Guides · Financial Services Guide · Chapter 1 of 7

Do you need an AFSL?

Last reviewed 29 August 2026

The licensing trigger — financial products, financial services, and the exemptions that are relied on more often than they apply.

In short

You need an Australian Financial Services Licence if you carry on a financial services business in Australia, unless you are exempt or authorised by someone else's licence. The analysis is mechanical: identify the product, identify the service you provide in relation to it, then test the exemptions. Most licensing disputes come from a product being characterised more broadly than the business expected.

Financial services licensing under Chapter 7 of the Corporations Act 2001 (Cth) is not a judgement call about how regulated your business feels. It is a two-step test applied to what you actually do, and it catches a lot of businesses that do not think of themselves as financial services businesses at all.

Step one: is there a financial product?

The Act defines a financial product both by a general test — a facility through which a person makes a financial investment, manages financial risk, or makes non-cash payments — and by a list of specific inclusions. The specific list captures securities, interests in managed investment schemes, derivatives, general and life insurance, superannuation, deposit products and non-cash payment facilities. There are also express exclusions, including credit facilities, which sit under the separate National Consumer Credit Protection regime.

The general test is where businesses get caught. A prepaid or stored-value arrangement can be a non-cash payment facility. A revenue-sharing or profit-participation arrangement can be a managed investment scheme interest. A contract whose value moves with an underlying reference price can be a derivative even where nobody involved uses that word.

Step two: are you providing a financial service?

The services that trigger licensing include providing financial product advice, dealing in a financial product, making a market, operating a registered scheme, providing a custodial or depository service, and providing a crowd-funding service. Two of these do most of the work in practice:

Advice. A recommendation or opinion intended to influence, or that could reasonably be regarded as intended to influence, a decision about a financial product. It splits into personal advice (where the provider has considered the client's objectives, financial situation or needs, or a reasonable person would expect them to have) and general advice.
Dealing. Applying for, acquiring, issuing, varying or disposing of a product — including arranging for another person to do so. "Arranging" is broad, and it is the limb that captures referral, comparison and distribution businesses.

Carrying on a business in Australia

The regime applies to conduct in this jurisdiction and can reach offshore providers who engage in conduct that induces, or is likely to induce, Australians to use their service. An offshore platform accepting Australian retail clients should assume the regime applies and work backwards from there.

The exemptions people over-rely on

Wholesale-only. Dealing exclusively with wholesale clients narrows your obligations substantially, but it does not remove the licensing requirement. You still need an AFSL — with a wholesale-only authorisation.
The "we only refer" position. A bare referral that passes on a name and contact details, with no recommendation and no involvement in the application, can sit outside the regime. Once you pre-qualify, compare, recommend or help complete an application, you are likely arranging.
Factual information. Purely factual, balanced information is not advice. Selecting, ranking or emphasising options moves it toward advice quickly.
Regulatory relief. ASIC class orders and legislative instruments provide targeted relief in specific circumstances. Relief is conditional, and the conditions are enforceable.

The cost of getting it wrong

Providing a financial service without a licence is an offence, exposes the business to civil penalty proceedings, and can render arrangements voidable at the client's election. It also tends to surface at the worst possible moment: during due diligence on a raise or a sale, where an unresolved licensing question is priced as a material contingent liability.

Where this fits

We provide fixed-fee licensing assessments that set out, in writing, whether your model requires an AFSL and which authorisations it needs — see our advice and compliance practice.

Talk to us

Want this applied to your business?

Send us a note about what you're working on. We'll respond within one business day and, if we're a fit, book a free 15-minute consultation with a senior lawyer.

All chapters