Australia: Full Federal Court Finds in Favour of ASIC Appeal Concerning the Scope of the “Authorised Representative” Exemption

Jun 11 2025

The Full Federal Court (the Court) has ruled in favour of the Australian Securities and Investments Commissions’ (ASIC) appeal as to whether BPS Financial Pty Ltd (BPS) could rely on the ‘authorised representative’ exemption in relation to issuing their ‘Qoin Wallet’ product (see our previous post for background). The authorised representative exemption is commonly relied upon and allows a person or entity to provide a financial service under the Corporations Act on behalf of the holder of an Australian financial services licence (AFS licence) without having to hold an AFS licence itself.

The primary judge concluded that a person did not need to hold an AFS licence to ‘issue’ a financial product during a particular period where it was appropriately authorised to provide the relevant financial services on behalf of an AFS licensee.

In short, the Full Federal Court in Australian Securities and Investments Commission v BPS Financial Pty Ltd [2025] FCAFC 74 reversed the primary judge’s decision, finding that the authorised representative exemption did not apply to BPS as BPS was acting on its own behalf and not as a representative of PNI Financial Services Pty Ltd (PNI) when issuing Qoin Wallet. The Court identified a number of factors that it considered showed that BPS was not acting as the representative of PNI in issuing Qoin Wallet.

This decision is consistent with ASIC’s long-standing position reflected in ASIC Regulatory Guide 36 and Information Sheet 251 that the authorised representative exemption is only available to persons acting as an “agent” of the AFS licensee and it cannot be relied upon if the person is acting as a “principal” by offering or issuing the particular product. However, the Court declined to consider whether the issuer of a financial product can:

Never act in their own capacity when they are operating as an authorised representative of an AFS licensee; and
Whether AFS licensees must always be involved in the issuing of relevant financial products when they are sold or promoted by its authorised representative.

The Court considered that ASIC’s reasoning in the appeal raised a factual question as to whether the service provided by BPS was done so in a representative capacity in the circumstances, and that consideration of broader application of the exemption was not necessary. However, the Court’s decision indicates that it may be possible, at least in theory (and ignoring ASIC’s position), for the issuer of a financial product to issue the product as the representative of an AFS licensee in reliance on the authorised representative exemption. The Court expressly noted that the answers to such questions will likely be fact dependent.

The matter will proceed to a penalty hearing for breach of the requirement to hold an AFS licence at a date to be determined.