Will Foreign Financial Services Providers (FFSPs) lose patience with Australia's regulatory regime?
Continued delays in settling the regulatory regime for FFSPs to market funds and provide services to Australians are likely testing the limits of their interest in the attractive Australian superannuation market.
Currently, FFSPs looking to conduct business in Australia must rely on exemptions provided by the Australian Securities and Investments Commission (ASIC) to avoid being caught by Australia's financial services licensing requirements.
Licensing exemptions for inbound FFSPs were included in The Treasury Laws Amendment (Miscellaneous Measures) Bill 2024 (Bill) that was before the Australian Federal Parliament. The Bill was necessary after the last change of government saw the repeal of changes to the old FFSP exemption regime then in transition. This created a confusing situation where incoming FFSPs had to apply to ASIC for individual exemptions based on the old law, in a confusing and uncertain process, until new legislation was developed.
“The Bill is seen as a crucial step towards creating legislative certainty, easing regulatory burdens and fostering international business relations.”
The transitional arrangements have now been extended four times, and on 28 March 2025, the Bill lapsed due to the federal election being called and the subsequent dissolution of Australian Federal Parliament.
As a result, the existing transitional arrangements for FFSPs, including limited connection and sufficient equivalent exemptions, are expected to remain in place until 31 March 2026.
It's unclear whether any newly formed Australian Federal Government will reintroduce the Bill to Parliament, in a timely way or at all. We remain optimistic that Treasury will not leave the situation in transition indefinitely.
For any questions about the Bill or the current regulatory landscape, please reach out to our team.
9 December 2024
Written by: Jon Ireland, Timothy Lou
On Thursday 28 November, on one of the last sitting days of the Australian Federal Parliament in 2024, the Senate passed a motion to split the Treasury Laws Amendment (Better Target Superannuation Concessions and Other Measures) Bill 2024 (the Initial Bill) into two bills:
- the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 containing Schedules 1 to 3; and
- the Treasury Laws Amendment (Miscellaneous Measures) Bill 2024 containing Schedules 4 to 8 (for the purposes of this article, the FFSP Bill).
Schedule 7 in the FFSP Bill contains the proposed exemptions for foreign financial service providers (FFSPs) from the requirement to hold an Australian financial services licence. The Initial Bill was first introduced in November 2023 and was previously set to introduce the FFSP exemptions together with reforms to superannuation concessions.
The Initial Bill had already passed the House of Representatives, and passed the second reading in the Senate on 10 October. In light of the splitting of the Initial Bill, the Senate has now indicated that it will give “further consideration” to each Bill starting from its next sitting day. However, it is understood that the Senate is not scheduled to reconvene until February 2025, meaning any “further consideration” of the FFSP Bill may not occur until well into the new year.
With a federal election scheduled in 2025, the timing therefore remains uncertain as to when the FFSP Bill may be passed. That said, we understand that carving out the FFSP Bill from the Initial Bill is intended to allow for a more streamlined passage through Parliament. In the meantime, if you have any questions about the FFSP Bill, or the current financial services regulatory framework, please reach out to our team.
