The licensing of providers of consumer credit, credit assistance and intermediaries by ASIC starts today, following a three month registration period.

In the first few hours of the day, ASIC has already received a number of licence applications from credit registrants in Victoria and South Australia.

The registration process, which saw nearly 14,800 people apply, was the first step in complying with the new licensing obligations under the National Consumer Credit Protection Act 2009 (National Credit Act), which have been introduced to raise standards across the consumer credit industry.

The registration process has identified which entities and individuals are engaging in credit activities and will be regulated under the new regime. Applicants had to meet some important preliminary thresholds for registration, including membership of an ASIC-approved external dispute resolution (EDR) scheme and various declarations that officers of the registered entity meet a ‘fit and proper person’ test.

ASIC has conducted an extensive campaign to help industry participants prepare for the new regime, which has been well supported. The resources available include:

• a dedicated credit website at www.asic.gov.au/credit, outlining the new requirements;
• detailed regulatory guidance and information sheets after an extensive consultation process with stakeholders;
• a regular online newsletter with nearly 5000 subscribers;
• a national roadshow, involving 55 presentations in capital and regional cities to help industry participants prepare for the registration process, attended by more than 2,700 people;
• additional presentations and ‘walk in’ sessions in all capital cities to help participants prepare for the licensing process, attended by over 850 people;
• two national webcasts outlining the registration and licensing processes, watched by a total of nearly 2000 people;
• ASIC’s Infoline (1300 300 630), which has trained staff dedicated to managing credit-related enquiries and offering person-to-person support;
• an online portal support team;
• a comprehensive media campaign to keep industry participants and other stakeholders informed about the new legislation; and
• the publication of extensive resources for consumers to help them better understand the new obligations of credit providers.

‘We have been very pleased with the positive response to registration, which effectively has been a ‘roll-call’ of the consumer credit industry, and will continue working with industry and other stakeholders to ensure a smooth transition to the new regime’, ASIC Commissioner, Dr Peter Boxall, said.

Registered consumer credit and credit assistance providers, and intermediaries now have until 31 December 2010 to apply for an Australian credit licence or become an authorised representative of a credit licensee.

In reviewing credit licence applications and determining whether specific licence conditions may need to be imposed, ASIC will apply a significantly higher level of scrutiny to each applicant and their key office holders and senior managers, which will include a close examination of any previous complaints history.

In addition to meeting the credit licence conditions and maintaining membership of an EDR scheme, credit licensees and their representatives must comply with the National Credit Code and meet ongoing training and competence requirements. They will also be subject to the new ‘responsible lending’ requirements. More information is available from ASIC’s website at www.asic.gov.au/credit.

Important information for credit providers who have not registered but intend engaging in credit activities from 1 July 2010

Registration has now closed. If entities or individuals have not registered, the law requires that they stop engaging in credit activities until they are granted a credit licence or have become a representative of a credit licensee. There are civil and criminal penalties under the National Credit Act for businesses or individuals that provide regulated credit without a credit licence or authorisation.

If you are not registered or don’t have a credit licence, you should contact ASIC immediately to discuss your options on 1300 300 630. ASIC has issued Information Sheet 127

What to do if you missed the deadline for credit registration

(INFO 127) to explain what action credit providers, credit assistance providers, intermediaries and anyone else engaging in credit activities must take if they have missed the deadline for registration under the National Credit Act. A copy of INFO 127 is available from the ASIC website at www.asic.gov.au/credit.

‘ASIC will closely monitor activity during the licensing period to identify any practical or regulatory issues that emerge during transition to the National Credit Regime, and issue further guidance, or provide additional support if necessary. We will continue to liaise with industry and consumer groups to ensure the new laws are working as intended’, Commissioner Boxall said.

‘In addition, in circumstances where ASIC identifies deliberate or significant non-compliance with the new laws, including acting without a credit licence or being a representative of a credit licensee, ASIC will not hesitate to take action’, he said.

For more information, visit www.asic.gov.au/credit.