Key takeaways
The Act provides three new AFSL exemptions for FFSPs, being the comparable regulator exemption, the professional investor exemption and the market maker exemption, as well as a fast-tracking process to bypass the fit and proper person test for eligible FFSPs who service only wholesale clients.
The new Act commences on 9 April 2027, with the existing ASIC ‘sufficient equivalence’ relief and ‘limited connection’ transitional ASIC relief set to expire on 31 March 2027.
FFSPs should assess now which exemption (if any) applies to their business and prepare their ASIC notifications and compliance arrangements ahead of commencement.
Earlier this year, the Federal Parliament passed the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Act 2026 (Cth) (the Act), which will take effect from 9 April 2027. The Act introduces a new statutory framework for Foreign Financial Service Providers (FFSPs) providing or seeking to provide financial services in Australia without holding an Australian Financial Services Licence (AFSL), replacing more than two decades of Australian Securities and Investments Commission (ASIC) transitional relief.
The Act provides three new AFSL exemptions for FFSPs, being the comparable regulator exemption, the professional investor exemption and the market maker exemption, as well as a fast-tracking process to bypass the fit and proper person test for eligible FFSPs who service only wholesale clients. The objective of these exemptions is to allow Australian professional and wholesale investors to diversify their investment opportunities by reducing barriers to entry for FFSPs in Australian financial markets. This is intended to provide Australian investors with access to global financial markets and attract additional investment and liquidity into Australian financial markets.
What does the legislation say?
In accordance with subsection 911A(1) of the Corporations Act 2001 (Cth) (Corporations Act), a person who carries on a financial services business in Australia must hold an AFSL covering the provision of the financial services. Unless exempt, the delivery of a financial service in Australia without an AFSL is a contravention of a civil penalty provision under subsection 911A(5B) of the Corporations Act. Previously, FFSPs could rely on ASIC relief including the ‘sufficient equivalence’ relief and ‘limited connection’ relief, for the provision of financial services to wholesale clients.
The exemptions: When FFSP's can provide financial services without an AFSL
Conditions of the exemptions
An FFSP that seeks to rely on the professional investor exemption, the comparable regulator exemption or the market maker exemption will be required to comply with specific conditions.1 Contravention of a condition may lead to a partial or complete cancellation of an exemption. The conditions for each exemption are:
| Condition | Professional investor | Comparable regulator | Market maker |
|---|---|---|---|
| Giving ASIC such assistance as ASIC reasonably requests in relation to the performance of ASIC’s functions or the exercise of ASIC’s powers | Yes | Yes | Yes |
| Submitting to the non-exclusive jurisdiction of Australian courts for proceedings brought by ASIC | No | Yes | Yes |
| Comply with ASIC directions | Yes | Yes | Yes |
| Give notice of which exemption is relied upon to each recipient of a kind of financial service | Yes | Yes | No |
| Notify ASIC of changes to contact details | Yes | Yes | Yes |
| Ensure that financial services are provided efficiently, honestly and fairly | Yes | Yes | Yes |
| Notify ASIC during the notification period (within 15 business days before or after the service is first provided) that they intend to rely upon the exemption | Yes | Yes | Yes |
| Consent to information sharing between ASIC and any comparable regulator | No | Yes | No |
| Notify ASIC of significant overseas enforcement action | No | Yes | No |
| Maintain an Australian agent | No | Yes | No |
| Notify ASIC of any contravention of a condition for the exemption | Yes | Yes | Yes |
What does this mean for FFSPs who are currently relying on individual or transitional ASIC relief?
The transitional relief was most recently extended by ASIC to expire on 31 March 2027. ASIC is expected to release further guidance on the new regime over the coming months, including whether it will extend its relief through to 8 April 2027 to bridge the gap between the expiry of existing ASIC individual or transitional relief and the commencement of the Act. Until the commencement of the Act, we suggest that FFSPs providing, or intending to provide financial services, in Australia should consider:
- seeking legal advice to determine whether they are able to rely on any of the new exemptions; and
- aligning their compliance obligations with the specific exemption they plan to rely on, and preparing their ASIC notification and any supporting material well in advance of the Act taking effect; or
- applying for a standard or foreign AFSL where no alternative licensing exemption is available.
What does this mean for your business?
FFSPs that currently operate in the Australian market, or wish to do so, should consider whether any of the new AFSL exemptions may be appropriate for their business. This includes FFSPs that:
- currently rely on individual or transitional relief, such as the limited connection relief, which is set to expire on 31 March 2027; or
- are currently applying for, or already hold, a foreign AFSL.
FFSPs intending to rely on the new AFSL exemptions should also be aware of other regulatory considerations. In particular, an FFSP that is carrying on business in Australia will need to register with ASIC as a foreign company. Providing financial services in Australia may also give rise to obligations under other regimes, including tax laws, modern slavery laws, Anti-Money Laundering and Counter-Terrorism Financing laws and privacy laws.
Please contact us if you would like to discuss how these changes may affect your business or how to prepare for the changes.
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1 Sections 911G to section 911Q of the Act.