Rural financial counselling and money management service providers will be exempt from licensing requirements under the National Consumer Credit Protection Act 2009 (the Credit Act) following ASIC’s decision to grant conditional relief [CO 11/926].

Money management service providers who give financial advice about basic deposit products in the course of providing a money management service have also been granted limited relief [CO 11/927] from licensing requirements under the Corporations Act 2001 (Corporations Act).

Rural financial counselling services are available to primary producers and rural small businesses in financial difficulty and are funded in whole, or in part, by the Commonwealth Government through the Department of Agriculture, Fisheries and Forestry (DAFF) or, in Queensland, through the Department of Employment, Economic Development and Innovation (DEEDI).

Money management services are provided predominantly to improve the financial knowledge and skills of consumers, principally Indigenous consumers in regional and remote Australia. These service providers are funded in whole, or in part, by the Commonwealth through the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA).

ASIC Senior Executive Leader, Delia Rickard, said the exemptions recognise the important assistance and support these services provide to rural small businesses and Indigenous communities around Australia.

‘The exemption for rural financial counselling service providers will ensure that they can continue to provide services to primary producers and rural small businesses in financial difficulty’, Ms Rickard said.

‘The exemption for money management service providers will ensure that these important financial literacy programs can continue to provide services to consumers, mostly Indigenous consumers in regional and remote Australia. This exemption also recognises the support money management services give to consumers to access and use credit and basic deposit products in more cost effective and sustainable ways.’

ASIC’s exemptions are subject to important conditions, namely that:

• the regulated service is provided to the consumer as part of a rural financial counselling or money management service;

• no fees or charges are payable by the consumer for any aspect of the rural financial counselling service or money management service;

• the service providers do not engage in any credit activity or financial services business beyond the scope of these exemptions, and take all reasonable steps to ensure that none of their employees do so; and

• the service provider ensures its representatives have undertaken appropriate training to ensure that they have adequate skills, knowledge and experience to satisfactorily provide the services.

These exemptions are given to rural financial counselling and money management service providers that deliver services within the parameters set by the relevant Government funding and supervisory arrangements. These exemptions are designed to support the continuing provision of these services within a consistent regulatory framework without imposing a disproportionate regulatory burden on service providers that would otherwise make their services unviable.

Background

In 2003, ASIC provided a limited exemption to financial counselling agencies from the requirement to hold an Australian financial services licence under the Corporations Act to enable them to provide financial product advice to persons where the advice was provided in the context of the overall financial counselling service. The exemption is set out in ASIC Class Order [CO 03/1063].

When framing the Credit Act and the National Consumer Credit Protection Regulations 2010 (the Credit Regulations), this licensing exemption was substantially adopted in subregulation 20(5) of the Credit Regulations to exempt financial counsellors from the credit licensing requirements.

Subregulation 20(5) of the Credit Regulations imposed substantially similar conditions to those applying under ASIC Class Order [CO 03/1063], namely that services were provided to consumers at no cost, that the agency does not otherwise carry on a business that would otherwise require a licence and that certain requirements were met.

Under subregulation 3(1) of the Credit Regulations, “financial counselling service” is defined as a “counselling and advocacy service provided predominantly to assist individuals in financial difficulty to resolve their problems”. There is some doubt as to the scope of coverage of that definition for the purposes of subregulation 20(5) of the Credit Regulations.

Following the implementation of the new national consumer credit regime, ASIC undertook an assessment of the range of non-commercial services provided to consumers and small business principally by non-Government organisations in relation to financial and credit issues to consider any regulatory issues arising in relation to the new credit regime or the AFSL licensing requirements. ASIC identified a spectrum of services including those directed toward:

• low income and/or disadvantaged consumers and people in financial hardship;

• primary producers and rural small businesses; and

• capacity building programs such as financial literacy programs.

ASIC also considered that rural financial counselling services and financial literacy services provided by money management service providers might not qualify for the exemption in subregulation 20(5) of the Credit Regulations, but should be exempt from the credit licensing requirements on similar terms to exempt financial counselling services.

In deciding whether to grant exemptions to certain service providers, ASIC considered regulatory and policy issues and the funding, training and supervisory arrangements in place for different services.

Before making these class orders, ASIC consulted with the Commonwealth Department of Agriculture, Forestry and Fisheries (DAFF), the Queensland Department of Employment, Economic Development and Innovation (DEEDI) and the Commonwealth Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA). ASIC also consulted with rural financial counselling agencies, money management services and financial counselling agencies.

Download a copy of:

• Class Order [CO 11/926] Credit licensing exemptions for NGOs (non-government organisations) providing credit assistance to consumers

• Class Order [CO 11/927] Australian financial services licensing exemption for NGOs (non-government organisations) providing basic deposit advice