Another year of transitional relief for FFSPs 3 min read
ASIC has again extended transitional relief for foreign financial services providers (FFSPs) relying on existing relief when providing financial services to Australian wholesale clients. Originally due to expire on 31 March 2025, the making of ASIC Corporations (Amendment) Instrument 2024/497 now extends this relief for another 12 months to 31 March 2026.
This decision provides certainty for FFSPs currently relying on the limited connection relief and sufficient equivalence relief, until the eagerly awaited passing of the new licensing exemption regime for FFSPs under the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 (the Bill).
In this Insight, we provide an overview of ASIC's guidance and what's next for FFSPs.
Status of the Bill
- The new licensing regime for FFSPs is due to commence on 1 April 2025, subject to passage of the Bill through Parliament.
- The Bill is currently before the House of Representatives, having agreed to its second reading on 16 May 2024.
- The House sits again on 12 August 2024.
It is also worth noting that the commencement of the funds management relief (as contained in ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199) has also been extended to 1 April 2026 (previously 1 April 2025). This commencement date is also subject to passage of the Bill.
You can read more about the types of relief and the proposed new licensing exemption regime as set out in the Bill in our previous August 2023 update and January 2024 update.
What does this mean for FFSPs?
FFSPs that are currently relying on the limited connection relief and the sufficient equivalence relief can continue to do so until 31 March 2026. ASIC has noted that after this date, these FFSPs will be required to notify ASIC of their intention to rely on the new licensing exemption regime once the Bill is passed, unless they choose to opt in by notifying ASIC earlier.
As it is currently unclear when the Bill will be passed, the extension of the transitional relief provides those FFSPs that are not currently relying on transitional or individual relief (and have no doubt been awaiting further developments before making a decision) with some additional time to make a decision about their licensing position during the transitional period.
Those FFSPs may consider the following options:
- consider whether they are eligible to rely on the limited connection relief until 31 March 2026;
- apply for individual relief based on the sufficient equivalence class orders (although the transitional relief for sufficient equivalence only extends to FFSPs already relying on the relief; ASIC is still processing individual relief on an equivalent basis); or
- consider applying for a standard or foreign AFS licence to the extent they are unable to rely on an alternative licensing exemption.
Entities that are not currently relying on existing individual or transitional relief will be able to notify ASIC of their reliance on the licensing exemption regime after the Bill is passed and the new regime commences.
Next steps
In light of the extension of this transitional relief and the delay in the passage of the Bill to date, we encourage FFSPs to start considering their licensing options early, so that they have sufficient time to prepare for changes to their existing arrangements to ensure compliance with new regulations and conditions.