Australian Credit Licensing: A New Regime

You may have read numerous articles relating to the new Australian Credit Licensing scheme. Under the National Consumer Credit Protection Bill 2009, which was passed by parliament on 26 October 2009, a provider of credit services had to have registered with the Australian Securities and Investments Commission (ASIC) by the end of 30 June 2010.

Whether you are a new or existing credit provider you must have obtained an Australian Credit License to be able to operate in Australia after 30 June 2010.

Who needs a credit licence?

Under the new regime, you will need an Australian Credit Licence only where the credit is:

  • provided to a consumer or strata corporation;
  • provided predominantly for personal, household or domestic purposes or residential property investment; and
  • provided for products that are for business purposes.

Under the National Consumer Credit Code, you are either a ‘credit provider’ or a ‘provider of credit services’. Credit unions, Banks mortgagees and general lenders are all examples of a ‘credit provider’. However financial advisers, finance brokers and mortgage managers are all examples of a ‘provider of credit services’. If you fall under any of the above two general categories, you must have a credit licence.

Intermediaries – do they need a licence?

If you act as an intermediary between a lender and a consumer, with the aim of obtaining credit for the consumer, you will need to have a credit licence. Under the new regulations, you do not need to deal directly with the consumer to be an intermediary. So long as your role was to secure a credit contract or consumer lease for a consumer with a credit provider, you will need to obtain a credit licence. Common examples of intermediaries include financial brokers and mortgage managers.

Who does not need a credit licence?

You will not need a credit licence if you are:

  • an authorised credit representative acting on behalf of somebody who has an Australian Credit Licence; or
  • an employee or director of somebody who has an Australian Credit Licence.

You will not need a credit licence for some types of credit, such as:

  • credit without express prior agreement i.e. when a savings account falls into debit;
  • short term credit i.e. credit for less than 62 days;
  • employee loans; and/or
  • credit provided by pawnbrokers i.e. where personal property is provided as security.

How to get a credit licence?

The Commercial and Business law team at Berrigan Doube Lawyers can help you obtain the Australian Credit Licence for your business if you have not already done so. In granting a licence to a credit or credit services provider, ASIC will consider a variety of factors including, but not limited to, whether:

  • the person is a fit and proper person to engage in credit activities;
  • an audit report is requested by ASIC; and
  • a banning order was made against the person under the Corporations Act 2001.

You will need to apply for a credit licence online and with this you must pay an application fee that will vary according to the credit amount you have provided. You must be aware that these actions do not automatically entitle you to a credit licence and ASIC will determine your application based on its degree of compliance with the National Credit Act.

Please be advised that this article is not intended to be legal advice. All advice Berrigan Doube Lawyers provides is tailored to our client’s needs and therefore our advice is on a case-by-case basis after having consideration of our client’s circumstances.