Margin lending

What's new

ASIC releases guidance to improve margin lending disclosure, 10-232AD, 10 November 2010
Margin lending - getting or varying an AFS licence Updated. 16 April 2010
Margin lending licensing commences, 10-12AD, 1 February 2010

Legislation regulating margin lending received Royal Assent on 6 November 2009.

The changes to margin lending, contained in the Corporations Legislation Amendment (Financial Services Modernisation) Act, are part of the Government's plan to regulate consumer credit nationally.

The Act requires (among other things):

issuers and advisers of margin lending facilities to be licensed by ASIC under an Australian financial services (AFS) licence;
advisers to only provide advice that is appropriate to the client's individual circumstances;
margin lenders to meet new responsible lending requirements;
consumers to have access to external dispute resolution services; and
clarity around responsibility for notifying clients in the case of a margin call.

Timeline

The Act has been proclaimed to commence on 1 January 2010. Issuers of, and advisers on, margin lending facilities are able to apply for an AFS licence, or a variation to an existing AFS licence, between 1 February 2010 and 30 June 2010 . The balance of the new requirements took effect from 1 January 2011.

Transition timeline for margin lending reforms

Licensing

From 1 July 2010 issuers of, and advisors on, margin lending facilities who have not applied for an AFS licence or who have not applied for a variation to an existing AFS licence cannot provide financial services to retail clients in respect of margin lending facilities until the necessary AFS licence authorisations are obtained.

The same licensing, conduct and disclosure requirements that currently apply to financial services will apply to providers and financial advisers in relation to margin lending facilities.

Read our information sheet

ASIC guidance on margin lending

ASIC has released updated policy and regulatory guidance to assist issuers and advisers of margin lending facilities comply with their new requirements.

Regulatory Guide 2 AFS Licensing Kit: Part 2 — Preparing your AFS licence application (RG 2)
Regulatory Guide 3 AFS Licensing Kit: Part 3 — Preparing your additional proofs (RG 3)
Regulatory Guide 146 Licensing: Training for financial product advisers (RG 146)
Regulatory Guide 166 Licensing: Financial requirements (RG 166)

Updated pro forma

Pro Forma 209, Australian financial services licence conditions (PF 209)

Consultation papers

Consultation Paper 108 Margin lending: Training of financial advisers, Released 13 July 2009. Comment closed 10 August 2009 | View submissions | Download report on submissions
Consultation Paper 109 Margin lending: Financial requirements. Released 13 July 2009. Comment closed 10 August 2009. | View submissions | Download report on submissions
Consultation Paper 112 Dispute resolution requirements for consumer credit and margin lending (Issued 27 July 2009; consultation closed 11 September 2009); View submissions
Consultation Paper 129 Non-standard margin lending facilities: Improving disclosure for retail clients. Released 21 December 2009.

More information:

Corporations Legislation Amendment (Financial Services Modernisation) Act

Draft Regulations and example Product Disclosure Statement

National Consumer Credit Regulation

ASIC Website: Printed 06/19/2013

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