10-117AD Updated ASIC guidance helps industry prepare for credit licensing
Tuesday 8 June 2010
With the start date for applications for an Australian credit licence (credit licence) soon to commence, ASIC has issued updated policy guidance, and details of the standard conditions that will be imposed by ASIC on credit licences, to assist those individuals and entities intending to engage in credit activities after 1 July 2010.
The updated guidance is contained in:
Regulatory Guide 203 Do I need an Australian credit licence (RG 203)
Regulatory Guide 204 Applying for and varying an Australian credit licence (RG 204).
The changes to the regulatory guides generally reflect the final form of the National Consumer Credit Protection Act 2009(National Credit Act), National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Transitional Act) and associated regulations, rather than substantive changes to ASIC’s current policies and approach to administering the new regime. ASIC has also taken the opportunity to clarify some issues that have been raised by industry.
ASIC has also released Pro Forma 224 Australian credit licence conditions (PF 224) which contains the standard licence conditions that will be imposed by ASIC on credit licences.
Background to updates to ASIC’s regulatory guides
RG 203 and RG 204 were first released in December 2009. This guidance was released prior to the commencement of the legislation to ensure those likely to be impacted by the reforms could determine whether they would need to be licensed, and to help them prepare their businesses in readiness for the new requirements when they come into effect. It was anticipated that the guidance would need to be reviewed once the legislation was finalised.
A number of regulations have also been made under National Credit Act and Transitional Act that affect how the credit licensing regime will apply, which are reflected in these updated guides.
The updated guidance also incorporates useful feedback from industry on the development of our policies and procedures for the implementation of the credit licensing regime.
Key changes to regulatory guides
RG 203 contains information to help people who engage in credit activities to understand whether they need to be licensed. Key changes to RG 203 include:
Updates to information about the treatment of people who engage in credit activities in relation to credit contracts and consumer leases that were entered before 1 July 2010 (carried over instruments). Further information about carried over instruments is contained in ASIC Information Sheet 110 Lenders with carried over instruments (INFO 110)
Clarification that the licensing requirements only apply to a provision of credit where the credit is connected with Australia, and that activities performed outside Australia will only be caught where they relate to credit provided in the course of a credit business carried on in Australia
Additional information to illustrate when debt management services will be subject to the licensing requirements.
RG 204 outlines the process for applying for a credit licence and the questions that will be asked in the application. Key changes to RG 204 include:
Updates to information about the licence application process for credit providers and lessors that engage in credit activities in relation to carried over instruments. More detailed information on credit providers and lessors that can choose to engage in credit activities as unlicensed carried over instrument lenders under a modified statutory regime is contained in INFO 110
Updates to information about the calculation of the licence application fee
Information about additional types of streamlined applicants
Updates to information about ASIC’s process for assessing applications of streamlined applicants, and limitations that will be placed on the authorisations that will be given to some types of licensees (i.e. lenders mortgage insurers and life insurers that rely on the streamlining process, and assignee debt collectors)
Updates to information about the types of entities that can apply for a licence to include bodies corporate other than companies and registered Australian bodies
Updates to information about the questions that will be included in the application about systems and arrangement for complying with the general conduct obligations, and ASIC’s process for assessing an applicant’s ability to comply with those obligations
Updates to information about the background checks that are required for people involved in the management of the applicant, including removal of the requirement for bankruptcy checks and expansion of the acceptable types of criminal history check and credit history reports.
Australian credit licence conditions
PF 224 sets out each of the standard conditions that will be imposed by ASIC on credit licences.
ASIC will impose these conditions on all credit licences at the time that the licence is granted to support the statutory requirements and the minimum requirements that ASIC has set in its regulatory guides dealing with the general conduct obligations of credit licensees. These conditions are additional to the conditions set out in regulation 9 of the National Consumer Credit Protection Regulations 2010.
Information about these standard conditions will help potential credit licence applicants to prepare their businesses and to make statements in their licence application about their ability to comply with the conditions that (if a licence is granted).
ASIC intends to revise other regulatory guides that deal with the general conduct obligations of credit licensees.
We will continue to publish information on our website about the new regulatory framework including the legislation, licensing process, general obligations and the timeframe in which the changes will take effect.
To receive information from ASIC about the National Consumer Credit Protection reforms, and be informed about relevant policy announcements or regulatory guidance, subscribe to the ASIC Credit Reform Update available at www.asic.gov.au/credit.