FAQs - Getting a credit licence

This information sheet (INFO 103) answers frequently asked questions about getting an Australian credit licence (credit licence) under the National Consumer Credit Protection Act 2009 (National Credit Act). It covers:

For more detailed guidance on these issues, see Where can I get more information? at the end of this page.

Applying for a credit licence

How do I know what authorisations to select?

The credit licensing process is much simpler than the AFS licensing process as there are only three possible authorisations:

  • engage in credit activities as a credit provider

  • engage in credit activities other than as a credit provider or lessor (e.g. as a credit representative or broker)

  • engage in all credit activities.

You should only select the authorisations that suit your business model. For example, if you want to be (or act solely as) an intermediary (i.e. broker or other credit service provider), you should not apply for an authorisation for all credit activities because you would then be assessed on your ability to be a credit provider as well as your ability to provide credit services like broking.

See Regulatory Guide 204 Applying for and varying a credit licence (RG 204) at RG 204.122–RG 204.146.

Do I need to provide a statement of personal information and other supporting documentation for directors and company secretaries who are not actively involved in credit activities?

Unless you are a streamlined applicant (see Streamlining), each director and company secretary must complete the statement of personal information. This is because ASIC needs to determine whether a credit licensee meets the minimum requirements to be licensed under the National Credit Act.

I am a credit provider and a broker. Will I need two credit licences?

It will depend on how your business is structured. If, for example, you have a single company or partnership, you should only need one credit licence but the authorisations you select upon completing your licence application would need to cover both types of credit activities.

See Regulatory Guide 204 Applying for and varying a credit licence (RG 204) for more information about authorisations.

Credit licence numbers

Do I get a credit licence number? What do I need to do with it?

You will get a credit licence number. If you are an Australian financial services (AFS) licence holder, your credit licence number will be the same as your AFS licence number.

From 1 April 2012, whenever a licensee identifies itself in certain documents it is required to include its Australian credit licence number in the document and identify that number as being the licensee's Australian credit licence number (see s52(2) of the NCCP Act).

This means that in these documents the licensee must include its licence number in the following way:

"Australian credit licence 12345"

It is not sufficient to only use an abbreviated form, such as "ACL 12345".

However, we think that if a licensee or a licence number is referred to in a document more than once, it will be sufficient for the full description of the licence to be used once, and the abbreviated form to then be used in that document.

The documents in which the Australian credit licence number must be included are prescribed in regulation 13 of the NCCP Regulations 2010, as:

  • a document that is required to be created or produced in accordance with Chapter 3 of the Act

  • a printed advertisement that relates to the provision of credit to which the Code would apply

  • a document that is required to be created, produced, given or published by a provision of the Code

  • a document lodged with ASIC that relates to the provision of credit to which the Code would apply.

The Australian credit licence number does not have to be included in other business documents, such as business cards and letterhead. However, licensees should still ensure that this documentation is not confusing or misleading to consumers.

Australian financial services (AFS) licensing

Is the AFS licensing process different from credit licensing? Do I need a separate AFS licence and credit licence?

Yes. A decision was made that it would not be useful to apply the whole AFS licensing regime to credit providers and credit assistance providers. A more tailored approach based on existing state laws was preferred, and thus a separate credit licence (as opposed to an AFS licence with credit authorisations) is required.

Rejection of a credit licence application

When will ASIC reject a credit licence application?

ASIC must not grant a credit licence if, for example:

  • ASIC has reason to believe that an applicant is likely to contravene the general conduct obligations imposed by the National Credit Act, or

  • the applicant is not a fit and proper person to engage in credit activities (i.e. a banning order has been made against the person or they are a bankrupt person).

See Regulatory Guide 204 Applying for and varying a credit licence (RG 204) for detailed guidance on the licence application process.

Criminal history check

Who do I have to provide criminal history checks for?

If you are a streamlined applicant, you will not be asked for this information.

For all other applicants, you will need to provide criminal history checks:

  • if you are applying as a natural person—for yourself

  • if you are applying as a company—for your directors, company secretaries and senior managers who will perform duties in relation to the credit activities to be authorised by the credit licence

  • if you are applying as a partnership or multiple trustee—for the partners or trustees who will perform duties in relation to the credit activities to be authorised by the credit licence.

How recent do criminal history checks need to be? What other checks do I need to provide?

Criminal and bankruptcy checks must be no more than 12 months old at the date of your licence application. The credit history report should be no more than three months old. If the credit history report includes a bankruptcy check, you don’t need to provide a separate bankruptcy check.

Do I need to do a criminal history check every year?

While this is not a legislative requirement, as a credit licensee, you should ensure as part of your compliance arrangements that any relevant senior persons who will perform duties in relation to credit activities continue to be fit and proper persons.

Where can I get a criminal history check? Is a state police check sufficient?

For the purposes of applying for a credit licence, the criminal history check must be a national criminal history check. ASIC will accept national criminal history checks obtained from the following sources. For details of how to apply, see the relevant websites.

Table 1: Where to get national criminal history checks

Australian Federal Police

www.afp.gov.au

In the application form, insert code number 25: Australian Securities and Investments Commission (ASIC) Consumer Credit/Financial Services Licensing Requirements)

State and territory police services

New South Wales: www.police.nsw.gov.au

Northern Territory: www.pfes.nt.gov.au

Queensland: www.police.qld.gov.au

South Australia: www.sapolice.sa.gov.au

Tasmania: www.police.tas.gov.au

Victoria: www.police.vic.gov.au

Western Australia: www.police.wa.gov.au

Brokers accredited by CrimTrac

www.crimtrac.gov.au

 

Streamlining

What do you mean by ‘streamlining’? What is the difference between ‘streamlining’ and ‘simplification’?

‘Streamlining’ is set under the legislation whereas ‘simplification’ is an ASIC process.

Under the legislation, some credit businesses may be eligible for a streamlined application process depending on how the previous licensing regime was applied. For example, credit businesses will be streamlined if their business is a registered deposit-taking institution (ADI) and thus regulated by the Australian Prudential Regulation Authority (APRA).

ASIC’s simplification process means that the online credit licence application form has fewer questions and requires fewer proofs from applicants who are AFS licensees, as ASIC already has information about these applicants from the AFS licensing process.

See Regulatory Guide 204 Applying for and varying a credit licence (RG 204) at RG 204.21–RG 204.30 for more information about streamlining.

Can lenders mortgage insurers streamline?

Yes, the National Credit Regulations permit lenders mortgage insurers to be streamlined.

Western Australian credit providers and brokers

Can a WA credit provider streamline?

Credit providers operating in Western Australia will be streamlined if their business is a registered ADI.

Western Australian licensed brokers (Class A or Class B) will be streamlined but only for an authorisation limited to broking activities and only until 31 December 2010. After that date Western Australian licensed brokers (Class A or Class B) will only be eligible for streamlining if ASIC has granted an instrument of relief to enable a streamlined licence application to be submitted to ASIC on or after 1 January 2011.

Why aren’t other WA brokers (Class C or Class D) eligible for streamlining?

Access to streamlining is set by the legislation. In relation to brokers, it depends on whether they are already subject to a licensing system that meets certain requirements specified in the legislation. The regime applying to licensed Class A and B brokers in WA meets the requirements. The regime applying to Class C and D brokers does not.

Class C and D brokers can apply for a credit licence. However, they will be subject to the full assessment process rather than being streamlined. Class C and D brokers who wish to apply for a credit licence or be a responsible manager of a credit licensee may rely on transitional arrangements to complete their 2 years mentoring experience by 30 June 2012.

See Regulatory Guide 206 Credit licensing: Competence and training (RG 206).

I am a WA licensed broker (Class A or Class B) and my WA licence is due to expire a week or two before 30 June 2010. Do I need to renew my WA licence? Will I still be able to streamline and will the WA Department of Commerce refund the cost of my WA licence renewal?

To be eligible to streamline (and have the advantage of having to lodge less information and pay a slightly smaller licence application fee), you need to hold a current WA Class A or Class B licence:

  • at the time you lodge your application for a credit licence, or

  • at the time the WA licensing regime stops operating (if this occurs before you lodge a credit licence application).

The WA Department of Commerce has advised WA licensees that the Western Australian Government is making provision for a pro rata refund of state licence fees paid before the transition to the new credit regime. The process for refunds has not been finalised but details will be published on the WA Department of Commerce credit website and distributed by their e-Bulletin when they become available.

Financial resources

What are the financial resource requirements for getting a credit licence?

Credit licensees should ensure that they have access to sufficient financial resources to be able to meet all their debts as and when they become due and payable. As a credit licensee, you must also:

  • plan and monitor cash flows to make sure they are sufficient to adequately meet your obligations as a credit licensee under the National Credit Act, and

  • document the process for determining whether you have adequate financial resources.

See Regulatory Guide 207 Credit licensing: Financial requirements (RG 207).

Will you be issuing further guidance on the level of financial resources I must maintain?

It is not possible to prescribe a level of resources for each credit licensee—it depends entirely on the nature, size and complexity of your business. RG 207 provides detailed guidance about how to assess what is appropriate for your business. However, it is not designed to be prescriptive but rather principles based.

See Financial requirements

Employees, contractors and aggregators

What are the human resource requirements for getting a credit licence?

Whether your human resources are adequate will depend on the nature, scale and complexity of your business. We have provided some guidance about human resources in Regulatory Guide 205 Credit licensing: General conduct obligations (RG 205) at RG 205.96. In essence, you need to have enough people so you can comply with all of your obligations under the legislation, carry out monitoring and supervision, and meet your current and anticipated future operational needs.

See also general conduct obligations.

Do I need to authorise my staff or contractors to be credit representatives or require them to be licensed?

If you have a credit licence, you do not need to separately authorise your employees, or require them to apply for their own credit licence. If you use independent contractors, you can either require them to get a credit licence or you can authorise them to be a credit representative. If you have authorised a company as a credit representative, you can also authorise that company’s employees or approve the company sub-authorising some or all of them. You are legally liable for their conduct under the authorisation or sub-authorisation.

We have a group structure and various members of the group will provide some credit activities. Should we apply for a credit licence or become credit representatives?

You need to assess the group structure and the type of services the members of the group provide. ASIC’s licensing system is flexible to suit a wide range of business models. The National Credit Regulations provide some relief in that a related body corporate is exempt from the requirement to get a credit licence if they engage in credit activities on behalf of the related body corporate that holds a credit licence.

See Regulatory Guide 203 Do I need a credit licence? (RG 203).

Why can’t I appoint a person or company as a credit representative if that person or company is a registered person?

This is prohibited under the National Credit Act in order to avoid confusion as to liability for particular conduct.

I am an aggregator. How do I structure my business? Do my brokers need credit licences or can I appoint them as my credit representatives?

Brokers, aggregators and other intermediaries have the flexibility to choose how to structure and operate their business models under the regime—that is, whether to get their own credit licence or operate under the umbrella of someone else’s credit licence as an authorised credit representative.

Organisational competence and training

What are the organisational competence and training requirements? When do they start?

The following tables summarise the transitional and ongoing organisational competence and training requirements.

You must comply with the requirements for qualifications by 30 June 2014. Until then, ASIC will accept various levels of relevant problem-free industry experience.

See Regulatory Guide 206 Credit licensing: Competence and training (RG 206).

See also competence and training.

Table 2: Organisational competence for credit licensees

Transitional period (before 30 June 2014)

By 30 June 2014

Streamlined applicants

Although we will not assess organisational competence as part of the credit licence application, applicants must still be able to meet the organisational competence obligations when they apply for a credit licence and on an ongoing basis as set out below.

We will ask applicants to provide details of the experience and qualifications of responsible managers with the licence application.

Note: The responsible manager may be the credit licensee if they are a natural person, all or some of the licensee’s directors or senior managers if the licensee is a company, or all or some of the partners or trustees if the licensee is a partnership or trust.

Credit licensees must meet the organisational competence obligations as set out below.

Responsible managers

Lenders

Responsible managers must have 5 years relevant problem-free experience or meet the 30 June 2014 requirements.

Responsible managers should also undertake at least 20 hours of continuing professional development each year.

Responsible managers must have:

  • credit industry qualifications to at least the Certificate IV level, or

  • another general relevant higher level qualification (e.g. diploma or university degree), and

  • at least 2 years relevant problem-free experience.

Responsible managers

Credit assistance businesses

Responsible managers must have 2 years relevant problem-free experience.

Responsible managers should also undertake at least 20 hours of continuing professional development each year.

Responsible managers must have:

  • credit industry qualifications to at least the Certificate IV level, or

  • another general relevant higher level qualification (e.g. diploma or university degree), and

  • at least 2 years relevant problem-free experience.

Responsible managers – Mortgage brokers

Responsible managers must have 2 years relevant problem-free experience. They can rely on mentoring to meet this requirement, as long as the mentoring is completed by 30 June 2012.

Note: See mentoring guidelines from the Mortgage and Finance Association of Australia (MFAA) at

www.mfaa.com.au.

Responsible managers should also undertake at least 20 hours of continuing professional development each year.

Responsible managers must have a Certificate IV in Financial Services (Finance/Mortgage Broking) and at least 2 years relevant problem-free experience.

Responsible managers should also undertake at least 20 hours of continuing professional development each year.

Table 3: Training requirements for credit representatives

Transitional period (before 30 June 2014)

By 30 June 2014

Streamlined applicants

Although we will not assess the training of credit representatives as part of the licence application process, applicants must still ensure that credit representatives meet the training requirements set out below when they apply for their credit licence and on an ongoing basis.

We will ask applicants to provide details of the training and supervision of their credit representatives with the licence application.

Note: Credit representatives include employees of a credit licensee who will be undertaking credit activities and persons authorised by the credit licensee to engage in credit activities on their behalf.

Credit representatives must meet training obligations as set out below.

Responsible managers

Lenders

Credit representatives must be adequately trained and competent to engage in the credit activities authorised by the licence.

Credit licensees are required to determine what is appropriate initial and ongoing training for credit representatives to ensure that the licensee complies with their own representative training obligation.

Where industry standards exist for sectors of the credit industry or for specific products, we expect that credit licensees will ensure their representatives are trained to at least the level of the industry standard.

Credit representatives should also undertake 20 hours of continuing professional development each year

Credit representatives must have a Certificate IV in Financial Services (Finance/Mortgage Broking).

Responsible managers

Credit assistance businesses

Credit representatives must be adequately trained and competent to engage in the credit activities authorised by the credit licence.

Credit licensees are required to determine what is appropriate initial and ongoing training for credit representatives to ensure the licensee complies with their own representative training obligation.

Where industry standards exist for sectors of the credit industry or for specific products, we expect that credit licensees will ensure their representatives are trained to at least the level of the industry standard.

No change.

Fees

When do I have to pay the licence application fee, and how much is it?

Licence application fees are prescribed in the National Credit Regulations and have been set on a sliding scale to reflect the size of each business.

Fees are due when you lodge your licence application. There is stepped table of bands depending on the amount of consumer credit provided or referred in the previous year and/or the value of property you have leased to consumers in the previous year.

You can pay the licence application fee:

  • through BPay or Post Bill Pay (including by credit card)

  • via Electronic Funds Transfer, or

  • by posting a money order or cheque directly to Australian Securities and Investments Commission, Locked Bag 5000 Gippsland Mail Centre, VIC 3841.

See Regulatory Guide 204 Applying for and varying a credit licence (RG 204) at RG 204.61 for more information about licence application fees. See also Information Sheet 108 How much does a credit licence cost? (INFO 108).

For detailed information about payment options, go to www.asic.gov.au/payments.

Are there any discounts on the licence application fee?

Streamlined applicants will receive a 10% discount on the licence application fee. The discount takes into account the information ASIC already has about streamlined applicants, the reduced processing time and the reduced assessment required.

Will the licence fee for my state credit licence be refunded?

The Australian Capital Territory (ACT) and Western Australia are the only jurisdictions where refunds are an issue.

The ACT legislation includes a pro rata refund obligation on the ACT Government. The ACT Government wrote to all ACT registrants advising of refund arrangements before their common annual renewal in March 2009, anticipating a November 2009 commencement of the new credit regime.

For information about refunds for WA licences, see Western Australian credit providers and brokers.

Compensation and insurance

What level, if any, of professional indemnity insurance do I need? When do I need to get it?

As a credit licensee, you will need to have arrangements in place for compensating your clients for any loss they might suffer if you breach your obligations under the National Credit Act. For most applicants, the way to comply with this obligation is to have adequate professional indemnity insurance cover.

There are exemptions from this obligation for some applicants (e.g. credit providers, general insurance companies, life insurance companies and ADIs): see Regulatory Guide 204 Applying for and varying a credit licence(RG 204) at RG 204.269.

See also Regulatory Guide 210 Compensation requirements for credit licensees (RG 210).

Outsourcing

Why does the application form ask about outsourcing?

The information is useful in determining the risk profile and the business model of credit licensees.

Where can I get more information?

  • Read Regulatory Guide 203 Do I need a credit licence? (RG 203).

  • Read Regulatory Guide 204 Applying for and varying a credit licence (RG 204)

  • Click here for the latest information on credit and to download copies of the regulatory guides.

  • Subscribe to ASIC updates on credit

  • ASIC Infoline 1300 300 630

  • Ask a question online. 

Important notice

Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. Omission of any matter in this information sheet will not relieve a company or its officers from any penalty incurred by failing to comply with the statutory obligations of the National Credit Act.

You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.

This is Information Sheet 103 (INFO 103), reissued in July 2011. Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.

Search our registers

Use our online services

Find a form

Last updated: 23/03/2016 03:08