ASIC has today released guidance to clarify dispute resolution requirements for unlicensed carried over instrument lenders (unlicensed COI lenders).

Unlicensed COI lenders are credit providers and lessors (lenders) who will not be offering any new contracts but will continue to have pre-existing contracts (carried over instruments) on or after 1 July 2010.

Under the new National Consumer Credit regime, all registered and licensed credit providers must provide their customers free access to their internal dispute resolution (IDR) procedures for complaints handling and to an approved External Dispute Resolution (EDR) scheme.

For unlicensed COI lenders, ASIC has updated guidance in:

• Regulatory Guide 165 Licensing: internal and external dispute resolution (RG 165);
• Regulatory Guide 139 Approval and oversight of external dispute resolution schemes (RG 139); and
• Class Order [CO 10/517] Internal dispute resolution (credit – unlicensed COI lenders).

Under the regulations, consumers who have carried over instruments will have access to dispute resolution arrangements based on ASIC-approved standards and requirements.

These consumers will be able to make complaints at IDR about their lender or lessor, even if that lender or lessor does not register with ASIC or hold an Australian credit licence.

When a complaint is received, unlicensed COI lenders must be responsive to the complaint and their IDR system must handle it within the maximum timeframes and according to other requirements set out in RG 165.

While not compelled to do so, ASIC encourages all unlicensed COI lenders to join an external dispute resolution scheme – either the Financial Ombudsman Service Limited (FOS) or the Credit Ombudsman Service Limited (COSL).

The changes to RG 165 and RG 139 were made as part of ASIC's priority to assist and protect retail investors and consumers in the financial economy.