ASIC has today released a revised version of Regulatory Guide 206 Credit licensing: Competence and training (RG 206), with a modified policy on organisational competence and representative training for credit licensees that provide home loans.

The revised policy gives additional flexibility for credit licensees that provide home loans and responds to feedback received from Consultation Paper 165 Credit assistance for home loans: Competence and training requirements (CP 165), released earlier this year.

RG 206 sets out ASIC’s minimum expectations on how credit licensees must maintain organisational competence and ensure that their representatives are adequately trained. The main changes from our earlier policy are as follows:

• Responsible managers of credit providers providing home loans will no longer need to complete a Certificate IV in Finance and Mortgage Broking, but will instead be able to hold any relevant credit industry qualification to at least the Certificate IV level, or another general relevant higher level qualification (e.g. a diploma or university degree). This is the general approach we have taken in relation to responsible managers of other credit licensees.
• We will no longer prescribe a particular training course for representatives providing credit assistance in relation to home loans offered by their own licensee. Instead, we have provided more principles-based guidance on the types of skills and knowledge these representatives should acquire through the training they undertake.
• In relation to ongoing training requirements, we will also give these representatives the option of a regular ‘knowledge update review’—a test administered by a registered training organisation via a secure facility, assessing the representative’s knowledge of key regulatory and market developments, as relevant to their role and industry sector—as part of meeting their continuing professional development obligations.

‘Home loans are the largest loan most consumers will take on so it is critical that credit licensees have appropriate organisational competence, and adequately trained representatives, to meet consumers’ needs,’ ASIC commissioner, Peter Kell, said.

‘Our revised policy seeks to minimise licensees’ compliance burden, while requiring a high standard of training for those who play a significant role in decisions about home loans’ Mr Kell added.

ASIC will monitor how the credit industry complies with RG 206 over the next three years, and the broader standards of training and competence within the industry and will review our policy in light of any findings arising from that monitoring process. If, at that stage, we are not confident that the more flexible arrangements we are announcing today are effectively ensuring a high standard of organisational competence and representative training in the industry, we may investigate whether a more prescriptive approach would be appropriate.

ASIC has not changed its policy on organisational competence and representative training for the intermediary mortgage broking sector. We did not receive any submissions to CP 165 suggesting any changes were warranted and we are confident that the current settings in RG 206 are right for this industry sector.

Changes to licence conditions

Following on from our change of policy, we will be updating PF 224 Australian credit licence conditions and making any other necessary changes to regulatory guides. These changes will take effect in early 2012. If you are a credit licensee that currently has a licence condition relating to mortgage broking services and you believe that you no longer require it as a result of our change of policy, you may apply to us to vary the conditions on your licence. For more details on this, visit our webpage Vary your credit licence. Please note that you will only need to apply to vary your licence conditions and not to vary your licence authorisations.

Download:

• Regulatory Guide 206 Credit licensing: Competence and training (RG 206)
• Response to submissions on CP 165 Credit assistance for home loans (REP 271)