ASIC Corporations (Foreign Financial Services Provider - Queensland Fidelity and Indemnity Schemes) Instrument 2022/437

This ASIC instrument gives Lexon Insurance Pte Limited targeted relief from selected parts of the Corporations Act 2001 for a very specific purpose. The relief is tied to the Queensland Law Society's professional indemnity insurance arrangements and the associated scheme described in the instrument as the Queensland fidelity or indemnity scheme.

The instrument is not a broad approval for Lexon to provide financial services generally in Australia. Its scope is narrow and technical. It exempts Lexon from certain managed investment scheme, financial product disclosure and Australian financial services licensing requirements, but only in the circumstances set out in the instrument.

That narrow scope matters. If a business is looking at Lexon's activities outside the Queensland Law Society scheme, this instrument should not be treated as a general permission or a general precedent that removes normal licensing requirements. The relief is specific to Lexon, specific to the scheme, and specific to the listed services and conditions.

The instrument was made under ASIC's exemption powers in the Corporations Act and commenced on the day after registration on the Federal Register of Legislation.

The instrument is aimed at Lexon Insurance Pte Limited, which is identified in the definitions by name and ARBN. It also matters to the Queensland Law Society because the relief is linked to the Society's indemnity arrangements and to separate ASIC relief for related services provided by the Society.

Queensland law firms and legal practitioners covered by the relevant professional indemnity arrangements are also directly affected in practice. So are claimants, insured parties and others dealing with financial products, claims handling or related services that arise from the Queensland fidelity or indemnity scheme.

Most Australian businesses are outside scope. If your business is not involved with the Queensland Law Society indemnity arrangements, this instrument is unlikely to change your day to day compliance position. It is also not a general roadmap for foreign insurers to operate in Australia without a licence. The relief is specific to Lexon and to the scheme described in the instrument.

Section 5 sets out the exemptions. First, Lexon does not have to comply with section 601ED(5) of the Corporations Act in relation to the operation of a managed investment scheme that is or arises from the Queensland fidelity or indemnity scheme.

Second, Lexon does not have to comply with Divisions 2 to 5 of Part 7.9 and section 992A of the Act in relation to a financial product that arises from the Queensland fidelity or indemnity scheme.

Third, Lexon is exempt from subsection 911A(1), which is the requirement to hold an Australian financial services licence, but only for specified financial services. Those services are providing financial product advice, dealing in a financial product, providing a custodial or depository service, and claims handling and settling services.

Even for those services, the relief is still limited. The service must only be provided to the extent reasonably necessary for the operation of the Queensland fidelity or indemnity scheme. The instrument also ties the relief to a further condition about context: the Queensland Law Society must be providing related services in respect of which it is exempt from the requirement to hold an Australian financial services licence because of ASIC Corporations (Law Societies-Fidelity and Indemnity Schemes) Instrument 2022/435.

This means the exemption is not available for Lexon's other insurance activities or other financial services activities just because Lexon is the entity named in the instrument. The activity must fit within the exact statutory description.

The exemption is only available where all of the threshold requirements in section 5(2) are satisfied. These are not optional and they are not merely background facts. If one of them is missing, the relief is not available.

Lexon must have a current licence granted by the Monetary Authority of Singapore authorising it to be a captive insurer. It must be a wholly owned subsidiary of the Queensland Law Society. It must also be registered under Division 2 of Part 5B.2 of the Corporations Act. The instrument further requires that Lexon's primary business is the provision of financial services, and that Lexon has not notified ASIC in writing that it will not rely on the instrument.

Lexon must also have provided ASIC with several documents and notices. These include a copy of the MAS licence, or other evidence ASIC has stated in writing is adequate, and a written notice that Lexon will provide financial services in Australia in reliance on the instrument.

Another key requirement is a deed by Lexon for the benefit of, and enforceable by, ASIC and the other persons referred to in subsection 659B(1) of the Corporations Act. The deed must be irrevocable except with ASIC's prior written consent. It must include Lexon's submission to the non-exclusive jurisdiction of Australian courts in proceedings brought by ASIC and, for proceedings relating to a financial services law, by the persons referred to in subsection 659B(1). It must also include Lexon's covenant to comply with Australian court orders relating to the financial services, and its covenant that, on written request of MAS or ASIC, it will give or vary written consent and take all other practicable steps to enable and assist information sharing between MAS and ASIC.

Lexon must also provide written consents to disclosures between ASIC and MAS of any information or document relating to Lexon, in the form ASIC specifies if ASIC specifies one.

Section 6 sets out the ongoing conditions that apply while Lexon relies on the instrument. These conditions are central to the relief. The exemption is not a one-off approval that continues automatically regardless of later conduct.

First, Lexon must provide each of the financial services in Australia in a manner which it believes would comply, so far as possible, with the Singaporean regulatory requirements if the financial service were provided in Singapore in like circumstances. This ties Lexon's Australian conduct back to the Singaporean regulatory framework that applies to it.

Second, Lexon must notify ASIC in writing within 30 days of several kinds of significant developments. These include significant changes to, including termination of, the licence applying to Lexon where relevant to the financial services it provides or intends to provide in Australia. They also include significant changes to the Singaporean regulatory requirements relevant to those services, including changes in MAS's power or authority to supervise, monitor or procure compliance, unless ASIC has stated in writing that notice of that change is not required.

Lexon must also notify ASIC within 30 days of each significant particular exemption or other relief it obtains from the Singaporean regulatory requirements that is relevant to the financial services it provides or intends to provide in Australia. The same 30 day notification rule applies to each enforcement or disciplinary action taken against Lexon by MAS or another overseas regulatory authority.

Third, Lexon must provide written disclosure to all persons to whom the financial services are provided in Australia before the financial services are provided. Timing matters here. The disclosure is not something that can be left until later. It must contain prominent statements to the effect that Lexon is exempt from the requirement to hold an Australian financial services licence for the services and that Lexon is regulated by MAS under Singaporean laws, which differ from Australian laws.

Fourth, if Lexon becomes aware, or should reasonably have become aware, of matters giving it reason to believe it has failed in a material respect to comply with any of the conditions in paragraphs (a) to (c), it must provide ASIC with full particulars of the failure to the extent known or that would have been known after reasonable enquiries. It must notify ASIC in writing no more than 30 calendar days after it becomes aware, or should reasonably have become aware, of the failure.

The most important practical point is that this relief is conditional from start to finish. It is not enough that Lexon was once eligible, or that the instrument remains listed as in force on the register. The threshold requirements must be satisfied, and the ongoing conditions must continue to be met.

That means businesses should not read the instrument as a blanket statement that Lexon is always exempt. The exemption only operates where the statutory conditions are met. If Lexon does not satisfy the requirements in section 5(2), or later fails to comply with the conditions in section 6, it cannot rely on the relief.

For businesses and practitioners dealing with Lexon under the scheme, sensible checks include confirming that the activity is actually connected to the Queensland fidelity or indemnity scheme, that the service is one of the listed financial services covered by the instrument, that the service is only being provided to the extent reasonably necessary for the scheme's operation, and that the Queensland Law Society is providing related services under its separate ASIC relief.

It is also sensible to check that the required written disclosure was given before the financial services were provided. That timing requirement is expressly stated in the instrument and is one of the practical signs that the arrangement is being handled within the terms of the relief.

For people dealing directly with Lexon under the scheme, the instrument points to a few practical documents and behaviours that matter. One is the written disclosure given before services are provided. Another is Lexon's continuing regulatory status with MAS as a captive insurer. The instrument also assumes that ASIC has received the required deed and written consents, which are part of the legal structure supporting Australian oversight.

The deed matters because it is designed to support enforceability in Australia even though Lexon is a foreign provider. It must be enforceable by ASIC and the persons referred to in subsection 659B(1) of the Corporations Act. It must also deal with Australian court jurisdiction, compliance with Australian court orders, and practical steps to support information sharing between MAS and ASIC.

The information-sharing consents matter for the same reason. The relief depends in part on cross-border regulatory cooperation. The instrument requires Lexon to give written consents to disclosures between ASIC and MAS of information or documents relating to Lexon, in the form ASIC specifies if it specifies one.

Taken together, these requirements show that the relief is not simply a waiver of Australian rules. It is a narrow exemption built around specific safeguards, foreign regulatory supervision, and Australian enforceability mechanisms.

The instrument was made on 31 May 2022. Under section 2, it commenced on the day after it was registered on the Federal Register of Legislation. The register lists it as in force.

Because this page is about a current legislative instrument, businesses should still confirm the latest register status and read the current version before relying on it for a live matter. That is especially important where the real issue is whether Lexon currently satisfies the conditions for relief, because the instrument's existence alone does not answer that question.

The key operative provisions are sections 5 and 6 of ASIC Corporations (Foreign Financial Services Provider-Queensland Fidelity and Indemnity Schemes) Instrument 2022/437. The instrument should also be read alongside the separate ASIC relief referred to in section 5(1)(c)(ii) for the Queensland Law Society, because Lexon's AFS licensing relief is tied to the Society providing related services under that separate instrument.