New AFS licensing exemption regime for FFSPs commences 2027

Insights21 May 2026

By Harry New, Aash Velhal and Annabelle Duke

After protracted reform attempts, the Australian government has ushered in a new Australian financial services (AFS) licensing exemption regime for foreign financial service providers (FFSPs). These significant changes aim to largely centralise the AFS licensing exemption framework for FFSPs while providing greater certainty and stability, following years of shifting policies and repeated extensions of transitional relief.

The new regime will be introduced by the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Act 2026, which was passed by both houses of parliament on 1 April 2026 and received royal assent on 8 April 2026, with the new regime scheduled to commence on 9 April 2027.

We highlight the key features of the new regime, how the new regime came to be introduced and what it means for financial services industry participants.

Background

FFSPs have historically relied on transitional relief granted by the Australian Securities and Investments Commission ( ASIC ), exempting them from the requirement to hold an AFS licence when providing financial services to Australian clients in certain circumstances.

Currently, the two main exemptions from the requirement to obtain and hold an AFS licence available to FFSPs have been:

sufficient equivalence relief - which applies where an FFSP is regulated in an overseas jurisdiction considered ‘sufficiently equivalent’ to Australia’s regulatory framework ^[1] ;and
limited connection relief - which applies where an FFSP is only deemed to be carrying on a financial services business in Australia because it engages in ‘inducing’ conduct from outside Australia. ^[2]

The instruments containing these transitional exemptions have been repeatedly extended by ASIC while various reform proposals seeking to streamline and consolidate the regulation of FFSPs failed to pass through parliament for various reasons.

For more information about the background to the licensing exemption regime for FFSPs, see our recent article ‘ASIC extends transitional relief and announces new licensing exemption regime for FFSPs.’

New FFSP exemption regime overview

The new licensing exemption regime for FFSPs will amend the Corporations Act 2001 (Cth) by introducing new exemptions that centralise and overhaul the existing transitional arrangements which are set to expire on 31 March 2027.

The table below summarises the new exemptions that will be available to FFSPs under the new regime:

Exemption	An FFSP will be exempt from the requirement to hold an AFS licence for a financial service provided in the following circumstances:
Comparable jurisdiction ^[3] (intended to, broadly, replace the ‘sufficient equivalence relief’)	The FFSP: is a foreign company or partnership formed outside of Australia; provides the financial services to wholesale clients only; and maintains authorisations within a ‘comparable jurisdiction’ outside of Australia which are administered by a ‘comparable regulator’* and legally necessary to provide substantially the same financial services it intends to provide in Australia. *Comparable regulators will be determined by the Minister via legislative instrument. We would expect comparable regulators to be those ASIC has historically assessed as ‘sufficiently equivalent’, including the SFC in Hong Kong, SEC in the US, MAS in Singapore and the United Kingdom regulated financial service providers broadly.
Professional investors ^[4]	The FFSP: provides the financial services to ‘professional investors’ (as that term is defined in the Corporations Act, and includes, for example, persons controlling greater than $10m in assets) only; provides the financial services to Australians from a place outside of Australia (with the exception of limited ‘marketing visits’ not exceeding 28 days in any given financial year): has their head office and principal place of business located outside Australia; and reasonably believes that providing substantially the same financial services would not contravene any law in the overseas jurisdictions from which it operates or has a head office or principal place of business. This exemption would apply more broadly to FFSPs operating out of jurisdictions that would not be covered by the ‘comparable jurisdiction exemption’ but investors are limited to professional investors rather than wholesale clients more generally.
Making a market for derivatives ^[5]	The FFSP: is only seeking to provide financial services involved in making a market for derivatives to be traded on a ‘licensed market’; provides the financial services to Australians from a place outside of Australia; has their head office and principal place of business located outside Australia; and reasonably believes that providing substantially the same financial services would not contravene any law in the overseas jurisdictions from which it operates or has a head office or principal place of business.

Exemption

An FFSP will be exempt from the requirement to hold an AFS licence for a financial service provided in the following circumstances:

Comparable jurisdiction ^[3] (intended to, broadly, replace the ‘sufficient equivalence relief’)

The FFSP:

is a foreign company or partnership formed outside of Australia;
provides the financial services to wholesale clients only; and
maintains authorisations within a ‘comparable jurisdiction’ outside of Australia which are administered by a ‘comparable regulator’* and legally necessary to provide substantially the same financial services it intends to provide in Australia.

*Comparable regulators will be determined by the Minister via legislative instrument. We would expect comparable regulators to be those ASIC has historically assessed as ‘sufficiently equivalent’, including the SFC in Hong Kong, SEC in the US, MAS in Singapore and the United Kingdom regulated financial service providers broadly.

Professional investors ^[4]

The FFSP:

provides the financial services to ‘professional investors’ (as that term is defined in the Corporations Act, and includes, for example, persons controlling greater than $10m in assets) only;
provides the financial services to Australians from a place outside of Australia (with the exception of limited ‘marketing visits’ not exceeding 28 days in any given financial year):
has their head office and principal place of business located outside Australia; and
reasonably believes that providing substantially the same financial services would not contravene any law in the overseas jurisdictions from which it operates or has a head office or principal place of business.

This exemption would apply more broadly to FFSPs operating out of jurisdictions that would not be covered by the ‘comparable jurisdiction exemption’ but investors are limited to professional investors rather than wholesale clients more generally.

Making a market for derivatives ^[5]

The FFSP:

is only seeking to provide financial services involved in making a market for derivatives to be traded on a ‘licensed market’;
provides the financial services to Australians from a place outside of Australia;
has their head office and principal place of business located outside Australia; and
reasonably believes that providing substantially the same financial services would not contravene any law in the overseas jurisdictions from which it operates or has a head office or principal place of business.

To rely on any of the exemptions listed above, an FFSP will have to provide ASIC with written notice of its intention to rely on an exemption within 15 business days before or after the first day it starts providing the relevant financial service.

FFSPs will also be subject to a range of conditions in order to rely on the new exemptions, contraventions of which will require the FFSP to notify ASIC. While not all conditions apply to each exemption, examples including requiring the FFSP to:

do all things necessary to provide financial services efficiently, honestly and fairly;
comply with written directions and reasonable requests for assistance from ASIC;
submit to the non-exclusive jurisdiction of Australian courts for proceedings brought by ASIC;
where the recipient of their financial services is a professional investor or wholesale client, provide written notice to those recipients explaining their exemption from the AFS regime;
notify ASIC of contact detail changes, investigations undertaken against them outside Australia; and
consent to information sharing between ASIC and any comparable regulator.

The modified Corporations Act also sets out ASIC’s powers which can be exercised when an FFSP contravenes a condition of an exemption on which it relies, including the power to cancel the exemption or impose additional conditions.

Funds management relief

The final form of relief which may be available to FFSPs from 1 April 2027 is the funds management relief.

This relief sits outside the Act and is instead contained in ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199 (Funds Management Relief Instrument), which is set to commence on 1 April 2027.

This relief will largely mirror the limited connection relief, except that the former will apply only in the context of ‘funds management financial services’ (being a new concept introduced by the Funds Management Relief Instrument) while the latter applies to all financial services.

At a high level, funds management financial services include, among other things, providing funds management services in respect of offshore financial product’s or portfolio management services in respect of certain financial products, to eligible Australian users (which includes the responsible entity of a registered scheme and the trustee of a superannuation fund where the fund has net assets of at least $10 million but does not cover all wholesale clients).

To view the list of the types of financial services captured under this concept, please refer to the Funds Management Relief Instrument.

What this means for you

The new FFSP licensing exemption framework provides long-awaited certainty for FFSPs looking to provide financial services in Australia without having to themselves maintain or otherwise be authorised under an AFS licence.

While the transitional relief will remain in place until 31 March 2027, FFSPs should start considering how the reforms affect their business and whether they will satisfy the criteria to rely on the reformed AFS licensing exemptions.

It is important to stay informed about these changes and prepare for any adjustments that may impact your compliance or business operations. To discuss how these reforms impact your business, your ability to rely on the new exemptions, and any related compliance obligations, please reach out to a member of our HW Funds team.

[1] Information Sheet - 157 Foreign financial services providers: Licensing relief provides details as to each of the instruments under which this relief was historically provided, and outlines the process by which ‘new’ FFSP’s can apply for such relief on an individual basis.
[2] ASIC Corporations (Foreign Financial Services Providers-Limited Connection) Instrument 2017/182.
[3] Item 3, Schedule 2 of the Act.
[4]Item 3, Schedule 2 of the Act.
[5] Item 3, Schedule 2 of the Act.

Contact