In Australian finance, two ASIC licences do most of the heavy lifting: the Australian Financial Services Licence (AFSL) and the Australian Credit Licence (ACL).
They’re often mentioned in the same breath, but they regulate different activities. One is about financial products & markets, the other about consumer credit. If you work in or follow Australian finance, it’s worth understanding the split.
What An AFSL Actually Covers
An Australian Financial Services Licence (AFSL) is the ticket to run a financial services business in Australia.
In broad terms, an AFSL is needed if you:
- Give financial product advice (about shares, managed funds, super, insurance, derivatives, etc.)
- Deal in financial products (issue, arrange, buy/sell on behalf of clients)
- Operate a managed investment scheme, super fund or other investment structure
- Provide custodial / depository services or traditional trustee company services
- Run things like CCIVs, crowd‑funding platforms or certain claims‑handling services
The focus is:
“Are you in the business of dealing with financial products and investors?”
If yes, you’re in AFSL territory, with all the associated obligations around competence, financial resources, disclosure and conduct.
What An ACL Actually Covers
An Australian Credit Licence (ACL) sits under the national consumer credit regime.
You’re in ACL land if your core activities look like:
- Providing credit under a credit contract (home loans, personal loans, credit cards, consumer leases)
- Providing credit assistance (e.g. brokers helping consumers choose/apply for loans or leases)
- Acting as a credit intermediary between the lender and the consumer
- Enforcing or managing rights under a regulated credit contract, mortgage or guarantee
The question here is:
“Are you in the business of providing or arranging consumer credit?”
If yes, the National Consumer Credit Protection Act framework applies: responsible lending concepts, hardship handling, disclosure, and a stricter “don’t disadvantage your customer in a conflict” standard.
Four Key Differences That Actually Matter
1. Products Vs Credit
- AFSL = financial products: securities, managed funds, derivatives, super, many insurance products, etc.
- ACL = regulated credit contracts & consumer leases.
Plenty of businesses need both (for example, a wealth business that also arranges margin lending or home loans), but the underlying concepts are different.
2. Who The Regimes Were Built To Protect
Both ultimately point at households, but from different angles:
- AFSL focuses on how financial products are designed, sold & advised on, with a big distinction between retail and wholesale clients.
- ACL focuses on whether credit is provided and administered fairly, assuming the borrower is a retail consumer by default.
That’s why you see things like best‑interests duties for retail advice on the AFSL side, and detailed hardship/arrears expectations on the ACL side.
3. How Conflicts Are Framed
Both licences require licensees to act “efficiently, honestly and fairly” and to manage conflicts. The credit regime goes further: ACL holders must have arrangements that ensure consumers are not disadvantaged by conflicts related to the credit activities they provide.
In practice, that means the outcome for the borrower is front and centre in credit land, not just the existence of a conflicts policy.
4. Licence Flexibility
An AFSL can, with the right authorisations, cover some credit‑related services inside a broader financial services business. The reverse isn’t true: an ACL cannot be used to run a funds business, broking desk or advice practice.
For mixed‑model fintechs, the usual pattern is either:
- An AFSL with specific credit‑related authorisations, or
- Separate AFSL + ACL authorisations inside the same group, depending on design.
Reading Licence Badges Like An Adult
From the outside, all you see is a line in tiny font:
“XYZ Pty Ltd holds Australian Financial Services Licence ###### and Australian Credit Licence ######.”
Behind that, every ACL or AFSL application process means proving to ASIC that the business has the right authorisations, competent responsible managers, adequate financial resources and real compliance systems for what it wants to do.
If a firm is clearly in the business of:
- Running investment products or giving investment advice, but only mentions an ACL, or
- Writing home loans and leases, but only talks about an AFSL,
…that mismatch is a useful signal that something might not be lined up correctly in the background.
Conversely, when you see a business clearly displaying the right licence for the activity you’re looking at (and, where relevant, both), you’re at least dealing with someone who’s been through the vetting process and sits inside a live regulatory framework – which is the minimum baseline any system like ours should demand.