From today, lenders, brokers and intermediaries dealing in consumer credit can register for an Australian Credit Licence, a key new requirement under the new National Consumer Credit Protection Act (National Credit Act).

Registration is the first step in complying with the new licensing obligations under the National Credit Act. The legislation establishes a national licensing regime to require providers of consumer credit and brokers and intermediaries to obtain a licence from ASIC.

Credit providers and businesses involved in helping consumers obtain credit can register for a credit licence from 1 April 2010 until 30 June 2010. However, to ensure applications can be processed in time, applicants are encouraged to register by 18 June 2010. Registering with ASIC will allow people to continue to engage in credit activities from 1 July 2010 until the licence application process is complete. Registered credit participants will then have six months to apply for a credit licence, between 1 July 2010 and 31 December 2010.

ASIC Commissioner, Dr Peter Boxall encouraged credit industry participants to familiarise themselves with the new regime and, if applicable, register early to ensure compliance with the new obligations.

‘People who haven’t registered with ASIC by 30 June 2010 must stop engaging in credit activities until they have a credit licence. It is important that people take the time to understand the new changes and make any necessary preparations to ensure a smooth transition to the new regime,’ Dr Boxall said.

‘ASIC has developed a number of support tools to assist industry in complying with their new obligations which start today with registration. We have developed a range of guides to take people through registration and licensing, step by step, as well as face-to-face support via our National Roadshow Program, now available to download as a webcast. We encourage people to use these and other resources as they start to assess and fulfil their new obligations.’

‘We have taken the time to review our previous programs and we have looked at how to improve on these to make credit licensing more user-friendly and streamlined. So, the process we have designed is client-focused, and has been made as simple as possible to involve less red tape. For example, we’ve halved the number of questions people had to answer for an Australian Financial Services licence,’ Dr Boxall said.

There are no fees for registration. The process is an online facility, it automatically pre-fills data where possible and is programmed not to repeat questions already asked of applicants who hold an AFS licence. APRA-regulated applicants will also not be required to complete certain parts of the licence application.

When people apply for registration, they need to show that they can meet certain requirements that will apply to them as credit licensees. Membership of an external dispute resolution body is required; background checks will be needed so that certain statements about the past conduct of directors, company secretaries, partners or trustees involved in a business can be provided, and updates to existing entries on other ASIC registers should also be made.

Registration and notification requirements for lenders with pre-existing credit contracts

The Minister for Financial Services, Superannuation and Corporate Law, Hon. Chris Bowen MP recently announced details of the proposed regulatory framework for lenders with pre-existing contracts when the new credit legislation commences on 1 July 2010. Details of the proposal are available at www.treasury.gov.au/consumercredit.

Under the proposal, lenders who intend to continue lending after 1 July 2010 will have to register for a credit licence. That licence and the obligations attaching to it will cover both their old and new loans.

Lenders who will not offer new loans or leases after 1 July 2010 but are still continuing to collect payments due under pre-existing contracts will have the option to register and apply for a credit licence. If they choose not to, they will need to meet similar statutory requirements to those imposed under licensing so that ASIC can monitor their conduct and compliance with the law. They will also have to notify ASIC before 1 July 2010 that they have pre-existing contracts and do not intend to register and obtain a credit licence.

ASIC will provide guidance on the notification process and the regulatory requirements once the final regulations are made and will continue to assist industry to understand how the licensing requirements apply to their business.

Support tools

• Regulatory Guide 202 Credit registration and transition (RG 202) Updated to take into account regulations made since the guide was released in December 2009.
• Infosheets and other regulatory guides that take people through each requirement step-by-step: www.asic.gov.au/credit
• A call centre for applicants to talk to trained staff: 1300 300 630
• A support team who are experts in using ASIC's online portals and can assist with technical enquiries: online@asic.gov.au
• A recording of ASIC's National Credit Roadshow online: www.asic.gov.au/credit
• E- newsletter for subscribers: www.asic.gov.au/credit-update

Register for an Australian credit licence

Industry participants can register online at www.asic.gov.au/credit

Background

On Monday, 26 October 2009 the Senate passed the National Consumer Credit Protection Bill. Under the legislation, ASIC has been appointed the national regulator for consumer credit and finance broking, taking over from the states and territories. This means that home loans, personal loans, credit cards, consumer leases, pre-arranged overdrafts and line of credit accounts, among other products and services, will be regulated under Commonwealth legislation and administered by ASIC.

For more information about the national consumer credit protection regime go to www.asic.gov.au/credit