GopherWood LawyersBecome a Client
Separated workspaces in a contemporary Sydney office

Regulatory Disputes & Investigations

Corporate Authorised Representative Disputes

In this practice area

Acting for licensees and corporate authorised representatives in disputes over authorisation agreements, termination, client liability, indemnities and ASIC action involving representatives.

01

What these disputes are

Section 916A of the Corporations Act 2001 (Cth) allows a financial services licensee to authorise a person, including a body corporate, to provide financial services on its behalf. A company authorised in this way is commonly called a corporate authorised representative. The model allows advice firms, fund managers and other businesses to operate under another entity's licence.

Disputes arise between licensees and representatives over fees, compliance obligations, audit findings, termination of authorisation, ownership of client relationships and records, post-termination restraints, and who bears the cost when a client claim or regulatory problem emerges.

02

The legal framework

Under Division 6 of Part 7.6 (sections 917A to 917F), a licensee is generally responsible to clients for the conduct of its representatives acting within authority, and in some circumstances beyond it where the client could reasonably believe the representative was acting for the licensee. As between licensee and representative, the authorisation agreement usually governs indemnities, recovery and conduct of claims.

Licensees must monitor and supervise their representatives under section 912A and report reportable situations about them to ASIC. ASIC's register records authorised representatives, and ASIC may take action against the licensee or, through banning orders under section 920A, against individuals involved. General contract law, the Australian Consumer Law and equitable principles also apply to the commercial relationship.

03

How these matters run

Many disputes start with an audit or a compliance finding that the licensee says justifies termination, or with a representative's decision to move to another licensee. Termination notice periods, cure rights, client notification and access to records are often the first issues. Urgent relief may be needed where client files, systems or data are withheld.

Where a client claim is involved, the licensee may face an AFCA complaint while the representative is the party with the knowledge and the relationship. Coordinating the response, and preserving indemnity and insurance positions, is important from the outset.

04

How GopherWood Lawyers acts

We act for both licensees and representatives. We review the authorisation agreement, the compliance history and the regulatory overlay, and advise on termination, transition, restraints and recovery.

Where the dispute becomes litigious we run it in the Federal Court or the Supreme Court of New South Wales, including urgent applications, and coordinate with AFCA and insurer processes so positions taken in one forum do not undermine another.

Frequently asked questions

Corporate Authorised Representative Disputes

Can a licensee terminate my authorisation immediately?

That depends on the authorisation agreement and the reason for termination. Many agreements allow immediate termination for serious compliance breaches and longer notice otherwise. A licensee must also meet its own regulatory obligations. If termination is unjustified, remedies may include damages and, in some cases, urgent orders about client records.

Who pays if a client of the representative sues?

As against the client, the licensee is often responsible for the representative's conduct under sections 917A to 917F. The licensee may then seek to recover from the representative under an indemnity in the authorisation agreement or at general law. Professional indemnity insurance at both levels is usually relevant and should be notified promptly.

Who owns the client book when a representative leaves?

There is no single answer. Ownership of client relationships, files and data is usually governed by the authorisation agreement and any separate sale or servicing arrangements, together with privacy law and record-keeping obligations. Restraint clauses must be reasonable to be enforceable. The documents need to be read closely before any step is taken.