Credit compliance tools
Tools for small credit businesses and finance brokers when preparing or updating a compliance plan
If you are establishing new systems as part of a preparation of a credit licence application or are updating your existing plan, the following examples can be used as a guide to help with matters relevant to your business.
For full details about your compliance obligations make sure you read Regulatory Guide 205 Credit licensing: General conduct obligations (RG 205). The appendix to that guide has some questions that might help you to design and test your arrangements and systems.
What should be covered in the compliance plan?
Example 1: Checklist for compliance with credit legislation/ licence conditions
Example 2: Monitoring compliance
Example 3: Training register
Example 4: Risk management plan
Example 5: Checklist for client file
What should be covered in the compliance plan?
The compliance plan should cover how you will meet your credit obligations under the legislation. A written plan serves to clarify the obligations that apply to your business, who in your business is responsible for monitoring compliance with those obligations, what steps will be taken to monitor compliance, and how often this will happen. It also provides a record of what has been done, so you can review your procedures and performance periodically.
If your business is small, you are unlikely to need complex arrangements or systems. Your written plans may be quite short, and may largely rely on checklists. See our guidance for small businesses, including tips for preparing compliance documents.
As businesses vary greatly in size and complexity, it is impractical for us to provide sample compliance plans. Each business will need to consider their individual requirements and procedures. We recommend that you speak to peak industry bodies if you need help developing a compliance plan.
Example 1: Checklist for compliance with credit legislation/ licence conditions
A summary checklist can help you keep track of your compliance with credit legislation and licence conditions. Here is an example of how your checklist could be set out.
| Description of major requirements | Section/condition | Time frame | Responsible for meeting requirement in day-to-day conduct? | Responsible for monitoring compliance? |
Keep financial records of credit business that explain:
- transactions, and
- financial position.
| National Credit Act, s88 | Ongoing | Director or senior employee | Name of director or senior employee |
Before providing credit assistance for a credit contract:
- make a preliminary assessment of whether credit contract will be unsuitable
- make inquiries about and verify consumer’s requirements, objectives and financial situation.
| National Credit Act, s115–117 | Within 90 days before assistance day | Representative dealing with consumer | Name of director or senior employee |
Example 2: Monitoring compliance
Credit licensees are required to lodge with us a compliance certificate on an annual basis: s53, National Credit Act. To comply with this obligation, we expect that you will need to keep records of your monitoring and reporting, including records of reports on compliance and non-compliance. Here is an example of how you might keep track of any instances of non-compliance.
| Description of non-compliance (including relevant requirement) | Date of non-compliance | People involved | Has the situation been rectified? | Outcome of action taken |
 | | | | |
Example 3: Training register
One of the obligations on credit licensees is to ensure representatives (e.g. employees and people who are specifically authorised to act on your behalf) are trained and competent to engage in credit activities. A register helps you to keep track of training. Here is an example of how your register could be set out.
| Representative | Course/ development program | Date completed | Post-training assessment of competence? |
| | | |
Example 4: Risk management plan
You need to identify the most critical risks your business may face (i.e. events that could occur and impact on your business objectives). You need to have systems to control the chance of these events occurring, and the impact of the events if they do occur.
As business risks are dynamic, you need to monitor and review your systems to ensure that you consistently identify and evaluate the risks to your business. A senior person in your business (such as a director or senior employee) can be responsible for monitoring and reviewing your risk management systems, and making sure that people involved in your business are aware of the risks and how to deal with them if they occur (e.g. by reporting to appropriate people at appropriate times).
Here is an example of how your risk management plan might be set out.
| Risk (event that will impact on lawful operation of business) | Probability/ impact analysis | Priority | Measures to minimise occurrence/ impact of risk | Who do staff report occurrence of risk event to? |
Risk areas may include:
- financial risks
- obligations under the credit legislation
- obligations under your credit licence
- governance (e.g. resignation of directors)
- human resources (e.g. resignation of a key person named on your credit licence)
- technology and systems
- business strategy
- commercial and legal
- economic and environmental
| | | | |
Example 5: Checklist for client file
Client ………………………………………
Representative’s name ………………………………………
Service provided: e.g. Suggesting or assisting a consumer to apply for a particular credit contract [name of contract]
Is the representative authorised to provide this service? Yes/No
| Description of major requirements | Yes | No | If no, why not? | N/A | Date |
| Have you made reasonable inquiries about the consumer’s requirements and objectives in relation to the credit contract? National Credit Act, s117(1)(a) | | | | | |
Have you made reasonable inquiries about the consumer’s financial situation?
National Credit Act, s117(1)(b) | | | | | |
| Have you taken reasonable steps to verify the consumer’s financial situation?
National Credit Act, s117(1)(c) | | | | | |
Have you made a preliminary assessment of whether the credit contract will be unsuitable for the consumer, taking into account:
- the consumer’s requirements and objectives, and
- the consumer’s financial situation?
National Credit Act, s116(1) | | | | | |
| Has the consumer asked for a copy of the preliminary assessment? | | | | | |
More information on your compliance obligations
Regulatory Guide 205 Credit licensing: General conduct obligations (RG 205)
ASIC Website: Printed 05/17/2012
