The regulation of margin lending, contained in the Corporations Legislation Amendment (Financial Services Modernisation) Act which commenced on 1 January 2010, is part of the Government's national regulation of consumer credit.
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 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.
From 1 July 2010 issuers of, and advisors on, margin lending facilities cannot provide financial services to retail clients in respect of margin lending facilities until the necessary AFS licence authorisations are obtained.
All licensing, conduct and disclosure requirements apply to providers and financial advisers in relation to margin lending facilities.
ASIC guidance on margin lending
We have released policy and regulatory guidance to assist issuers and advisers of margin lending facilities comply with their 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)
Pro Forma 209, Australian financial services licence conditions (PF 209)