• For over a decade, Foreign Financial Service Providers (FFSP) who do not hold an Australian financial services (AFS) licence have operated in Australia relying on a series of exemptions, most notably Class Order relief and Limited Connection relief arrangements.
  • These exemptions were intended as a temporary measure, while market participants awaited the passage of a new FFSP licensing regime in Australia. These exemptions have been extended annually since 31 March 2020 and are currently due to expire on 31 March 2027.
  • Continually awaiting the extension of these exemptions has often caused uncertainty for FFSPs relying on these arrangements.
  • On 1 April 2026, the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025 (Cth), which included the new FFSP regime, finally passed both houses of parliament. Royal Assent was granted on 8 April 2026.
  • The new FFSP regime is scheduled to commence on 1 April 2027 (although market participants who rely on existing relief will need to have transitioned to the new FFSP regime prior to this date).

Snapshot: what’s happening and what to do next

Parliament has finally passed the FFSP licensing regime which will bring certainty to how FFSPs engage with potential clients in Australia. The regime is scheduled to commence on 1 April 2027.

It is expected that ASIC will soon announce a transition period so that FFSPs currently relying on the existing arrangements can effectively and efficiently transition to the new regime. This is also an opportunity for FFSPs, who are not, for a variety of reasons, eligible for the current relief, to notify ASIC of their intention to rely on the new FFSP regime and commence engaging with relevant Australian investors.

FFSPs who are considering relying on the relief should be aware of their ongoing obligations and the conditions of these arrangements.

If you would like to know more about the regime, how to rely on the new arrangements, applicable ongoing compliance obligations and whether the regime is suitable for your business needs, please reach out to us.

Background

Currently, there are two main forms of relief available to a FFSP that is carrying on a financial services business in Australia: (1) Class Order relief and (2) the Limited Connection relief.

The Class Order relief applies where a FFSP is regulated in their home jurisdiction by a regulator recognised by ASIC as having a sufficiently equivalent regulatory regime. There is, though, an important limitation on the ability for a FSSP to rely on this relief, being that an FFSP must have registered with ASIC prior to 31 March 2020 to rely on this relief, or otherwise have made a successful individual relief application to ASIC.

Limited Connection relief applies where an FFSP is deemed to be carrying on a financial services business in Australia only because it engages in inducing conduct or is intending to induce a person in Australia to use its financial services. This relief does not require registration with ASIC, but has somewhat limited utility in practice.

What’s changing?

The Class Order relief and Limited Connection relief arrangements will expire on 31 March 2027, to be replaced by the new FFSP regime which commences on 1 April 2027, and the separate funds management relief which came into effect on 1 April 2025. A FFSP currently relying on the Class Order relief or Limited Connection relief will need to have transitioned to the new FFSP regime, or that separate funds management relief, prior to this date.

For a FFSP not currently relying on the existing relief arrangements, but who are considering providing financial services to clients in Australia, that FSSP will now be eligible to interact with and provide certain services to clients in Australia provided it complies with the applicable conditions of the new FFSP regime.

New FFSP regime

There are three main exemptions that will be available under the new FFSP regime. Each of the exemptions bring with them the requirement to meet certain general conditions, together with ongoing compliance requirements. We have outlined some of the key conditions/requirements below.

Importantly, to be able to rely on any of the exemptions, a FSSP must notify ASIC (in the prescribed form) that it intends to rely on the relief, and provide information required by ASIC, including information about the kinds of financial services it intends to provide, its contact information and information about its business. That notification must be provided within a 15-business day window falling either side of the day on which the financial service is first provided.

Professional investor exemption

This exemption is available where a FFSP is located outside Australia and provides financial services from outside of Australia exclusively to ‘professional investors’ (as defined in the Corporations Act 2001 (Cth) (Corporations Act)).

To rely on the exemption, the FFSP must reasonably believe that providing the same, or substantially the same, financial services would not contravene any law in the other jurisdictions from which it operates (ie, jurisdictions outside Australia).

The professional investor exemption also permits a representative to conduct one or more marketing visits to Australia for up to 28 days in a financial year without these visits impacting on the analysis as to whether financial services are provided outside of Australia. Importantly:

  • The allocation need not be exhausted in a single visit, provided the representative does not exceed their yearly allocation.
  • The limit is not reduced by each full or partial day on which the representative is in Australia and not engaging with a client or prospective client.
  • The 28-day limit is assessed on a per-representative basis, whether those representatives are operating on an individual basis, or, perhaps, engaging in marketing visits jointly with another representative.

Comparable jurisdiction exemption

This exemption is applicable to a FFSP formed outside Australia that is regulated by a comparable regulator in its home jurisdiction in respect of the same, or substantially the same, services it intends to provide in Australia.

Financial services under this exemption may only be provided to ‘wholesale clients’ (as defined in the Corporations Act).

While the list of comparable regulators is still to be determined, these are expected to include those operating under the current Class Order arrangements, as well as regulators from certain new jurisdictions. This list is likely to encompass, among others, the US Securities and Exchange Commission, the Monetary Authority of Singapore, the Hong Jong Securities and Futures Commission and the UK Financial Conduct Authority and the Prudential Regulatory Authority.

Making a market for derivatives exemption

This exemption applies only to FFSPs involved in making a market for derivatives to be traded on a licensed market prescribed by regulations. The FFSP must be located, and provide the financial services from, outside Australia. The FFSP must reasonably believe that providing the same, or substantially the same, financial services would not contravene any law in other jurisdictions from which it operates (ie, jurisdictions outside Australia).

General Conditions (all exemptions)

There are several general conditions that a FFSP must comply with to rely on the forms of relief above. Subject to certain exceptions, these include the following obligations:

  • Do all things necessary to ensure that the financial services provided predominantly in Australia are provided efficiently, honestly and fairly.
  • Comply with reasonable requests for assistance from ASIC in relation to the performance of ASIC’s duties and the exercise of ASIC’s powers.
  • Comply with written directions from ASIC to provide specified information about the FFSP’s financial services or financial services business.
  • Notify ASIC as soon as practicable of any change to its contact details.
  • Comply with breach reporting requirements.

Funds management relief

Replacing the Limited Connection relief is the funds management relief. Unlike the FFSP regime, which is a type of relief that allows FFSPs regulated by sufficiently equivalent regimes to apply for a modified form of a standard AFS licence to provide its services to Australian professional or wholesale clients, this relief provides a much narrower form of relief.

The relief will only apply in respect of offshore fund financial products or in respect of financial products under a portfolio management mandate to eligible Australian users. Eligible Australian users is a new subset of professional investors under the relief, and is limited to responsible entities of registered schemes, trustees of superannuation, approved deposit or pooled superannuation trusts or public sector superannuation schemes (each of which has net assets of at least A$10 million) and certain other entities.

We expect these developments will be welcomed by many market participants, providing well overdue clarity for FFSPs looking to provide financial services to Australian clients. If you would like any assistance understanding the reforms and how they will impact your business and operations (including how you are able to rely on these exemptions), please reach out to us and we will be very happy to assist.