Licensing

Corporates

Navigate regulation with confidence.

Australia has some of the world’s most stringent financial services regulation.

Compliance with the requirements under the Australian Financial Services Licence (AFSL) is seen as a way to protect consumers against harmful practices within the industry and to safeguard the overall reputation and integrity of Australia’s financial services sector.

The role of the Australian Securities and Investments Commission (ASIC) in regulating the industry has become even more critical following numerous corporate collapses in the 1990s, the Global Financial Crisis of 2008-09, and the final report of the Financial Services Royal Commission in 2019.

Navigating the financial services landscape in Australia requires a clear understanding of licensing requirements, the distinction between wholesale and retail clients, and the regulatory framework governing financial services and products.

LICENSING REQUIREMENTS

Entities conducting financial services businesses in Australia must obtain an Australian Financial Services Licence (AFSL) unless an exemption applies.

Determining whether an entity needs an AFSL involves both statutory and common law tests, and businesses may require licensing even without a physical presence in Australia.

AFSLs are regulated by ASIC, and licence holders must comply with obligations relating to capital adequacy, organisational competence, client asset management, and reporting. For those offering personal advice to retail clients, there is a duty to act in the client’s best interests, along with specific fee disclosure requirements. A ban on conflicted remuneration also applies to both personal and general advice for retail clients.

FINANCIAL SERVICES AND FINANCIAL PRODUCTS

Financial Services

Financial services encompass a range of activities, including:

Providing financial product advice.
Dealing in financial products.
Making a market for financial products.
Operating a registered scheme under the Corporations Act.
Providing custodial or depository services.
Offering crowdfunding services.

Financial Products

Financial products broadly include facilities for financial investment, risk management, or non-cash payments.

The definitions of financial services and products are complex and involve numerous inclusions, qualifications, and exceptions. Transactions subject to regulation include:

Issuance of securities, shares, deposits, bonds, or managed investment scheme interests.
Entering derivative transactions (e.g., swaps, options) in Australia.
Facilitating secondary market trades as an agent or trustee.
Managing or holding investments in securities or related products on behalf of Australian clients.

RETAIL VS WHOLESALE CLIENTS

Australia’s financial services regulation differentiates between retail and wholesale clients. Financial services provided to retail clients are subject to additional conduct and disclosure obligations.

Entities working solely with wholesale clients may benefit from exemptions in licensing, disclosure, and conduct requirements.

FOREIGN FINANCIAL SERVICES PROVIDERS (FFSPS)

Foreign financial services providers aiming to operate in Australia must hold an AFSL, a Foreign Australian Financial Services Licence (FAFSL), or rely on an exemption.

The FAFSL regime, introduced on 1 April 2020, simplifies the licensing process for FFSPs regulated by sufficiently equivalent overseas jurisdictions, including the United States, the United Kingdom, Hong Kong, and Singapore, among others.

Key provisions include:

Transition from “passport” relief to the FAFSL regime by 31 March 2022.
Introduction of funds management relief, exempting certain FFSPs from obtaining an AFSL to provide services to eligible Australian professional investors, subject to conditions.

ASIA REGION FUNDS PASSPORT (ARFP)

Australia is part of the Asia Region Funds Passport (ARFP) initiative, which facilitates the cross-border offering of eligible funds among participating economies.

This reduces regulatory burdens while ensuring compliance with both home and host country requirements. For Australian funds, registration as a managed investment scheme with ASIC is typically required.

NAVIGATING AFSL REQUIREMENTS: CHALLENGES AND ALTERNATIVE SOLUTIONS

For those looking to establish a financial services business in Australia, obtaining an Australian Financial Services Licence (AFSL) from the Australian Securities and Investments Commission (ASIC) is often essential.

An AFSL is required for entities engaging in financial advice, wealth management, stockbroking, investment trading, insurance services, funds management, corporate finance, and custodial services.

However, securing an AFSL is a highly regulated, costly, and time-intensive process, typically taking up to 12 months to complete.

SIGNIFICANT BARRIERS TO ENTRY FOR AFSL APPLICANTS

Beyond the application process, obtaining and maintaining an AFSL requires compliance with strict regulatory conditions, which can present significant challenges for new businesses. These include:

Stringent Licensing & Compliance Requirements

AFSL applicants must meet rigorous financial, operational, and regulatory obligations, including:

Capital Adequacy – Demonstrating sufficient financial resources to operate responsibly.
Organisational Competence – Ensuring that key personnel, including a Responsible Manager (RM), have the necessary expertise and qualifications.
Risk Management & Compliance – Establishing internal policies to mitigate financial, operational, and regulatory risks.
Consumer Protection & Best Interest Duties – Meeting ASIC’s disclosure and reporting requirements, particularly for retail clients.
Governance & Regulatory Reporting – Ongoing compliance with evolving financial regulations, requiring substantial investment in legal and compliance frameworks.

Product Innovation

AFSL holders are required to obtain Professional Indemnity (PI) Insurance, which can be:

Difficult to Secure – Many insurers classify financial services businesses as high-risk, leading to limited availability.
Extremely Costly – Premiums for new entrants are often prohibitively expensive, particularly for firms without an established track record.
Legally Essential – Without adequate insurance, operating a financial services business is neither legally nor financially viable.

Operations and Risk Management

To obtain an AFSL, businesses must appoint a qualified Responsible Manager (RM)—a key individual with substantial experience and expertise in financial services who oversees compliance with AFSL obligations.

Hiring an ASIC-Approved RM – Finding and retaining a competent RM is highly competitive and expensive.
Ongoing Compliance & Supervision – The RM is responsible for ensuring continued adherence to ASIC regulations, making their role critical to business operations.

Given these substantial regulatory, financial, and operational barriers, many new entrants find the process of obtaining and maintaining an independent AFSL too complex and costly.

AN ALTERNATIVE PATHWAY: BECOMING A CORPORATE AUTHORISED REPRESENTATIVE (CAR)

For businesses seeking a faster, cost-effective, and compliant way to enter the financial services industry, operating as a Corporate Authorised Representative (CAR) under an established AFSL holder provides an efficient alternative. This pathway allows financial services businesses to:

Reduce Compliance Burdens

Operate under the Licence & Supervision of an Established AFSL

Eliminate High Licensing Costs

No need to invest in an independent AFSL application process.

Avoid PI Insurance Challenges

Covered under the AFSL holder’s existing insurance.

Access Regulatory Expertise & Oversight

Benefit from structured compliance frameworks without the administrative burden.

Focus on Growth, Not Compliance

Allowing businesses to concentrate on delivering client services while leveraging the AFSL holder’s established infrastructure.

Cost & Time Comparison: AFSL vs CAR Registration

Financial Licensing Cost Comparison: AFSL vs CAR (AUD)

HOW KOSEC GROUP SUPPORTS CORPORATE AUTHORISED REPRESENTATIVES

KOSEC Group provides opportunities for suitable businesses to explore Corporate Authorised Representative arrangements, offering:

Comprehensive Regulatory & Compliance Support

Ensuring seamless operations under ASIC regulations.

Access to Established Infrastructure

Including PI insurance, risk management, and governance frameworks.

Experienced Industry Leadership

Providing guidance, oversight, and operational support to ensure business success.

Customised Solutions for Investment Managers

Tailored licensing solutions for wealth managers, financial advisers, and trading firms.

By partnering with KOSEC group as a corporate authorised representative, businesses can streamline entry into the financial services industry, reduce regulatory complexity, and focus on strategic growth—all while operating within a fully compliant, professionally managed framework.

Seamless Licensing, Compliance, and Growth

AREAS WE LICENSE

At KOSEC Group, we equip advisers and corporates with the expertise, tools, and resources to offer comprehensive financial solutions that empowers retail and wholesale clients to achieve their financial goals. Here's how you can expand your service offerings with our support:

Financial Advice:
Solutions For Every Client

Through our financial advisory license, you can offer your clients expert advice to help them navigate complex financial decisions.

With access to tools, insights, and training, you’ll be able to manage a successful practice while prioritising your clients’ best interests.

Financial Planning:
Building Robust Financial Futures

Help your clients gain control of their income, investments, and expenses for a brighter economic future.

You’ll be empowered to deliver personalised strategies that address both short-term objectives and long-term aspirations, ensuring your clients stay on track to meet their financial goals.

Insurance:
Offering Financial Security

Life is unpredictable, but you can help your clients stay prepared.

With access to life insurance, TPD coverage, income protection, and trauma insurance, you can provide a financial safety net that ensures peace of mind when it’s needed most.

Share Trading:
Growing Wealth Through Strategic Investments

Support your clients in accumulating wealth through effective share trading strategies. Provide them with tools for buying and selling shares, expanding SMSFs, and indirect share investments.

With access to comprehensive analysis and market insights, you’ll be able to guide your clients toward making informed decisions.

Superannuation:
Ensuring A Secure Retirement

Help your clients make the most of their superannuation with our advisory services.

Whether it’s offering product advice on superannuation funds or SMSFs, you’ll have the knowledge and resources to guide clients through compliance requirements and ensure they are on the path to a comfortable retirement.

KOSEC Group is committed to supporting businesses at every stage of their journey, offering our extensive solutions to navigate this dynamic industry with confidence.

Apply now

Join KOSEC Group and gain the resources, flexibility, and support you need to take your business to the next level.

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