Loading…
Priya is an authorised representative of only one AFS licensee, Harbour Wealth. Without Harbour Wealth's knowledge she recommends a product that is outside her written authorisation, and the client loses money. Which statement BEST describes Harbour Wealth's position as between it and the client?
Where a representative acts for only one licensee, the licensee is responsible, as between itself and the client, for the representative's conduct whether or not it is within authority (Corporations Act 2001 s917B, compilation 19 Sep 2026), and that responsibility extends to the client's loss (s917E). The only escape is s917D: the representative disclosed the lack of authority before the client relied on it, with enough clarity and prominence. Nothing here suggests that disclosure, so Harbour Wealth is responsible. Supervision failures are not a condition of s917B, and the licensee and Priya are jointly and severally liable (s917F(2)), so the client need not pursue Priya first.
Candidates assume 'outside authority' breaks the licensee's liability. Under s917B it does not; only a clear, prominent disclosure under s917D does.
Practise more Licensing, authorised representatives and professional standards questions
Exam-style questions with worked answers, then full timed mocks. Free to start.
Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.
Start practising →Original practice material mapped to the learning outcomes in ASIC's exam guidance. Independent, not affiliated with or endorsed by ASIC. Verify figures and rules against current guidance before relying on them.