Authorised Representative AFSL Exemption: How It Works and When You Can Rely on It

Introduction

Obtaining your own Australian Financial Services Licence (AFSL) is not the only way to provide regulated financial services in Australia. In some circumstances, a business can operate as an authorised representative (AR) of an existing AFS licensee and rely on the exemption in Section 911A(2)(a) of the Corporations Act 2001 (Cth) (‘Corporations Act‘) instead of holding its own licence.

However, an AR arrangement is not simply a way to “use” another business’s AFSL. The relevant services must fall within the licensee’s authorisations and must genuinely be provided as representative of the AFSL holder. In this article, we explain how the AR exemption works, its limits, the obligations of both parties and when obtaining your own AFSL may be more appropriate.

Interactive Tool: See If You Qualify for the Authorised Representative Exemption

The Authorised Representative Exemption

AFSL Requirement Under Section 911A

Under Section 911A(1) of the Corporations Act, a person carrying on a financial services business in Australia must hold an AFSL covering the financial services it provides.

However, Section 911A(2)(a) provides an exemption where the person provides the financial service as representative of another person carrying on a financial services business and that principal either holds an AFSL covering the service or is otherwise appropriately exempt.

The exemption applies to the particular services provided as representative. It is not a general exemption from the AFSL regime for everything the representative does.

Appointment as an Authorised Representative

Under Section 916A(1) of the Corporations Act, an AFS licensee can appoint an AR by giving written notice authorising the person to provide specified financial services on the licensee’s behalf.

The authorisation may cover some or all of the services within the AFSL. However, Section 916A(3) provides that an authorisation is void to the extent it purports to cover a financial service that the licensee’s own AFSL does not cover.

The proposed activities should therefore be mapped against both:

• the AFSL holder’s licence authorisations; and
• the written authorisation granted to the representative.

ASIC Notification and Registration

Under Section 916F of the Corporations Act, the AFSL holder must notify the Australian Securities and Investments Commission (ASIC) of an AR appointment. As modified by Regulation 7.6.04AA of the Corporations Regulations 2001 (Cth) (‘Corporations Regulations‘), the notification period is generally 30 business days.

ASIC records authorised representatives on its AFS Authorised Representatives Register. Changes and cessations must also generally be notified within the prescribed period.

ASIC registration should not be confused with the legal basis for the arrangement. The written authorisation determines the services the representative is authorised to provide; ASIC notification is a separate statutory requirement.

Sub-Authorisations and Multiple AFSL Holders

An AR cannot simply appoint another business under the AFSL. Under Section 916B(3) of the Corporations Act, an AR may sub-authorise an individual to provide specified financial services on behalf of the licensee where the licensee has given the required written consent.

A person may also act as AR of multiple AFSL holders, but Section 916C generally requires the relevant licensees to consent, subject to the statutory exceptions.

Limits of the Authorised Representative Exemption

Representative Capacity After ASIC v BPS Financial

A written appointment under Section 916A of the Corporations Act does not automatically establish that the exemption in Section 911A(2)(a) applies.

In Australian Securities and Investments Commission v BPS Financial [2025] FCAFC 74 (‘ASIC v BPS Financial‘), the Full Federal Court held that BPS could not rely on the AR exemption in relation to financial services connected with the Qoin Wallet. Although BPS had been appointed as an AR of an AFSL holder, the Court found that BPS was acting on its own behalf, rather than as representative of the licensee.

The case therefore makes the distinction between formal appointment and actual representative capacity critical.

Assessing Genuine Representative Capacity

The Full Court did not create a fixed statutory test. Whether a business acts “as representative of” an AFSL holder depends on the facts.

In ASIC v BPS Financial, relevant circumstances included that:

• BPS developed the product independently;
• the AFSL holder had limited involvement in the product’s development and issue;
• BPS sought an AFSL arrangement as an alternative to obtaining its own licence; and
• the customer-facing and contractual arrangements principally reflected BPS’s own role.

These are not legislative requirements. They illustrate the broader inquiry into whether the commercial reality matches the claimed representative relationship.

A business should therefore not assume that an AR agreement and ASIC registration are sufficient where it effectively operates its own independent financial services business under another entity’s licence. Advice from AFSL lawyers on authorised representative arrangements can help assess whether the model is genuinely representative.

Product Issuers and Principal Activities

The ASIC v BPS Financial decision did not establish that a product issuer can never rely on the AR exemption; it was confined to the facts before the Court.

However, product issuers should approach the exemption cautiously. ASIC’s existing guidance in Information Sheet 251 (INFO 251) takes the view that a trustee of an unregistered managed investment scheme cannot rely on the AR exemption when issuing, varying or disposing of interests in its own scheme because it acts as principal in doing so.

Businesses issuing their own financial products should therefore obtain specific advice rather than assuming that an AR appointment removes the need for their own AFSL.

Obligations Under an Authorised Representative Arrangement

The AFSL Holder’s Supervisory Obligations

Appointing an AR does not allow an AFSL holder to outsource its regulatory responsibility.

Under Section 912A(1)(ca) of the Corporations Act, an AFS licensee must take reasonable steps to ensure its representatives comply with the financial services laws. Section 912A(1)(f) also requires the licensee to ensure its representatives are adequately trained and competent, while other Section 912A obligations may support the resources and systems required to supervise representatives.

In practice, appropriate oversight may include:

• due diligence before appointment;
• clearly defined approval authorities;
• compliance and incident reporting;
• file or transaction reviews;
• training;
• monitoring of marketing and disclosure; and
• periodic review of whether the representative remains within scope.

AFS licensees reviewing their broader oversight arrangements can use Click Legal’s free AFSL Compliance Checklist.

Responsibility for Representative Conduct

The representative model can also create liability for the AFSL holder. Where Division 6 of Part 7.6 applies and the representative acts for only one licensee, Section 917B of the Corporations Act generally makes that licensee responsible, as between itself and the client, for the representative’s conduct, subject to the statutory qualifications and exceptions.

Different rules apply in some multiple-licensee arrangements, while Section 917D contains an exception where lack of authority is appropriately disclosed.

This is one reason AFSL holders should not treat AR arrangements as passive “licence-for-fee” arrangements. The licensee has a direct regulatory and commercial interest in the representative’s conduct.

Obligations That Still Apply to the Representative

The AR exemption removes the need for the representative to hold its own AFSL for the services covered by the exemption. It does not remove other financial services obligations. Depending on the services and client type, the representative may still have direct obligations relating to:

• Financial Services Guides;
• advice conduct;
• disclosure;
• misleading or deceptive conduct;
• conflicted remuneration; and
• professional standards applying to relevant providers.

For example, Section 941B of the Corporations Act can require an AR to provide an FSG when providing relevant financial services to a retail client, subject to the statutory exceptions.

Structuring an Authorised Representative Arrangement

Scope of the Written Authorisation

The written arrangement should clearly identify the financial services the representative is permitted to provide. It should also align with the AFSL holder’s actual licence authorisations and address matters such as:

• permitted financial products and services;
• retail or wholesale client limitations;
• approval of marketing and disclosure;
• compliance reporting;
• use of the AFSL and representative number;
• monitoring and audit rights; and
• suspension and termination.

Not every contractual control is prescribed by legislation. These provisions help define the representative relationship and support the AFSL holder’s supervisory obligations.

Oversight in Practice

The written agreement and the actual commercial relationship should be consistent. Following ASIC v BPS Financial, particular risk arises where the representative independently controls its own products, customer relationships, disclosure, and material business decisions while the AFSL holder provides little more than regulatory cover.

The AFSL holder should therefore supervise the substance of the relationship, while the representative should ensure its operating model remains within the capacity on which its Section 911A(2)(a) exemption depends.

Changes to the Representative’s Business

An AR arrangement should be reviewed whenever the representative changes its products, services, or client base. A new financial product, advice service or dealing activity may fall outside:

• the AFSL holder’s licence;
• the representative’s written authority; or
• the representative capacity on which the exemption relies.

That review should occur before the new service launches rather than after the representative has already operated outside scope.

Common Authorised Representative Mistakes

Common problems include:

• assuming ASIC registration alone creates the AFSL exemption;
• providing services outside the written authorisation;
• failing to check whether the AFSL itself covers the service;
• operating as an independent principal while describing the business as an AR;
• using an AFSL holder primarily to obtain regulatory “coverage” without genuine representative capacity;
• launching new products or services without reviewing the arrangement;
• assuming an AR can freely appoint other representatives;
• failing to notify ASIC of appointments, changes or cessations; and
• assuming AR status removes other direct financial services obligations.

The key question is not simply whether a business appears on ASIC’s AR register. It is whether the particular financial service is within scope and is genuinely being provided as representative of the AFSL holder.

Authorised Representative Arrangement Versus Your Own AFSL

An AR arrangement can be appropriate where a business genuinely intends to provide financial services within another licensee’s regulatory and supervisory framework.

It may be less suitable where the business intends to independently control its own regulated products, customer relationships and financial services operations.

Before choosing the AR pathway, consider:

1. Financial services: Identify exactly which activities require AFSL authorisation.
2. Licence scope: Confirm that the AFSL holder’s licence covers those services.
3. Representative capacity: Determine whether the services will genuinely be provided as representative of the licensee.
4. Commercial control: Consider who controls products, disclosure, customers and key decisions.
5. Long-term model: Decide whether the business intends to remain within another licensee’s framework or requires regulatory independence.

For businesses comparing the AR model with holding their own AFSL, Click Legal’s free AFSL Compliance Guide – Core Obligations for AFS Licensees provides an overview of the obligations associated with direct licensing.

Conclusion

The AR exemption can allow a business to provide financial services without holding its own AFSL, but it is a limited statutory exemption, not a substitute licence. The relevant services must fall within the AFSL holder’s authorisations, be covered by the written appointment and genuinely be provided as representative of that licensee.

Following ASIC v BPS Financial, businesses relying on AR arrangements should look beyond the paperwork and test whether the commercial relationship genuinely reflects representative capacity. AFSL holders should likewise ensure representatives remain within scope and are appropriately supervised, and can contact our AFSL lawyers at Click Legal for representative supervision and compliance.

Frequently Asked Questions