ASIC extends transitional relief and announces new licensing exemption regime for FFSPs
On 5 December 2025, the Australian Securities and Investments Commission (ASIC) announced it is extending transitional relief exempting foreign financial service providers (FFSPs) from the requirement to hold an Australian financial services (AFS) licence when providing financial services to Australian wholesale clients. The move aims to give FFSPs flexibility while new regulatory changes are being considered.
ASIC’s sufficient equivalence relief and limited connection relief were due to expire on 31 March 2026. The extension means the transitional relief will remain in place until 31 March 2027.
On 26 November 2025, the Australian Government introduced legislation for a new licensing exemption regime for FFSPs under the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025 (Bill). The new regime is due to commence 12 months after the Bill receives Royal Assent.
FFSPs that have been granted a foreign AFS licence can continue to operate their financial services business in Australia under the licence issued by ASIC.
Background
FFSPs providing financial services to Australian wholesale clients have historically been entitled to relief from the requirement to hold an AFS licence in certain circumstances, including where their financial services business has a ‘limited connection’ to Australia or where the FFSP is regulated in an overseas jurisdiction ASIC considers is ‘sufficiently equivalent’ to Australia’s AFS licensing framework.
However, for some time, there has been uncertainty surrounding Australia’s AFS licensing exemption and relief framework for FFSPs, with various reforms having been proposed but not receiving Royal Assent due to a variety of market factors.
ASIC’s latest announcement seeks to provide some stability to the regulation of FFSPs.
See our summary below of the key things you need to know.
Extended relief instruments
ASIC Corporations (Foreign Financial Services Providers) Instrument 2025/798 remakes the relief previously provided under ASIC Corporations (Repeal and Transitional) Instrument 2016/396 (Instrument 2016/396), which provided transitional relief for FFSPs seeking to rely on their regulation by a ‘sufficiently equivalent’ international regulator to ASIC. As a result, FFSPs currently relying on an individual relief instrument, where the expiry is linked to Instrument 2016/396, can continue to rely on that relief until 31 March 2027.
In addition, ASIC Corporations (Amendment) Instrument 2025/799 extends the relief contained in the following instruments:
ASIC Corporations (CSSF-Regulated Financial Services Providers) Instrument 2016/1109; and
ASIC Corporations (Foreign Financial Services Providers—Limited Connection) Instrument 2017/182,
being the ‘limited connection’ relief instrument and the ‘sufficient equivalence’ relief instrument for FFSPs regulated by the Commission de Surveillance du Secteur Financier (the Commission for the Supervision of the Financial Sector) of Luxembourg.
New licensing exemption regime for FFSPs
The relief instruments ASIC has extended are set to expire on 31 March 2027. In addition, ASIC has proposed a new licensing exemption for FFSPs under the Bill, due to commence 12 months after the Bill receives Royal Assent.
Schedule 2 of the Bill (titled ‘Licensing exemptions for foreign financial services providers’) is intended to replace the transitional arrangements ASIC currently has in place.
The Bill proposes to amend the Corporations Act 2001 (Cth) by adding:
a new defined term ‘comparable regulator’, which will be defined broadly as the regulator administering certain authorisations, registrations, or licences that are necessary to provide the same or substantially the same financial service in a place outside Australia (which will be known as the ‘comparable jurisdiction’);
an AFS licensing exemption for FFSPs that provide financial services only to professional investors and provide those services from a place outside Australia (with their head office located outside Australia);
an AFS licensing exemption for FFSPs that provide financial services only to wholesale clients, are a foreign company, and have the requisite authorisations, registrations or licences to provide the relevant financial services under the comparable regulation; and
the power for the Minister to determine regulators that administer broadly comparable regulatory regimes of authorisations, registrations, or licences necessary to provide financial services in places outside Australia.
The Bill also introduces a range of governance and regulatory provisions that are expected to enhance the strength and clarity of Australia’s framework for regulating FFSPs.
What's next
It should be emphasised that the Bill has yet to be passed and may ultimately not receive Royal Assent. Reform of the FFSP licensing regime over the past decade has been slow, with many other previously proposed amendments failing to pass through parliament.
However, following ASIC’s announcement, it finally appears the regulation of FFSPs may gain some certainty.
Importantly, the sweeping nature of the reforms means FFSPs that wish to provide financial services in Australia, even if they are currently exempt from the requirement to hold an AFS licence, will need to take action to comply with these imminent reforms if passed.
We encourage all FFSPs and stakeholders to closely monitor the changes in the regulatory landscape. To discuss how these reforms might affect your business and ensure your organisation remains ahead of the curve please reach out to our investment funds team.
This article was prepared with the assistance of Will Higgins, Seasonal Clerk.
