On 30 November 2023, the Australian Government tabled the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 (Bill) in Parliament to implement changes to the licensing exemptions for foreign financial service providers (FFSPs). The new exemptions were set to commence on 1 April 2025, subject to the draft legislation being passed.
However, the Bill remains before Parliament, with the second reading having been agreed to on 16 May 2024 in the House of Representatives. The House sits again on 12 August 2024.
In the meantime, ASIC has extended the existing transitional relief for FFSPs from the need to hold an Australian financial services (AFS) licence until 31 March 2026. We expect this decision was made as a pre-emptive step to allow Parliament further time to consider the Bill and undertake due process if required.
By way of background, the transitional relief was previously extended until 31 March 2025 pursuant to ASIC Corporations (Amendment) Instrument 2023/588.
The ASIC Corporations (Amendment) Instrument
The ASIC Corporations (Amendment) Instrument 2024/497 (Amending Instrument) has been made to give effect to the extension of the transitional period. Specifically, it amends the following ASIC instruments (which contain the existing 'sufficient equivalence / passporting' relief, the 'limited connection' relief and the 'CSSF-regulated FFSP' relief) to extend the sunset date to 31 March 2026:
- ASIC Corporations (Repeal and Transitional) Instrument 2016/396;
- ASIC Corporations (CSSF-Regulated Financial Services Providers) Instrument 2016/1109; and
- ASIC Corporations (Foreign Financial Services Providers—Limited Connection) Instrument 2017/182.
This means that FFSPs who currently rely on, or wish to rely on, the 'limited connection relief' to provide financial services to wholesale clients in Australia can continue to do so until 31 March 2026.
Similarly, this extension allows FFSPs that currently rely on the 'sufficient equivalence' relief for FFSPs regulated by the UK FCA, the US SEC, the Singapore MAS and the HK SFC (among others) to continue relying on that relief to service Australian wholesale clients until 31 March 2026. Unlike the 'limited connection' relief, the 'sufficient equivalence' relief is not able to be relied upon by a FFSP that is not already currently relying on that relief. However, we understand ASIC will accept individual relief applications from FFSPs who do not currently rely on the sufficient equivalence relief but would like to do so (provided they meet all relevant eligibility requirements).
Funds management relief further delayed
The Amending Instrument also delays the commencement of the ASIC Corporations (Foreign Financial Services Providers – Funds Management Financial Services) Instrument 2020/199 for 12 months until 1 April 2026. This instrument was created to give licensing relief to FFSPs that provide 'funds management financial services' to certain categories of Australian professional investors. You can find more information about the funds management relief in Foreign financial services regime – your questions answered.
Contact our specialists to stay in touch with, and track progress, on updates to the FFSP exemption regime.
