Australian Credit Licensing (ACL)
Licensing and Registration
The National Consumer Credit Protection Act (NCCP Act) is the key legislation passed by the Commonwealth taking over the regulation of credit from 1 July 2010.
Businesses conducting a credit activity must be registered or be appointed as a credit representative of a registered business. Credit activities include finance broking, lending, leasing, servicing and managing NCCP Act regulated loans.
Click the ASIC link above to see whether your circumstances require that you need a licence.
The following information is as summarised by the MFAA:
How does licensing affect day to day business for brokers
The basic new requirements are:
- you must conduct enquiries to assess whether a loan is unsuitable. This involves a three stage process:
- make reasonable enquiries about the borrower’s requirements and objectives
- make reasonable enquiries about the borrower’s financial situation
- take reasonable steps to verify that financial situation
- you must ensure that borrowers are not disadvantaged by any conflict of interests
- comparison rate schedules are abolished (but you must still show comparison rates in advertisements that mention repayments or interest rates)
- you must be registered/licensed or appointed as a credit representative under an organisation’s licence
- you must ensure that any referrer who is not registered or a credit representative discloses to the borrower any commission payable to the referrer (it’s a good idea for you to make this disclosure)
The NCCP Act also imposes the following general conduct obligations:
- conduct business efficiently, honestly, and fairly
- comply with any conditions imposed on their registration
- comply with all credit legislation
- take reasonable steps to ensure your representatives (this includes employees as well as credit representatives) comply with all credit legislation.
- Breach register – There is no obligation to maintain a breach register until you are licensed, but it would be a good idea.
- Loan assessments – You need to develop a system for assessing whether a loan is ‘not unsuitable’ and a system for recording that information. As from 2011 you will need to provide a copy of that assessment on request.
Register online yourself at www.asic.gov.au/credit.
Before you complete your registration, please check the following:
- Determine which entity you are registering as the licensee.
- Depending on the entity in point 1, check all business registration details are correct on relevant government websites e.g. if a company, check the company’s details on www.asic.gov.au are correct.
- If registering as a company, make sure all Directors details on www.asic.gov.au are correct.
- Obtain police and bankruptcy checks for all “owners” of the entity eg. for a company then checks for the directors; or for a partnership then checks on the partners, etc.
- Ensure that the entity is a member of an external disputes resolution scheme e.g. AFCA (afca.org.au)