How to Operate as a Corporate Authorised Representative Under an AFSL

Introduction

A company that provides financial services in Australia does not always need to hold its own Australian Financial Services Licence (AFSL). In some circumstances, it can operate as a Corporate Authorised Representative (CAR) of an existing AFS licensee and provide specified financial services within that licensee’s regulatory framework.

However, a CAR is not simply a company “using” another business’s AFSL. Its directors and employees may need separate sub-authorisations, its activities must remain within the scope of the AFSL and its written authority, and the company must genuinely operate as a representative of the licensee. In this article, we explain how CAR structures work, the governance responsibilities on both sides and when a company may be better suited to obtaining its own AFSL.

Interactive Tool: Check If Your Company’s CAR Structure Is Compliant

Understanding the Corporate Authorised Representative AFSL Exemption

What is a Corporate Authorised Representative?

“CAR” is an industry term rather than a separate statutory licence category. Under Section 916A(1) of the Corporations Act 2001 (Cth) (‘Corporations Act‘), an AFS licensee may give a person written authority to provide specified financial services on its behalf. An authorised representative can be an individual, body corporate, partnership or certain groups of trustees. A company appointed under this provision is commonly referred to as a CAR.

The company can then rely on the authorised representative exemption in Section 911A(2)(a) for services genuinely provided as representative of the AFSL holder.

Scope of the CAR’s Authority

The CAR does not automatically receive every authorisation appearing on the AFSL. Its written appointment should identify the particular financial services it is permitted to provide. Under Section 916A(3) of the Corporations Act, an authorisation is void to the extent it purports to authorise a service that the licensee’s own AFSL does not cover.

The CAR therefore needs to operate within two boundaries:

• the financial services covered by the AFSL; and
• the narrower services covered by its own written authorisation.

A CAR arrangement should be reviewed whenever the company adds a new product, service, or client category. A new activity may require an expanded CAR authority, an AFSL variation by the licensee or a different licensing structure altogether.

ASIC Registration

The AFSL holder must notify the Australian Securities and Investments Commission (ASIC) when it appoints a CAR. Under Section 916F of the Corporations Act, appointments must generally be notified within 30 business days. ASIC then records the CAR on the AFS Authorised Representatives Register. Changes and cessations must also generally be notified within the prescribed period.

Registration is important, but it does not determine whether every activity carried on by the CAR is legally covered. The underlying authority and the capacity in which the financial service is actually provided remain critical.

Operating Through a Corporate Authorised Representative

Sub-Authorising Directors and Employees

A company acts through individuals. This makes sub-authorisation one of the most important practical differences between a CAR and an individual authorised representative.

Under Section 916B of the Corporations Act, an authorised representative may sub-authorise individuals to provide financial services on behalf of the licensee where the AFSL holder has given the required consent. ASIC specifically notes that a body corporate AR will generally need to sub-authorise the directors and employees who actually provide financial services.

The CAR should therefore identify which staff actually perform regulated activities rather than assuming all directors and employees automatically operate under the corporate appointment. Where an individual provides personal advice to retail clients on relevant financial products, separate Financial Advisers Register and registration requirements may also apply.

Control of Products and Client Relationships

A CAR can have its own brand, employees and commercial operations. However, the structure becomes more difficult where the company operates as an entirely independent financial services business and the AFSL holder provides little more than regulatory coverage.

Questions that matter in practice include:

• who controls the regulated financial products;
• who approves disclosure and marketing;
• who determines which clients may be serviced;
• who makes material compliance decisions; and
• how the AFSL holder supervises the services provided under its licence.

The legislation does not prescribe one commercial structure. However, the actual operating model should be consistent with the proposition that the CAR provides the relevant financial services as representative of the AFSL holder.

AFSL Holder Oversight

An AFSL holder remains responsible for supervising representatives appointed under its licence, making advice from AFSL lawyers advising on licensee supervision and representative governance particularly important. Under Section 912A(1)(ca) of the Corporations Act, a licensee must take reasonable steps to ensure its representatives comply with the financial services laws. This also includes representative training, competence, resources, compliance, and supervision as part of the general AFSL framework.

Depending on the CAR’s business, oversight may include:

• initial due diligence;
• defined approval authorities;
• compliance and incident reporting;
• review of marketing and disclosure;
• file or transaction monitoring;
• training; and
• periodic review of the CAR’s activities and authorisations.

These are practical governance controls rather than a mandatory statutory checklist. The level of oversight should reflect the services provided and the risks they create.

Liability for CAR Conduct

The CAR structure can also create significant exposure 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 the licensee responsible, as between itself and the client, for the representative’s conduct whether or not that conduct was within authority.

That statutory allocation of responsibility is one reason CAR agreements commonly contain detailed compliance, audit, indemnity, and termination provisions. The AFSL holder is not simply licensing its number to another company. It has a direct regulatory and commercial interest in how the CAR operates.

Limits of the Corporate Authorised Representative (CAR) Model

Representative Capacity After ASIC v BPS Financial

The most important recent authority for CAR structures is ASIC v BPS Financial Pty Ltd [2025] FCAFC 74 (‘BPS Financial‘).

BPS was a CAR of an AFSL holder. However, the Full Federal Court held that it could not rely on the authorised representative exemption for financial services relating to the Qoin Wallet because BPS was acting on its own behalf, rather than as representative of its AFSL holder.

The case confirms that a written CAR appointment and ASIC registration are not enough by themselves. Section 911A(2)(a) of the Corporations Act requires the relevant financial service to actually be provided in representative capacity.

For CARs, the key issue is therefore whether the legal documents and commercial reality point in the same direction.

Independent Product Businesses

The BPS Financial decision is particularly relevant where a company independently develops and operates its own financial product before seeking a CAR arrangement.

Relevant circumstances in BPS Financial included the company’s independent development of the product, limited involvement by the AFSL holder and the overall customer-facing relationship reflecting BPS’s own business rather than the licensee’s.

The Full Court did not decide that a financial product issuer can never rely on the authorised representative exemption. However, companies that control their own product issuance, distribution and customer relationships should obtain specific advice before assuming a CAR appointment provides sufficient AFSL coverage.

CARs That Already Hold an AFSL

A company that already holds an AFSL cannot generally become an authorised representative of another licensee. Under Section 916D of the Corporations Act, an AFS licensee cannot be appointed as the authorised representative of another AFS licensee, subject to the specific exception in Section 916E. A purported appointment contrary to Section 916D is void.

This is particularly important for businesses with limited or narrow licence authorisations.If the company wants to provide additional services outside its existing AFSL, becoming a CAR of another licensee will generally not provide a simple workaround. The business may instead need to consider varying its own AFSL or another lawful structure.

Multiple AFSL Holders

A CAR may potentially represent more than one AFSL holder. Under Section 916C of the Corporations Act, multiple appointments generally require each relevant licensee to consent, unless a statutory exception applies.

Where a CAR represents multiple licensees, the company should clearly identify which AFSL holder it represents for each financial service.

That distinction is particularly significant after BPS Financial, because the exemption depends on the capacity in which the particular service is provided.

CAR Governance in Practice

CAR Agreement and Operating Controls

The CAR agreement should do more than simply record the company’s appointment; it should be supported by AFSL compliance services for CAR agreements and operating controls.

It should clearly address matters such as:

• permitted products and financial services;
• retail and wholesale client restrictions;
• sub-authorised staff;
• approval of marketing and disclosure;
• complaints, incidents, and breach escalation;
• monitoring and audit rights; and
• suspension and termination.

Not every one of these provisions is expressly prescribed by the Corporations Act. They help define how the representative relationship will work and support the AFSL holder’s supervisory obligations.

Changes to the CAR Business

CAR arrangements can become non-compliant when the business evolves but the licensing structure does not.

A company may, for example, add a financial product, begin servicing retail clients, change its advice model or hire new staff without checking whether those activities remain within the AFSL and CAR authority.

The CAR and AFSL holder should therefore review the arrangement before material business changes are implemented.

The relevant question is always whether the new activity remains within the AFSL, the written CAR appointment and the representative capacity required by Section 911A(2)(a) of the Corporations Act.

Ongoing Compliance Responsibilities

CAR status removes the need for the company to hold its own AFSL for services validly covered by the exemption. It does not exempt the CAR or its staff from the financial services laws more generally. Depending on the business model, obligations may still arise concerning:

• disclosure;
• Financial Services Guides;
• advice conduct;
• misleading or deceptive conduct;
• conflicts and remuneration; and
• financial adviser professional standards.

The precise obligations depend on the services, products and client base.

AFSL holders reviewing their CAR supervision and broader representative governance can use Click Legal’s free AFSL Compliance Checklist.

Common Corporate Authorised Representative Mistakes

CAR problems commonly arise where the parties focus on the paperwork but not the company’s actual operations. Common mistakes include:

• assuming ASIC registration means every CAR activity is covered;
• allowing directors or employees to provide regulated services without considering sub-authorisation;
• providing services outside the CAR’s written authority;
• failing to check whether the AFSL covers a new service;
• treating the CAR as an independent business merely “using” the licensee’s AFSL;
• launching new products without revisiting the licensing structure;
• assuming a CAR can sub-authorise another company;
• failing to update ASIC when appointments or details change; and
• assuming CAR status removes other direct financial services obligations.

The most useful compliance question is therefore not simply “is the company a CAR?” It is:

What financial service is being provided, who is providing it, what authority covers it and on whose behalf is the service actually being provided?

CAR Versus Holding Your Own AFSL

When a CAR Structure Can Work Well

A CAR arrangement can be suitable where a company genuinely intends to operate within another licensee’s compliance and supervisory framework. It may work particularly well where:

• the required services already fall within the AFSL;
• the CAR is comfortable operating within the licensee’s controls;
• the AFSL holder has the resources and expertise to supervise the business; and
• the commercial relationship genuinely reflects representative capacity.

The structure can provide a pathway to market without the company taking on the full regulatory infrastructure associated with holding an AFSL directly.

When an Own AFSL May Be More Appropriate

A CAR structure becomes less suitable as the company seeks greater independence over its regulated business.

An own AFSL may be more appropriate where the company wants to control its products, customer relationships, disclosure, compliance systems and material financial services decisions without operating within another licensee’s framework.

Other considerations can include scalability, the cost of CAR supervision, commercial restrictions imposed by the AFSL holder and whether future products are likely to fit within the existing licence.

For businesses comparing the two pathways, Click Legal’s free AFSL Compliance Guide – Core Obligations for AFS Licensees explains the governance and compliance obligations that come with holding an AFSL directly.

CAR Due Diligence Before Appointment

Before a CAR arrangement begins, both the company and the AFSL holder should understand exactly what the structure is intended to cover.

As a practical starting point, confirm:

1. Financial services: Identify each regulated service the company will provide.
2. AFSL scope: Confirm the licence covers those services.
3. CAR authority: Align the written appointment with the proposed activities.
4. Individual authorisations: Identify directors and employees who need sub-authorisation.
5. Operating control: Determine who controls products, disclosure, customer relationships and material decisions.
6. Representative capacity: Confirm the business model supports reliance on Section 911A(2)(a) of the Corporations Act.

A CAR structure should be designed around the actual operating model rather than fitted around the business after regulated activities have already commenced.

Conclusion

A CAR structure can allow a company to provide specified financial services without holding its own AFSL, but the arrangement is not equivalent to having a licence. The CAR must remain within the AFSL holder’s licence, its written authority and the representative capacity required by the Corporations Act.

For companies considering the CAR model, the most important issues are therefore not simply appointment and ASIC registration. The structure needs to work at an operational level — including the authorisation of staff, supervision by the licensee, control of regulated activities and the degree of independence the company expects to retain — so companies can contact Click Legal’s AFSL compliance lawyers about operational CAR compliance services for help putting those requirements into practice.

Frequently Asked Questions