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Complying with your trust account obligations as a credit licensee
Complying with your trust account obligations as a credit licensee
This information sheet is for holders of an Australian credit licence (credit licensees). It explains how to meet your trust account obligations when you hold money received on behalf of another person in the course of providing a credit service: see s97 of the National Consumer Credit Protection Act 2009 (National Credit Act).
Determining if the trust account obligations apply to you
Under the National Credit Act, you must maintain a trust account if:
- you hold a credit licence that authorises you to provide a credit service, and
- in the course of providing that service, you or one of your representatives receives money on behalf of another person.
Examples of receiving money on behalf of another person in the course of providing a credit service include, but are not limited to:
- collecting funds from a customer to cover valuation fees payable to the credit provider or valuation company, and
- collecting application fees on behalf of the credit provider.
If the payment is made directly in favour of the other person (such as a cheque or money order) and you are only forwarding the means by which payment is being made, you are not required to maintain a trust account.
If you hold money on trust, but not in the course of providing a credit service (e.g. because of obligations under an Australian financial services (AFS) licence), the trust account obligations under the National Credit Act do not apply.
Handling of trust account money
If you receive trust money, you must:
- keep a trust account with an Australian authorised deposit-taking institution (The ADI must be an Australian ADI as defined in s9 of the Corporations Act 2001 (Corporations Act).) (ADI) (s98(2))
- designate the account’s title as your trust account (s98(3))
- pay into the trust account any money received by you or your representatives on behalf of another person in your capacity as a credit licensee (s99(1)), and
- only withdraw money from the trust account to pay a person who is lawfully entitled to that money (s99(2)–(3)).
Trust money is not to be used for the payment of any other debt or for any purpose other than the purpose for which it was collected. Criminal and civil penalties apply if trust money is withdrawn otherwise than in accordance with the National Credit Act.
Trust money held under an AFS licence
If you also hold an AFS licence and maintain a trust account to hold funds in the course of providing a financial service, you cannot use the same account to keep trust funds you receive as part of your credit service business, even if the same client is involved.
Trust account statement and trust account audit report
For each financial year that you operate a trust account, you must lodge a:
- trust account statement (Form CL70), and
- trust account audit report (Form CL71) prepared by an eligible auditor (s100).
Completion and lodgement of these forms is a multi-step process. First, you will need to complete and sign Part 1 of the trust account statement (Form CL70), including trust account details for the financial year, and give this to your appointed auditor.
After auditing Part 1 of your trust account statement, the auditor should give you the completed and signed trust account audit report (Form CL71).
After you have received the audit report from your auditor, you must complete and sign Part 2 of the trust account statement (Form CL70) and then lodge these two forms, together, with ASIC: see ‘Lodgement’ below.
These forms must be lodged with us within three months of the end of the financial year to which they relate—that is:
- by 30 September if you are not a body corporate, or
- within three months of your financial year end if you are a body corporate (s101).
A fee applies to lodging these forms: see Table 1.
Extensions of time to lodge trust account statement and audit report
We may grant an extension to the usual time limits if you and your auditor make a request for an extension before your due date for lodging the statement and audit report. Our approval of such a request may be subject to conditions.
To request an extension of time, you and your auditor will need to submit a jointly signed letter that provides a reasonable explanation for why the statement and report cannot be lodged within the required time. The letter should also specify the end date of the extension period you are seeking. The letter can be submitted in the same manner that you lodge forms: see ‘Lodgement’ below.
Auditor of your trust account
Appointment of an auditor
You must appoint an auditor within three months of the obligation to maintain a trust account applying to you. You must notify us within 14 days of appointing an auditor by lodging Form CL16. Fees apply to lodging CL16 after the due date and by mail or in person: see ‘Lodgement’ and Table 1 below.
Your auditor must be a person who meets the eligibility requirements set out in the National Consumer Credit Protection Regulations 2010 (National Credit Regulations). To meet these requirements, they must:
- be eligible to be appointed as an auditor under the Corporations Act (reg 18)
- not owe money to, or be owed money by, you or a related body corporate (reg 18)
- not be an employee, director or partner of you or of any other person carrying on a business that engages in credit activities (reg 19), and
- not be carrying on a business that engages in credit activities (reg 19).
There is no provision to appoint a firm of auditors. Your auditor can either be an individual registered company auditor, including a partner of a firm, or an authorised audit company.
Cessation of an auditor’s appointment
Your auditor is appointed until:
- you are no longer required to keep a trust account
- they cease to engage in the business of being an auditor (e.g. they retire or the company is wound up)
- they are unable to perform their duties as your auditor—for example, due to the auditor:
- falling ill
- being no longer eligible to be an auditor under the Corporations Act, or
- commencing their own credit business
- we approve the auditor’s resignation (an auditor can apply to resign by lodging Form CL18)
- we approve your request to replace the person as an auditor (you can apply to replace an auditor by lodging Form CL17), or
- the auditor dies.
If a person ceases to be your auditor and you are still required to maintain a trust account, you must appoint another eligible person as your auditor within 28 days. You must also notify us of the appointment within 14 days of the appointment of the new auditor by lodging Form CL16.
Replacement and resignation of auditors
In dealing with applications for either the resignation or replacement of an auditor, we are concerned with preserving the independence and integrity of the audit function. With that in mind, the factors we will consider include, but are not limited to:
- whether the reason for terminating the appointment is reasonable
- whether the timing of the termination gives rise to any concerns. The application should generally be lodged before the end of your financial year and not after the obligation to report arises, unless special circumstances are shown that justify allowing the termination at that point in time, and
- whether there is evidence of opinion shopping—that is, changing auditors to obtain a more favourable report.
We will consider each application on a case-by-case basis, taking into account all the relevant circumstances, including the above factors. To help us make a decision, you should provide supporting documents, including:
- if you are the auditor and you intend to resign, your written notification to the licensee, advising them of your intention, or
- if you are the licensee and you intend to end your auditor’s appointment, your written notification to your auditor, advising them of your intention.
You should also include confirmation from the proposed replacement auditor that they are prepared to accept the appointment. We may ask for further information depending on the circumstances.
You can lodge your forms by emailing completed and scanned copies to creditlicensing@asic.gov.au.
If you are unable to lodge the forms via email, you can mail them to us or hand them in at the ASIC office in your capital city. However, an additional fee of $26.00 applies if you lodge the forms by mail or in person (this fee does not apply to a request for an extension of time to lodge a trust account statement and audit report).
Mailing address
Australian Securities and Investments Commission
PO Box 4000
Gippsland Mail Centre VIC 3841.
In person
A list of ASIC offices and their addresses is available at www.asic.gov.au/asicoffices.
Fees
The National Consumer Credit Protection (Fees) Regulations 2010 sets fees for certain chargeable matters and the manner in which they are lodged: see Table 1.
Late lodgement fees may also apply in addition to the lodgement fee. However, if an application for an extension is granted for the lodgement of a trust account statement and audit report, and you lodge the documents within the extension period, the late lodgement fees do not apply.
Fees for lodgement of forms
Table 1: Fees for lodgement of Forms CL70, CL71, and CL16
| Chargeable matter | Lodgement fee | Additional fee for late lodgement |
 | | Within one calendar month of due date | One calendar month or more after due date |
| Lodgement of a trust account statement and audit report under s100: Forms CL70 and CL71 | $103* | $69 | $287 |
| Lodgement of notice of appointment of auditor: Form CL16 | No fee* | $69 | $287 |
*If you are lodging your forms by mail or in person, add an additional $26 to the lodgement fee.
Where can I get more information?
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 on 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 136 (INFO 136). Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. |
ASIC Website: Printed 05/17/2012
