An agent is a person or entity authorised to act on behalf of another party (the principal) in transactions and negotiations. In Australian lending and finance, the concept of agency is central to how brokers, credit representatives and intermediaries operate. Understanding who is acting as whose agent — and what duties flow from that relationship — matters whenever you arrange a loan, lease or other credit product.
An agent acts for a principal to negotiate, sign contracts, collect payments or provide services within an agreed scope of authority. The principal remains ultimately responsible for the outcomes of what the agent does within that scope.
In lending, common agency relationships include:
The nature of the agency relationship determines who bears liability, what duties are owed, and how disputes are resolved.
Agency can be created in several ways:
Express authority is the most common form in lending. A written agency agreement or credit representative agreement sets out exactly what the agent can do — which products they can arrange, what fees they can charge, and what lenders they can deal with.
Implied authority covers actions that are reasonably necessary to carry out the agent's express authority. A broker authorised to arrange a business loan has implied authority to collect documents, communicate with the lender and coordinate settlement.
Apparent (ostensible) authority arises where a third party reasonably believes the agent has authority based on the principal's conduct. If a lender publicly lists a broker as an accredited representative, a borrower who relies on that representation may hold the lender to commitments the broker made — even if the broker exceeded their actual authority.
This distinction matters in practice. If a dealer promises a borrower a particular interest rate "on behalf of" a funder, the question of whether the dealer had actual or only apparent authority to make that promise can determine who is liable.
Agents owe legal duties to their principal. In the lending context, these duties operate alongside regulatory obligations under the NCCP Act and the Corporations Act:
These terms overlap but have distinct meanings in Australian finance:
| Role | Position | Key distinction |
|---|---|---|
| Agent | Acts for a principal and can bind them | Authority to create legal effects on the principal's behalf |
| Broker | Intermediary between borrower and lenders | Negotiates and introduces — may act as agent for borrower or lender depending on arrangement |
| Credit representative | Operates under an ACL holder's licence | Legally an agent of the licence holder for compliance purposes |
| Authorised representative | Operates under an AFSL holder | Agent of the licensee for financial services activities |
A broker can be an agent (and usually is), but not all agents are brokers. The critical question is always: who is the principal, and what authority has been granted?
Several regulatory layers govern agency in Australian lending:
ACL holders who appoint credit representatives must maintain a register, ensure adequate training, monitor conduct and take responsibility for the representative's actions. This supervisory obligation is a key feature of the agency model in Australian lending.
Agency creates exposure for both principals and third parties. Common risks in lending include:
Risk mitigation starts with clear written agreements, defined authority limits, regular monitoring and proper disclosure of all remuneration arrangements.
It depends on the arrangement. Most brokers act as agent for the borrower when comparing products and submitting applications, but they may also have obligations to lenders under their aggregator agreements. The broker's Credit Guide should clarify this.
Yes, if the agent acts within their actual authority or if the borrower or lender reasonably relies on apparent authority. This is why written authority limits matter.
The principal can generally repudiate acts outside actual authority, but third parties who relied on apparent authority may still be able to hold the principal to the commitment.
The ACL holder is responsible for the conduct of their credit representatives. This is a fundamental feature of the credit representative model under the NCCP Act.
Yes. In lending, brokers and credit representatives must disclose commissions, fees and other remuneration in their Credit Guide and in loan proposals.
In Australian lending, agency relationships define how brokers, credit representatives and intermediaries operate and who bears responsibility for their conduct. The key concepts are the scope of authority (actual vs apparent), the fiduciary and statutory duties owed to the principal, and the regulatory framework under the NCCP Act and ASIC oversight that governs how agents are appointed, supervised and held accountable.
This article is general information only and is not legal, tax or financial advice.