Licensing relief for foreign financial service providers extended again by ASIC

Foreign financial service providers (FFSPs) now have a clearer path to permanent regulation, with the making of two new regulatory instruments, ASIC Corporations (Foreign Financial Services Providers) Instrument 2025/798 and ASIC Corporations (Amendment) Instrument 2025/799, which extend ASIC’s sufficient equivalence relief and limited connection relief from Australian Financial Services licensing requirements until 31 March 2027.

The extension comes after a new Bill was introduced into Federal Parliament to propose new licensing exemptions for FFSPs seeking to provide financial services to investors in Australia. With Parliament sitting again in early 2026, it is conceivable that the Bill could be passed well before the current exemptions expire.

If passed, the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025 will create the following three new licensing exemptions, replacing the current limited connection relief and sufficient equivalence relief regimes:

1. Professional Investor Exemption – provides relief from the requirement to hold an Australian financial services licence (AFSL) to FFSPs whose head office is based offshore and provide financial services from outside Australia (although, would not preclude making infrequent marketing visits to Australia or appointing local representatives to provide financial services). Under this exemption, financial services could only be provided to "professional investors" (ie. a subset of wholesale clients, as comprised primarily of institutional investors, superannuation funds and large corporate entities). The FFSP must notify ASIC if it intends to rely on this exemption. The Professional Investor Exemption would not be available to entities who are registered as a foreign company in Australia;

2. Comparable Regulator Exemption – replaces the atransitional Individual Licensing Relief. The Comparable Regulator Exemption would only be available to entities that are regulated in "comparable jurisdictions" who intend to provide financial services to wholesale clients only. The conditions under the Comparable Regulator Exemption largely reflect the same conditions as applicable under the current transitional Individual Licensing Relief, although certain additional conditions are also proposed, which broadly include that an entity consents to providing reasonable assistance to ASIC, maintaining sufficient oversight over representatives and notifying ASIC of any significant enforcement action, disciplinary action or investigation by any regulator or government authority outside of Australia;

3. Market Maker Exemption – provides an exemption from the requirement to hold an AFSL for persons that provide financial services that involve making a market for derivatives that are able to be traded on a specified licensed market; and

4. Fit and Proper Person Test Exemption – provides a fast-tracked licensing process for FFSPs applying for AFSLs to provide financial services to wholesale clients by providing an exemption from the fit and proper person tests for persons regulated by comparable regulators.

However, these amendments will only take effect 12 months after Royal Assent. In the meantime, FFSPs will be able to continue to rely on sufficient equivalence relief and limited connection relief.