What is sub-broking?

A sub-broker typically does not hold its own Australian Credit Licence and instead works under a referral, agency or credit representative arrangement with a licence holder. Those licensing rules cover consumer credit under the NCCP Act; purely commercial finance falls outside them. Under the referral model, the sub-broker introduces the customer and earns a referral fee or commission, while the licence holder keeps onboarding, KYC and AML checks, the credit assistance and the lender dealings. Under the execution model, the sub-broker is appointed a credit representative under section 64 of the NCCP Act and also prepares the application paperwork, while the licence holder keeps oversight and responsibility.

The flow is the same in both: the customer meets the sub-broker and expresses interest; the sub-broker explains the finance options and collects preliminary information; the customer is introduced to the licence holder for onboarding, or the sub-broker is appointed its credit representative; the application runs through the licence holder's systems; and the fee or commission split is paid under the written agreement.

Day to day, a sub-broker acquires customers and manages the relationship, does an initial needs assessment and explains the finance options (without providing credit assistance unless appointed), collects and forwards documents for KYC and AML onboarding, helps prepare applications when authorised, and keeps basic records and communications. It sits between an introducer, who only refers under the narrow referral exemption, and a credit representative, who may provide credit assistance within the scope of the licence.

The boundaries are firm. Without an appointment, a sub-broker must not provide credit assistance, which means suggesting a particular credit contract or helping a customer apply for one, and must not misrepresent the licence holder's services, scope or remuneration. The commercial relationship (referral fees, commission splits) has to be disclosed to the customer clearly and in writing, and transparent records of conversations, explanations and fees kept.

The licence holder must ensure its credit representatives and agents act within the licence conditions, so a sub-broker who provides credit assistance generally needs to be appointed a credit representative, or to stay inside the narrow referral exemption under a written referral agreement, in line with ASIC guidance. On purely commercial finance the obligations are general conduct, disclosure and unfair contract terms instead. Intermediaries may also carry AUSTRAC obligations for KYC, monitoring and suspicious matter reporting. Records must be kept for statutory periods and professional indemnity insurance is standard. Poor supervision, unauthorised credit assistance or weak AML controls can bring civil penalties, licence restrictions or criminal charges.

Commission income is generally assessable business income; GST may apply to brokerage services, so registration and BAS reporting need checking, and records of commissions and splits support ATO reporting. The commercial risks are clawbacks, non-payment and disputes over splits; the legal one is liability for unauthorised or negligent conduct, which can land on the sub-broker as well as the licence holder.