Certainty at last: New AFSL exemptions passed for foreign financial services providers

On 1 April 2026, the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2026 (Bill) was passed by both houses of parliament. The Bill introduces a legislative framework for exemptions from the requirement to hold an Australian financial services licence (AFSL) for foreign financial services providers (FFSPs).

Under section 911A of the Corporations Act 2001 (Cth) (Corporations Act), a person that carries on a financial services business in Australia must hold an AFSL unless an exemption applies. Importantly, a person may be taken to carry on a financial services business in Australia even where the relevant services are provided from offshore, including where the person engages in conduct intended to induce persons in Australia to use those services. As a result, FFSPs may be subject to the Australian licensing regime even where they do not have a physical presence in Australia.

Since 2003, ASIC has provided licensing relief to certain FFSPs, primarily where services are provided to wholesale clients. This has included sufficient equivalence relief for providers regulated in comparable jurisdictions and limited connection relief for offshore providers.

Overview of new exemptions

The Bill inserts three new exemptions into section 911A(2) of the Corporations Act, each of which is available where specified criteria are met and ASIC is notified.

Professional investor exemption

This exemption applies where an FFSP provides financial services only to professional investors.

These services must be provided from outside Australia, although the exemption extends to limited marketing visits to Australia by representatives of the FFSP. These visits are subject to a 28-day annual limit per representative.

The FFSP must also:

• have its head office and principal place of business outside Australia;
• reasonably believe that the services would not contravene applicable laws in relevant offshore jurisdictions; and
• notify ASIC that it intends to rely on this exemption to provide the financial service.

Professional investors include AFS licensees, superannuation trustees, APRA regulated entities and large institutional investors.

Comparable regulator exemption

This exemption applies where an FFSP provides financial services only to wholesale clients and is regulated in an overseas jurisdiction that the Minister determines to be comparable.

To rely on the exemption, the FFSP must hold the authorisations, registrations or licences necessary to provide substantially the same financial services in its home jurisdiction.

This exemption broadly replaces the existing sufficient equivalence relief.

It is subject to additional requirements, including that the FFSP must:

• consent to information sharing between ASIC and relevant overseas regulators;
• notify ASIC of significant regulatory or enforcement action in other jurisdictions;
• submit to the non-exclusive jurisdiction of Australian courts; and
• maintain an agent in Australia.

Market maker exemption

A separate exemption applies to FFSPs that make a market in derivatives traded on prescribed licensed markets.

The FFSP must provide those services from outside Australia, have its head office and principal place of business offshore, and reasonably believe its activities comply with applicable offshore laws.

This exemption is intended to facilitate offshore participation in Australian derivatives markets.

Conditions and regulatory oversight

Each exemption is subject to statutory conditions. While the detail differs between exemptions, common requirements include:

• notifying ASIC of reliance on the exemption within a prescribed period;
• providing reasonable assistance to ASIC and complying with ASIC directions; and
• notifying ASIC of changes to contact details.

Depending on the exemption, additional obligations apply. These include giving written notice to clients that the FFSP is relying on an exemption, consenting to information sharing with overseas regulators, maintaining an Australian agent and submitting to the jurisdiction of Australian courts.

In certain circumstances, where the provider’s financial services business is carried on predominantly in Australia, the provider must also ensure that financial services are provided efficiently, honestly and fairly, subject to specified carve-outs.

ASIC has powers to impose additional conditions, and to suspend or cancel the availability of an exemption where conditions are not met.

Licensing pathway for foreign providers

The Bill also introduces a streamlined pathway for FFSPs seeking to establish a licensed presence in Australia.

Certain foreign companies and offshore partnerships will be exempt from the fit and proper person test when applying for, or varying, an AFSL limited to wholesale clients, provided they hold relevant offshore authorisations issued by a regulator determined by the Minister.

Commencement and transition

The new regime will commence 12 months after Royal Assent and will apply to financial services provided on or after commencement.

Existing ASIC relief is expected to continue separately under transitional arrangements until 31 March 2027.

Funds management relief

Separate to the new exemptions, ASIC’s funds management relief for foreign financial services providers under the ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199 is scheduled to commence on 1 April 2027.

This relief applies to certain offshore providers of funds management financial services to eligible Australian institutional investors and will operate alongside the new legislative regime. It is more limited in scope and is not a direct replacement for existing limited connection relief.

What this means for FFSPs

The reforms provide greater certainty but require FFSPs to actively assess their position.

The new exemptions are not direct replacements for existing relief. FFSPs currently relying on ASIC relief, including limited connection relief, sufficient equivalence relief or individual relief, will need to reassess whether the new exemptions are available and appropriate for their activities.

FFSPs should now:

• assess whether their activities fall within one of the new exemptions;
• determine whether they can comply with the relevant conditions on an ongoing basis; and
• consider whether an AFSL will be required for their Australian operations.

For further information or assistance with assessing your position or transitioning to the new regime, email Chris Mee at cmee@cnmlegal.com.au or Alanah McAliece at amcaliece@cnmlegal.com.au, or call 07 3211 4010.

This article is produced as general information in summary for clients and should not be relied upon as a substitute for detailed legal advice or as a basis for formulating business or other decisions. CNM Legal asserts copyright over the contents of this article.