FFSPs servicing Australian clients
The passing of the Bill will have very important impacts on FFSPs.
The limited connection relief and sufficient equivalence relief will no longer be available to FFSPs once they finally expire.[1]
The existing professional investor exemption is proposed to be repealed.[2]
Many FFSPs that previously were not required to notify ASIC in order to be exempt from holding an AFSL and to provide financial services to Australian clients will now need to notify.
As a consequence of the new statutory framework, ASIC will have far more information as to the identify of FFSPs relying on an exemption from holding an AFSL.
FFSPs that service the Australian market, or wish to do so, should assess if one or more of the new exemptions from holding an AFSL will be suitable for their activities. This includes FFSPs that:
- currently rely on the limited connection relief, which will expire on 31 March 2027 and will not be replaced (no transitional or grandfathering relief is currently proposed);
- currently rely on an expiring sufficient equivalence Class Order or individual relief;
- currently rely on the existing professional investor exemption for financial services relating to FX, derivatives or carbon credits; or
- are in the course of applying for, or have been granted, a foreign AFSL.
It is expected that ASIC will release information on transitional arrangements, including details setting out the process, associated timing and materials required to notify ASIC of an FFSPs reliance on the new AFSL exemptions.
Further details are set out below.
New AFSL exemptions for FFSPs
A) Professional investor exemption
Unlike the existing professional investor exemption, the new professional investor exemption will not be restricted to certain financial services or financial products unless regulations are introduced to do so.
The new professional investor exemption will be available where:
- the financial service is provided only to professional investors;
- the FFSP provides the financial service from a place outside Australia (subject to permitted marketing visits, see below);
- the FFSP’s head office and principal place of business are located at one or more places outside Australia; and
- the FFSP reasonably believes that providing the same or substantially the same financial service does not contravene any law applying in the places where its head office and principal place of business are located, or the place from which the financial service is provided.
The exemption permits limited marketing visits by representatives of the FFSP to Australia. A 28-day limit applies on a per representative basis in each financial year. This day limit only counts days on which the representative spends time with clients or prospective clients in relation to any financial service.
There are no specific limitations in the Bill or its Explanatory Memorandum on the nature or purpose of a “marketing visit”.
The concept of “professional investor” applies the existing Corporations Act definition, which includes, among others, AFSL holders, APRA-regulated bodies, trustees of large superannuation funds, listed entities and persons controlling at least $10 million. Because the exemption only covers financial services provided to professional investors, FFSPs wishing to service broader categories of wholesale clients will need to implement the comparable regulator exemption or another exemption, or apply for an AFSL.
B) Comparable regulator exemption
The comparable regulator exemption will be available where:
- the FFSP is a foreign company or partnership formed outside of Australia;
- the financial service is provided only to wholesale clients;
- the FFSP has and maintains any authorisations, registrations or licences (however described) necessary to legally provide the same or substantially the same financial service in a place outside of Australia (comparable jurisdiction); and
- the regulator administering those authorisations, registrations or licences for the comparable jurisdiction has been approved as a “comparable regulator” by the Minister.
This exemption will replace the existing sufficient equivalence relief. Subject to the Minister’s decision, it is expected that initially the approved regulators will be the same as those currently approved under the eligibility criteria for a foreign AFSL (which reflect the approved sufficient equivalence relief regulators).
Although it is not expressly stated in the text of the Bill, the Explanatory Memorandum states that a financial service may be provided from within Australia, the jurisdiction of the comparable regulator or from another jurisdiction in which the comparable regulator is able to regulate the FFSP. This has important implications for FFSPs that operate branches in multiple jurisdictions. It may require an FFSP to implement the exemption for multiple comparable regulators.
For eligible FFSPs, the compliance overlay is more substantial than under the new professional investor exemption. In addition to the core conditions that apply more generally, an FFSP relying on this exemption must submit to the non-exclusive jurisdiction of Australian courts for proceedings brought by ASIC or another Commonwealth authority, consent to information sharing between ASIC and each comparable regulator, notify ASIC of significant enforcement action, disciplinary action or investigations in other jurisdictions, and maintain an Australian agent.
The requirement to hold a foreign licence, authorisation or registration may represent a challenge for some foreign investment fund structures, where the manager of the fund may be licensed but the fund vehicle itself is not.
C) Market maker exemption
The market maker exemption provides an exemption from the requirement to hold an AFSL for an FFSP making a market in derivatives that are able to be traded on prescribed licensed financial markets. The eligibility settings are narrow and activity-specific.
An FFSP will be able to rely on this exemption where:
- the financial service involves making a market for derivatives that are able to be traded on a prescribed licensed market (to be prescribed by regulations made for the purposes of this condition);
- the financial services are provided from outside Australia;
- the FFSP’s head office and principal place of business are located at one or more places outside Australia; and
- the FFSP reasonably believes that providing the same or substantially the same financial service does not contravene any law applying in the places where its head office and principal place of business are located, or the place from which the financial service is provided.
Similar to the comparable regulator exemption, an FFSP relying on this exemption must submit to the non-exclusive jurisdiction of Australian courts for ASIC or Commonwealth proceedings. Unlike the comparable regulator exemption, the market maker exemption does not carry the additional information-sharing, foreign investigation reporting or Australian agent requirements.
D) Other exemption conditions
In addition to the conditions we have specifically called out above, an FFSP that relies on the professional investor exemption, the comparable regulator exemption, or the market maker exemption will be required to comply with certain other conditions. These conditions and their application under each of the AFSL exemptions is set out in the table below.
These relief instruments are currently due to expire on 31 March 2027, unless further extended by ASIC for FFSPs to transition to the new regime.
911A(2E) of the Corporations Act (as inserted by regulation 7.6.02AG of the Corporations Regulations). It is not known when the existing professional investor exemption will be repealed. If the existing professional investor exemption is repealed, FFSPs currently relying on it (eg for derivatives, FX or carbon credits) will need to identify and implement another AFSL exemption, for example the new professional investor exemption.
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Condition
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Professional investor exemption
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Market maker exemption
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Comparable regulator exemption
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Notify ASIC during the notification period[3] that they intend to rely on the exemption The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
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Give ASIC reasonable assistance in relation to the performance and exercise of ASIC’s functions and powers. The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
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Notify ASIC that the person agrees:
The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Does not apply The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
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Comply with a direction given by ASIC to provide information about the person’s provision of financial services, or relevant financial service business The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Does not apply The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
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Give each recipient of a financial service a notice, which states that:
The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Does not apply The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
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Notify ASIC of any changes to the person’s contact details as soon as practicable after the change happens The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
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Do all things necessary to ensure that financial services that are provided predominantly inside this jurisdiction are provided efficiently, honestly, and fairly[4] The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
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Notify ASIC of any significant enforcement action, disciplinary action or investigation undertaken against the person by a regulator, government authority, or relevant financial market operator in any place outside Australia. The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Does not apply The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Does not apply The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
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Have an agent in Australia The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Does not apply The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Does not apply The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
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If a FFSP contravenes a condition for relying on the relevant exemption, the FFSP must provide ASIC with full particulars of the contravention as soon as practicable and otherwise before the 30th business day after the day on which the FFSP became aware or would reasonably be expected to have become aware, of the contravention The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Applies The notification period is the period:
This notice requirement will also apply to FFSPs that are currently relying on relief that can apply automatically but will expire (the limited connection relief) or will be repealed (the existing professional investor exemption). FFSPs who have previously given ASIC notice of their reliance on existing relief (eg the sufficient equivalence relief) will also need to notify. It is expected that ASIC will release guidance on how this notification must be provided and what materials will need to be submitted to ASIC with the notification. Certain limited exceptions apply to this condition. The Bill also provides for regulations to be made prescribing any other circumstance where the efficiently, honestly, and fairly condition may not apply. |
Some of these conditions are significant, particularly the efficient, honest and fair obligation and the additional obligations that will apply to FFSPs relying on the comparable regulator exemption. Further, unlike the reportable situation regime which AFSL holders are subject to under the Corporations Act, there is no materiality threshold applicable to the obligation to notify ASIC of contraventions of a relevant exemption.
FFSPs should implement a documented compliance process to meet these conditions, particularly to ensure that the FFSP is able to notify ASIC of any breach of conditions within the required timeframe. Contravention of any of the conditions may cause ASIC to cancel the FFSP’s reliance on an exemption or cause the FFSP to be liable for a civil penalty or other regulatory action by ASIC.
FFSPs seeking to rely on the new AFSL exemptions will also need to consider other regulatory issues. For example, FFSPs should be mindful that if they are carrying on business in Australia, they will be required to be registered with ASIC as a foreign company. Providing financial services in Australia may also trigger obligations under other laws, such as tax laws, modern slavery laws, AML/CTF laws and privacy laws.
Fit and proper person test exemption for FFSPs that apply for an AFSL or apply to vary an AFSL
The Bill also introduces a fit and proper person test exemption for certain offshore applicants seeking an AFSL or seeking to impose, vary or revoke conditions on an existing AFSL. This is not an exemption from the obligation to hold an AFSL where one is otherwise required. Rather, it removes one element of ASIC’s licensing assessment for qualifying applicants, namely the requirement to satisfy the fit and proper person test, while leaving the balance of the AFSL application framework in place. The requirement imposed a significant practical hurdle for some FFSPs applying for or varying an AFSL, as a result of the people proofs it required.
The exemption is available where the applicant is a foreign company or partnership formed outside Australia, the licence sought would be limited to the provision of financial services to wholesale clients, and the applicant holds the necessary overseas authorisations, registrations or licences issued by a Minister determined comparable regulator for the same or substantially the same services.
The fit and proper person test exemption will likewise apply only to AFSL and AFSL variations made on or after commencement, with pre-commencement applications continuing to be assessed under the existing rules.
Other points to note – Funds Management Relief
Separate to the AFSL exemptions provided in the Bill, the funds management relief under the ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199 is scheduled to commence on 1 April 2027. The Funds Management Relief will exempt a person carrying on a financial services business in Australia from the requirement to hold an AFSL only because of the operation of section 911D of the Corporations Act (ie the expanded jurisdictional test relating to “inducing” persons in Australia to use the FFSP’s financial services) in relation to certain funds management services provided to ‘eligible Australian users’.[5]
To rely on this exemption, an eligible FFSP must provide written confirmation to ASIC that it has satisfied the relevant requirements for the relief and that it intends to rely on the relief. The Funds Management Relief is subject to a number of material limitations in scope and technical limitations. It is not a like for like replacement of the limited connection relief.
The funds management financial services must only be provided to “eligible Australian users”. This is defined as a limited sub-set of the wholesale client categories under the Corporations Act aimed at professional investors and is more limited than the wholesale client categories currently applicable under the limited connection relief. Notably it does not include wholesale client categories aimed at high-net worth individuals, family offices or local government councils.
