Are we there yet? ASIC consultation on transition and implementation of FFSP licensing exemptions

What you need to know

• On 6 November 2026, ASIC released Consultation CS 68, to support the transition to the new statutory exemptions for foreign financial services providers (FFSP), which commence on 8 April 2027.
• To facilitate transition, ASIC proposes to extend the existing sufficient equivalence and limited connection relief by six months, so that the relief would end on 30 September 2027 (rather than 31 March 2027 as currently scheduled).
• ASIC proposes new conditional class relief so that FFSP's relying on the professional investor exemption can use Australian-based individuals to support "follow the sun" global operating models when servicing institutional investors.
• ASIC proposes to remove the "Foreign AFSL" regime, which was previously introduced to encourage FFSP's to become licensed. The never-commenced specific funds management relief would be repealed altogether as such activities would now be covered by the professional investor exemption.

What you need to do

• If you rely on sufficient equivalence or limited connection relief, plan your transition to a new exemption (or to an AFSL) by 30 September 2027.
• If you hold a "Foreign AFSL", decide whether to keep the licence, or apply to cancel it and move to a statutory exemption. Repeal of the instrument will not automatically cancel the licence.
• If you operate a global trading or booking model with staff in Australia acting for or in connection with an FFSP's business, and wish to rely on the professional investor exemption, assess whether the proposed class relief would cover your model.
• If you planned to rely on the funds management relief, consider whether the professional investor exemption will cover your activities.
• Give feedback on the proposals by 4 December 2026.

Background

In April 2026, we provided an overview of the three new statutory licensing exemptions for FFSP's – the professional investor exemption, the comparable regulator exemption and the market maker exemption – in our article, Foreign Financial Service Providers – New legislative licensing exemptions – It's been a journey. Since then, there have been a lot of questions on ASIC's implementation of these regimes and the process to transition from the existing exemptions to these new ones. ASIC is now consulting on these matters through CS 68.

Extension of current exemptions

In our previous article, we noted that the existing ASIC exemptions – the sufficient equivalence exemption and limited connection exemption – were due to expire on 31 March 2027. As expected, it has been proposed that these be extended for a further six months, with a new expiry date of 30 September 2027. In effect, there would be an almost six-month overlap between the old and the new exemptions, providing a reasonable period for FFSP's to transition and to make relevant notifications to ASIC.

Transition process

ASIC has released an infographic on the notification process for relying on the new exemptions. It is envisaged that notifications will be made through the existing ASIC Regulatory Portal via a streamlined process. Only basic information on the FFSP is required, and ASIC has confirmed that no supporting documentation needs to be submitted. Therefore, while the comparable regulator exemption contemplates additional requirements for FFSP's to submit to jurisdiction and consent to regulators sharing information, it appears that the documentation previously submitted for the sufficient equivalence exemption is no longer required.

Revised draft Regulatory Guide 176

The draft RG 176 replaces the current guide. It explains the eligibility criteria and conditions for each exemption and the notifications FFSP's must give ASIC. ASIC has focused on the following points in its guidance (and we make some observations on them below):

• Comparable regulator exemption:
  • The FFSP is required to hold any authorisation, registration or licence administered by a comparable regulator that is necessary to legally provide the same or substantially the same financial service in a comparable jurisdiction.
  • The Minister, rather than ASIC, determines comparable regulators, and none has been determined to date.
  • When deciding whether an FFSP holds an appropriate foreign authorisation, ASIC will generally apply Australian definitions of financial services and products. An FFSP only needs a foreign authorisation if the comparable jurisdiction requires one for that service. If the service can lawfully be provided in the comparable jurisdiction without such authorisation, then none is needed to provide the service under the exemption.
• Professional investor exemption – marketing visits
  • ASIC confirms the position that the 28-day limit on marketing visits applies separately to each representative (i.e. individual employees) in each financial year. A day counts only if the representative has contact with a client on that day, and the days need not be consecutive.
  • To monitor compliance with the marketing visit limit, ASIC suggests keeping records of each representative's visits, including the clients met, the meeting dates, the financial services and products discussed during the visit, and other relevant matters.
  • It should be noted that while this exemption allows for potentially lengthy visits per year on an aggregated basis for an FFSP, you should be mindful of the test under general law regarding "carrying on business in Australia" which triggers the requirement to register as a foreign company and the application of other regulatory obligations.
• Efficiently, honestly and fairly
  • Each of the new exemptions is subject to the condition that the FFSP does all things necessary to ensure that financial services provided in reliance on the exemption are provided efficiently, honestly and fairly (EHF), but only where the relevant financial services business is "carried on predominantly in Australia". There has been a question as to how this condition applies in practice to an FFSP relying on the professional investor exemption, where a condition of that exemption is that the financial service is provided from a place outside Australia (except during marketing visits).
  • ASIC states that factors that may be relevant in assessing whether the financial services business is carried on predominantly in Australia include (but are not limited to) the proportion of clients in Australia, the proportion of financial services revenue derived in Australia and the location of business operations.
  • ASIC gives breach of a fiduciary duty, or of a significant obligation under foreign law, as examples of conduct that may fail the EHF standard.
• Notifying ASIC of significant foreign enforcement actions
  • FFSP's relying on the comparable regulator exemption must notify ASIC of significant enforcement actions, disciplinary actions and investigations in any jurisdiction outside Australia. Notice is due as soon as practicable, and in any event within 15 business days of the FFSP becoming aware (or when it would reasonably be expected to have become aware). ASIC expects notice at each stage of a matter, and suggests FFSP's should not wait for a finding or outcome.
  • ASIC lists factors relevant to whether a matter is "significant", including:
    • the number and frequency of breaches;
    • whether clients have suffered material loss; and
    • the size of any penalty.
  • If in doubt, ASIC encourages notification. Contraventions of any exemption condition must be notified within 30 business days.
• Appointment of an agent
  • Relying on the comparable regulator exemption requires appointment of a local agent. The Australian agent must be authorised to accept service of process and notices, and the scope of the appointment must not be unduly restricted.
  • ASIC has clarified that relying on the exemption does not, of itself, require registration as a foreign company if the FFSP does not otherwise carry on business in Australia.
• Consequences of breach of a condition
  • If an FFSP breaches a condition, ASIC may seek civil penalties. After a hearing, it may also cancel the exemption or impose additional conditions, such as limits on products or services, stronger disclosure obligations or regular reporting.
  • ASIC may also cancel an exemption if it reasonably believes that the FFSP is not a fit and proper person, having regard to whether the FFSP has:
    • had any licence or authorisation suspended or cancelled;
    • been banned or disqualified by a competent authority in any jurisdiction from providing financial services;
    • been disqualified by a competent authority in any jurisdiction from managing a corporation;
    • refused or failed to give effect to a determination made under a mandatory dispute resolution scheme in any jurisdiction; or
    • been convicted of an offence in the last 10 years.

Repeal of Foreign AFSL and funds management relief

The "Foreign AFSL" was introduced in 2020 under ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198, which was intended to facilitate FFSP's obtaining an AFSL at a time when the current exemptions were expected to be repealed without replacement. Given the introduction of the new exemptions, ASIC proposes to remove this Foreign AFSL framework. It has clarified that the repeal will not automatically cancel a Foreign AFSL, and if a Foreign AFSL holder keeps its licence rather than relying on a new exemption, it must comply with the AFSL obligations required under paragraph 11A of Pro Forma 209.

Further, ASIC also introduced a specific funds management relief under ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199, similarly at a time when the current exemptions were expected to be repealed without replacement. 

ASIC now proposes to repeal that instrument when the amendment instrument commences, on the basis that the professional investor exemption replaces it. Foreign fund managers that were expecting to rely on this relief should reassess their position.

Class relief for professional investor exemption 

As discussed above, a condition of the professional investor exemption is that the FFSP provides financial services from outside Australia except during marketing visits (subject to the applicable limit). Through industry engagement, ASIC has proposed conditional class relief which would allow individuals in Australia to support an FFSP’s provision of financial services. This would assist with facilitating integrated global operating models that transfer trading, risk management and operational functions between offices in different time zones.

The proposed class relief would allow an Australian-based representative to provide services to institutional investors where:

• the FFSP carries on its financial services business predominantly from outside Australia;
• the service is provided from Australia by an individual representative for reasons arising from differences in time zones;
• considered as a whole and taking into account their relative significance, the service and related services are predominantly provided from outside Australia (relevant factors in deciding whether a service is predominantly provided offshore include where responsibility, decision-making, execution, booking, risk ownership and supervision sit);
• a related body corporate holds an AFSL covering the service and is responsible and liable for the Australian-based representative's provision of it; and
• the FFSP does all things necessary to ensure that the service is provided efficiently, honestly and fairly.

It is proposed that the relief would not be available where:

• the service relates to a financial product traded on a designated financial market or to an investment located in Australia;
• revenue and expenses are booked to the profit or loss account of a person in Australia; or
• substantive responsibility for, or supervision of, the service occurs in Australia.

In this context, "institutional investor" means a professional investor other than a person covered by paragraph (e) of the definition (the "$10 million" category). The relief would also require the FFSP to notify ASIC separately of its reliance on it.

The relief is proposed to last five years, and the draft instrument would be repealed at the start of 1 April 2032.

It should be noted that the draft instrument also refers to the related licensee entering into a deed poll in favour of institutional investors, but the operative provisions do not appear to contain this requirement. We will seek to clarify this with ASIC as part of our continuing engagement on behalf of industry, along with other comments and feedback on the practicality and appropriateness of some of these conditions.

Please get in touch if you would like to discuss any aspect of this consultation package.

Want to know more?

• Foreign Financial Service Providers – New legislative licensing exemptions – It's been a journey

Authors: Jonathan Gordon, Partner; Corey McHattan, Partner and Nicky Thiyavutikan, Senior Associate.