Any fund manager or investment professional seeking to operate in Australia will quickly encounter a choice: apply for your own Australian Financial Services Licence (AFSL) or operate under an existing licence holder as a Corporate Authorised Representative (CAR).
Understanding what a CAR arrangement is, what it involves, and whether it is the right path for the business is one of the first and most consequential compliance decisions to make.
What Is a Corporate Authorised Representative (CAR)?
A Corporate Authorised Representative (CAR) is a company or entity that has been authorised by an AFS licensee to provide specific financial services covered by that licensee's AFSL, without needing to hold its own licence.
The authority comes from the Corporations Act 2001 (Cth). An AFS licensee can authorise a body corporate to act as its representative. The written authorisation defines the scope of financial services the CAR is permitted to provide.
In practical terms, the CAR operates under the AFSL holder's licence. It can deal in financial products, provide financial product advice, or carry out other authorised activities — but only to the extent the written notice from the licensee permits.
The CAR is recorded on the ASIC Authorised Representatives Register, publicly searchable via ASIC Connect. The appointing licensee must notify ASIC of the appointment within 30 business days of issuing the written authorisation.
The Licensing Requirement in Australia
No entity can carry on a financial services business in Australia without either holding an AFSL or operating under a relevant exemption.
One of the most widely used exemptions is when a person does not need their own AFSL if they are providing financial services as a representative of a licensee. The CAR arrangement is the corporate form of this exemption.
Operating as a fund manager or dealing in financial products in Australia is not permitted without appropriate AFSL coverage — either through your own licence or a properly structured authorised representative arrangement.
How a CAR Arrangement Works in Practice
Once appointed, the CAR provides financial services within the scope of its written authorisation. The AFSL holder, as the appointing entity, remains responsible for ensuring those services are provided in compliance with the financial services laws.
This means the AFSL holder carries ongoing obligations to:
- Train the CAR and its personnel on the regulatory requirements relevant to their activities
- Supervise the CAR's conduct to identify and address compliance issues before they escalate
- Monitor activities on an ongoing basis for signs of non-compliance
- Review the CAR's business operations, systems and senior management at regular intervals
From the CAR's perspective, operating under the licensee's AFSL means accepting the licensee’s oversight authority. The CAR must act within the scope of its authorisation and in a manner consistent with the licensee's obligations to ASIC.
The 2024 Federal Court decision in Australian Securities and Investments Commission v Lanterne Fund Services Pty Limited [2024] FCA 353 reinforced how seriously regulators take these responsibilities. The Court found that Lanterne — the AFSL holder — had failed to adequately supervise its CAR arrangements, including a failure to ensure services were provided efficiently, honestly and fairly. The outcome included enforcement orders requiring independent compliance reviews at the licensee's cost.
The message from ASIC was clear: AFSL holders cannot treat CAR relationships as passive. Active supervision and documented governance are expected.
CAR Arrangement vs Holding Your Own AFSL
For most fund managers — particularly those in the early stages of building their business — the choice between obtaining an AFSL and entering a CAR arrangement comes down to time, cost and operational readiness.
Obtaining Your Own AFSL
Applying for an AFSL is a significant undertaking. ASIC's own service charter targets decisions on 70% of applications within 150 days of receiving a complete application, and 90% within 240 days. In practice, the preparation period alone can take four to eight months — meaning many managers wait close to a year before they can operate.
The costs are also material. Obtaining an AFSL can exceed $25,000 in upfront costs. Ongoing compliance obligations — including annual reviews and audits — add a further $10,000 to $50,000 per year.
Beyond cost, holding your own AFSL requires dedicated internal compliance resources: Responsible Managers who meet ASIC's competency requirements, documented compliance systems, and processes for self-reporting any breaches. External Responsible Managers typically cost between $60,000 and $120,000 per year. For a first-time manager without existing infrastructure, these are substantial obligations.
Operating as a CAR
A CAR arrangement allows a manager to enter the market without the time and cost of obtaining their own licence. The manager operates under the AFSL holder's existing authorisations, supported by the training and supervision framework that the licensee has in place.
The practical benefits include:
- Faster path to market — within weeks rather than months
- No need to build internal compliance infrastructure from the ground up
- Access to the licensee's existing compliance systems, resources and expertise
- Ongoing regulatory support from an experienced license holder
The trade-off is oversight: the CAR operates within the licensee's governance framework and must act within the scope of its written authorisation. The activities it can carry out are defined by what the AFSL holder has been licensed to do and what it has agreed to authorise.
For this reason, the quality and capability of the AFSL holder you partner with matters considerably.
What to Look for in a CAR Provider
Not all AFSL holders offering CAR arrangements are equal. The level of support, compliance supervision quality and operational depth vary considerably across the market.
Scope of Authorisation
The AFSL holder's licence must cover the financial services you intend to provide — whether that is dealing in managed investment schemes, providing financial product advice, or operating other financial products. A provider whose licence does not encompass your intended activities cannot authorise you to carry them out.
Training and Supervision Infrastructure
Regulatory obligations require the AFSL holder to train and supervise its CARs. A provider with well-documented compliance frameworks, structured onboarding processes and ongoing monitoring capacity is meeting its obligations — and providing its CARs with meaningful operational protection.
Operational Depth
Some AFSL holders offering CAR coverage operate as compliance-only providers. Others, like FundBase Group, function as fully integrated service platforms — combining AFSL coverage and compliance support with fund formation, trustee services, investor onboarding and registry, fund administration, and reporting. For fund managers who need more than licensing coverage, an integrated provider can reduce both cost and complexity.
Track Record and Regulatory Standing
Given ASIC's focus on the quality of CAR supervision — reinforced by the Lanterne decision — partnering with an AFSL holder that has a demonstrable record of active oversight is not merely preferable. It is a matter of sound governance.
The Regulatory Picture: What ASIC Expects
ASIC has made its expectations for CAR arrangements increasingly explicit, and recent court decisions have given those expectations real weight.
The Full Federal Court's 2025 decision in Australian Securities and Investments Commission v BPS Financial Pty Ltd [2025] FCAFC 74 added an important layer of clarity: a CAR must genuinely act as a representative of the AFSL holder — not as an independent operator who has arranged access to a licence simply to avoid the obligation to hold one. The Court held that the exemption from the requirement to hold an AFSL requires the CAR to act on behalf of the licensee, not purely on its own behalf.
For fund managers, the practical implication is this: a CAR arrangement only provides regulatory protection when it is properly structured and genuinely operated. The licensee must be engaged, supervisory systems must be active, and the CAR's activities must fall squarely within the scope of its written authorisation.
Arranging access to an AFSL and treating it as a passive credential is not a structure ASIC will accept — and recent enforcement activity demonstrates it will act on that position.
Do You Need a CAR Arrangement?
For most investment managers considering launching a fund in Australia, the answer is likely yes — at least in the early stages.
The questions worth working through are:
- Do you need AFSL coverage to operate your fund? If you are marketing to investors, dealing in financial products or providing financial product advice in Australia, the answer is almost certainly yes.
- Is obtaining your own AFSL the right path right now? If your timeline is measured in months, your budget is constrained, or your compliance infrastructure is still being established, a CAR arrangement is often the more practical starting point.
- What level of ongoing support do you need? Some providers can offer compliance coverage only. If you want a partner across the full operating infrastructure of your fund — compliance, registry, administration, reporting — an integrated provider will serve you better.
- What is your long-term plan? Some managers use a CAR arrangement as a launch pad, with a view to obtaining their own AFSL once the business has scale. Others find the CAR model suits their structure indefinitely. Both are valid — the right answer depends on your business model, investor base and growth plans.
For emerging managers, first-time fund operators and businesses exploring the Australian market, a well-structured CAR arrangement with a capable licence holder is frequently the most practical and cost-effective path to operating legally and to the standard investors expect.
How FundBase Group Supports CAR Arrangements
FundBase Group (FB Corp Limited ABN 16 675 876 490) holds AFSL 557810 and provides AFSL coverage under a CAR arrangement.
Unlike providers that offer compliance coverage in isolation, FundBase Group can deliver AFSL coverage and compliance services on a standalone basis or alongside the full range of fund infrastructure services — fund formation and structuring, trustee and Responsible Entity services, investor onboarding and registry, fund administration and accounting, and governance support.
This means managers entering a CAR arrangement with FundBase Group have access to a single operating partner across the functions that matter most in the early stages of a fund's life. Rather than coordinating separate compliance, trustee, administration and registry providers, managers can engage one platform and reduce both cost and execution risk.
The compliance support provided under FundBase Group's CAR framework is active and documented. Training on regulatory obligations is provided for each manager's specific activities. Supervision is structured, not passive — consistent with what ASIC expects and what the Lanterne decision confirmed is required.
For managers who want to move from concept to operating fund in weeks rather than months, FundBase Group's Fund-in-a-Box model combines the CAR arrangement with the full fund operating infrastructure, giving managers a complete and coordinated path to launch.
Getting Started
If you are assessing whether a CAR arrangement is appropriate for your business, the best starting point is a direct conversation about your intended activities and timeline.
FundBase Group works with emerging and established managers across a range of fund types — from equities and private credit to venture capital, private equity and real assets. Whether you are launching for the first time or reviewing your current operating structure, the team can work through the compliance and licensing questions that matter.
Contact FundBase Group to discuss your fund structure and licensing requirements.
References
- Australian Securities and Investments Commission. Who can be an authorised representative of an AFS licensee. ASIC. https://www.asic.gov.au/regulatory-resources/financial-services/financial-advice/running-a-financial-advice-business/authorised-representatives/who-can-be-an-authorised-representative-of-an-afs-licensee/
- Australian Securities and Investments Commission. AFS licensee obligations. ASIC. https://www.asic.gov.au/for-finance-professionals/afs-licensees/afs-licensee-obligations/
- Corporations Act 2001 (Cth) ss 911A, 916A, 916B.
- Australian Securities and Investments Commission v Lanterne Fund Services Pty Limited [2024] FCA 353.
- Australian Securities and Investments Commission v BPS Financial Pty Ltd [2025] FCAFC 74.
- Sophie Grace. AFSL application process. Sophie Grace. https://sophiegrace.com.au/afsl-application-process/
- Wikipedia. Australian Financial Services Licence. Wikipedia. https://en.wikipedia.org/wiki/Australian_Financial_Services_Licence
- Hall & Wilcox. AFS licence application — steps and timing. Hall & Wilcox. https://hallandwilcox.com.au/news/afs-licence-application-steps-and-timing/
- Allens. Federal Court and ASIC shine spotlight on supervisory and risk management requirements for CAR arrangements. Allens. https://www.allens.com.au/insights-news/insights/2024/04/federal-court-and-asic-shine-spotlight-on-supervisory-and-risk-management-requirements-for-car-arrangements/
- King & Wood Mallesons. ASIC v BPS Financial — What is the scope of the authorised representative AFSL exemption? King & Wood Mallesons. https://www.kwm.com/au/en/insights/latest-thinking/asic-v-bps-financial-what-is-the-scope-of-the-authorised-representative-afsl-exemption.html
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