AFSL vs Authorised Representative: A 2026 Comparison for Advice Practices

By Anthony Zaman, Director and Responsible Manager, Core Advice Collective. Reviewed by Anthony Zaman. Last reviewed 26 October 2026.

An AFSL lets your business provide financial services in its own name and makes it answerable to ASIC for every licence obligation. An authorised representative provides services on a licensee’s behalf under a written authorisation, while the licensee carries the licence obligations and responsibility for the services. The choice turns on control, cost and compliance capacity.

This guide compares the two models for financial advice practices that provide personal advice to retail clients. It covers what each model involves in 2026, what running your own licence costs in levies and compliance work, and the questions to ask before you decide. Every regulatory fact is dated and linked to the ASIC or Treasury page it comes from.

AFSL vs authorised representative: what is the difference?

The difference is who holds the licence. A business that carries on a financial services business generally needs an Australian Financial Services Licence (AFSL). A person who provides those services as a representative of a licensee is exempt from holding their own licence. ASIC describes this as acting “as a representative of a person who is licensed” (RG 121, amended April 2026). Source: ASIC RG 36 and RG 121.

A licensee can authorise a person or company to provide specified financial services on its behalf (ASIC, Authorised representatives, updated 28 September 2026). The authorised representative works within the licensee’s authorisations, policies and supervision. It does not hold the licence, so it cannot advise outside what the licensee is authorised to do.

Area	Your own AFSL	Authorised representative
Who holds the licence	Your business	The authorising licensee
Answerable to ASIC for licence obligations	Your business	The licensee (you must still comply with the law and the licensee’s requirements)
Responsible managers (RG 105)	You nominate and maintain them	The licensee’s responsibility
Financial requirements and annual audit (RG 166, FS70/FS71)	Your business	The licensee
Breach reporting to ASIC (RG 78)	Your business	The licensee reports; you report issues to the licensee under its policies
AFCA membership	Your business	The licensee
PI insurance meeting RG 126	Your business	The licensee’s arrangements must cover its representatives; your agreement sets who pays
ASIC industry funding and CSLR levies	Raised on your business	Raised on the licensee; how costs are shared is set by your agreement
Advice scope	Set by your licence authorisations	Limited to the licensee’s authorisations and what it authorises you to provide
Control of policies, research and approved products	Yours	Set or approved by the licensee

Table based on ASIC RG 104 (March 2026), RG 105, RG 126 (December 2025), RG 166 (October 2026), RG 78 (October 2026) and ASIC’s authorised representatives pages, checked 26 October 2026.

What does holding your own AFSL involve?

Holding an AFSL means your business carries every general obligation in section 912A of the Corporations Act, plus the compensation, financial and reporting requirements ASIC sets in its regulatory guides. The sections below summarise the obligations that matter most for an advice practice.

The general obligations in s912A

ASIC’s RG 104 (minor update March 2026) lists the general obligations. A licensee must, among other things:

• provide financial services efficiently, honestly and fairly
• have adequate arrangements to manage conflicts of interest
• comply with its licence conditions and the financial services laws
• take reasonable steps so that its representatives comply with the financial services laws
• comply with the reference checking and information sharing protocol
• have adequate financial, technological and human resources
• maintain the competence to provide the services covered by the licence
• keep its representatives adequately trained and competent
• have internal dispute resolution and AFCA membership
• have adequate risk management systems.

Compensation arrangements sit separately in section 912B. Source: ASIC RG 104, published 23 June 2022, minor update March 2026; ASIC AFS licensee obligations, updated 3 April 2025.

Responsible managers

Your licence needs responsible managers who meet one of the competence options in RG 105, are fit and proper, and are directly responsible for significant day-to-day business decisions. Changes to responsible managers must be notified to ASIC within 10 business days through the ASIC Regulatory Portal (ASIC, Changing your responsible managers, 11 March 2026). ASIC has said it expects to release an updated RG 105 in the first quarter of 2027. Source: ASIC RG 105 page, modified October 2026.

Financial requirements and the annual audit

All licensees must meet the base financial requirements in RG 166 (reissued 21 October 2026): be solvent, hold positive net assets, meet a cash needs requirement and have the auditor’s report cover compliance with the financial requirements. The most common cash needs options rely on cash flow projections covering at least three months. Stricter requirements apply to licensees that hold client money, act as principal or operate schemes, which most advice-only practices do not.

Each financial year a licensee lodges a profit and loss statement and balance sheet (form FS70) and an auditor’s report (form FS71). A body corporate that is not a disclosing entity, which describes most advice practices, has four months after year end. A disclosing entity has three months and a licensee that is not a body corporate has two months. Late fees apply. Source: ASIC, Information on submitting AFS licence annual financial statements, 13 May 2026.

Compensation arrangements and PI insurance

Licensees providing services to retail clients need compensation arrangements, generally PI insurance that meets RG 126. ASIC’s benchmark for a licensee with retail revenue of $2 million or less is cover of at least $2 million for any one claim and in the aggregate. Above that, cover should broadly match revenue, up to $20 million, and revenue earned by authorised representatives counts (RG 126, updated 2 December 2025). In its September 2026 financial advice update, ASIC reported that its review of FS70 data found 10 licensees reporting less than $2 million of cover.

Breach reporting and client notification

A licensee must report a reportable situation to ASIC within 30 days after it first knows, or is reckless as to whether, there are reasonable grounds to believe the situation has arisen. An investigation that runs for more than 60 days is itself reportable (RG 78, updated 21 October 2026). Licensees that provide personal advice to retail clients must also notify affected clients in writing within 30 days of first knowing about the situation, and tell them the outcome within 10 days of the investigation ending (ASIC INFO 259).

AFCA membership

A licensee that provides services to retail clients must be a member of the Australian Financial Complaints Authority. AFCA is funded by membership levies, user charges and complaint fees, and the firm pays a fee for each complaint made against it. Consumers pay nothing to lodge a complaint (AFCA, Who funds AFCA). Source: AFCA; ASIC AFS licensee obligations.

Applying for a licence

New applications are made through the ASIC Regulatory Portal, which calculates the statutory fee. Since the portal process changed, applicants no longer submit core and non-core proofs; ASIC asks for People Proofs (ASIC, FAQs: AFS licence applications, 20 April 2026). ASIC’s service charter target is to decide 70% of complete applications within 150 days and 90% within 240 days (ASIC service charter, 19 July 2026). Plan for a process measured in months, not weeks.

What does it cost to run an AFSL in 2026?

The direct cost of a licence is a mix of levies, insurance and the people and systems needed to meet the obligations above. ASIC and the CSLR publish the levy figures, which make up the most predictable part of the cost.

Cost or obligation	What applies to advice licensees	Period and source
ASIC industry funding levy	Graduated levy: a minimum plus an amount per adviser on the Financial Advisers Register. Estimate $1,500 plus $3,037 per adviser	2025-26 estimate, ASIC CRIS (July 2026)
ASIC industry funding levy (previous year)	Actual $1,500 plus $2,398 per adviser	2024-25 actual, ASIC (November 2025)
CSLR annual levy	$100 plus $1,312 per adviser, limited by the $20 million subsector cap. The estimated cost for the subsector was $126.851 million	FY2026-27, ASIC CSLR annual levy (16 April 2026)
CSLR special levy	2025-26 special levy determined 11 December 2025: $665 per adviser for advice on relevant products. Treasury consulted on a 2026-27 special levy from 21 September to 6 October 2026; no decision published as at 26 October 2026	ASIC CSLR special levy (September 2026); Treasury consultation
PI insurance	Cover that meets RG 126 for your retail revenue	Ongoing, RG 126 (December 2025)
AFCA	Membership levy, user charges and per-complaint fees	Annual, AFCA
Audit and FS70/FS71	Annual audit and lodgement within four months of year end for most practices	Each financial year, ASIC (May 2026)
Compliance resources	Responsible managers, policies, monitoring and supervision, training, breach register, IDR	Ongoing, RG 104 and RG 105

Levy figures are as published by ASIC for the stated years and change each year. Check the current figures before relying on them.

As a worked example using only the published figures: a self-licensed practice with three advisers would face an estimated 2025-26 ASIC levy of $1,500 plus 3 x $3,037, which is $10,611, and an FY2026-27 CSLR levy of $100 plus 3 x $1,312, which is $4,036. That is before PI insurance, AFCA fees, the audit and the cost of compliance staff or consultants. Any CSLR special levy would be additional.

Under authorisation, these levies are raised on the licensee, not the authorised representative. How the licensee recovers those costs is a commercial matter set out in your authorised representative agreement, so ask for it in writing.

How does being an authorised representative work?

As an authorised representative, you provide financial services on the licensee’s behalf under a written authorisation. The main steps and rules are:

• Written authorisation. The licensee authorises you by written notice, and a corporate authorised representative can sub-authorise its directors and employees with the licensee’s written consent (ASIC INFO 91, April 2025).
• ASIC notification. The licensee notifies ASIC within 30 business days of the appointment, and again when the authorisation ends (ASIC, Appointing and ceasing authorised representatives, 7 April 2025).
• Registration. Advisers who provide personal advice to retail clients must be registered on the Financial Advisers Register before they give that advice. The licensee lodges the registration.
• Reference checks. Before appointing an adviser, the licensee must follow the reference checking and information sharing protocol in s912A.
• Licensee responsibility. ASIC states that a licensee “remains ultimately responsible for all financial services provided under its AFS licence” (RG 121.64). Expect monitoring, supervision and advice reviews as a normal part of the arrangement.

A licensee generally cannot also be another licensee’s authorised representative, apart from limited binder arrangements (ASIC RG 36 and RG 121). If you already hold an AFSL and want to move to authorisation, plan how and when your own licence will be varied or cancelled. Our guide on how to become an authorised representative walks through the appointment steps in order.

What is a corporate authorised representative?

A corporate authorised representative (CAR) is a company authorised by a licensee. The company is the authorised representative, and its advisers are usually sub-authorised by it with the licensee’s consent. Many practices use this structure so the practice entity holds the client relationships while the licensee holds the licence. For example, Silverloom Advisory Group Pty Ltd (CAR 1310731) is a Corporate Authorised Representative of Core Advice Collective Pty Ltd (AFSL 700341). The two businesses are under common ownership and Anthony Zaman is a director of both. You can see how a licensee lists its representatives on our advisers and authorised representatives page.

Which model suits your practice?

Your own AFSL may suit a practice that wants full control of its advice process, approved product list and policies, and that has, or will fund, the compliance capacity the obligations require. Authorisation may suit a practice that would rather put its time into clients and growth, and is comfortable working within a licensee’s framework.

Use this checklist to test the decision:

• Do you have, or can you fund, at least one responsible manager who meets RG 105 and has time for the role?
• Can you meet the RG 166 financial requirements and fund an annual audit?
• Do you have systems for breach identification, investigation and reporting within the RG 78 timeframes?
• Can you obtain PI cover that meets RG 126 for your revenue?
• Have you budgeted for the ASIC and CSLR levies for every adviser, including a possible special levy?
• Who will monitor and supervise advice quality, and how often?
• How much do you value control over research, product approval and advice templates?
• Are you prepared to wait for a licence decision that ASIC targets within 150 to 240 days?

If several answers are “no” or “not yet”, authorisation is likely the more practical model for now. If most are “yes” and control matters more to you than shared infrastructure, your own licence may be worth the commitment.

Questions to ask a licensee before you sign

• What are you authorised to advise on, and does it cover the advice we provide now and plan to provide?
• How are advice and files reviewed, by whom, and how long do reviews usually take?
• What support is available for Statements of Advice, research and technology?
• How are ASIC levies, CSLR levies, PI insurance and AFCA costs recovered from representatives?
• How does your PI policy cover authorised representatives, and what is the excess?
• What is the process and notice period if either party wants to end the arrangement, and what happens to client records?
• How do you handle breach reporting and client notification when an issue involves our practice?

Common mistakes when comparing the two models

• Comparing licensee fees with nothing. Weigh a licensee’s charges against the full cost of running your own licence, including levies, PI, audit and compliance time.
• Ignoring scope. An authorised representative can only advise within the licensee’s authorisations. Check them against your client base before you move.
• Treating the CSLR levy as fixed. The annual levy is capped, but special levies have been imposed and another is under consultation.
• Underestimating the application timeline. ASIC’s service charter targets decisions within 150 to 240 days for complete applications.
• Assuming you can hold both. A licensee generally cannot also be an authorised representative of another licensee, outside limited binder arrangements.
• Overlooking registration. Authorisation alone is not enough to give personal advice to retail clients. The adviser must also be registered.

What changes are on the horizon?

Treasury released a proposals package on 18 August 2026 that includes a new class of adviser, a simplified best interests duty, obligations for licensees on lead generation and changes to the CSLR, such as capping payments at actual losses from 30 June 2027 and a waterfall framework for special levies. These are proposals, not law, as at 26 October 2026. Treasury also opened consultation on 17 March 2026 on new education standards for financial advisers. We will update this article if any of these are legislated.

Frequently asked questions