Sydney finance broking firm, Nova Home Loans Pty Limited (Nova) will no longer be able to engage in credit activities after ASIC cancelled Nova’s Australian credit licence.

On 9 December 2010, Nova was granted a licence to engage in credit activities relating to credit contracts, consumer leases, related mortgages and guarantees, and credit services.

Nova was expelled from membership of the Financial Ombudsman Service Limited, one of the two external dispute resolution (EDR) schemes approved by ASIC, in June 2011. Nova failed to obtain membership of the other approved EDR scheme, Credit Ombudsman Service Limited, and when ASIC became aware of this, it took steps to cancel Nova’s credit licence.

‘Membership of an EDR scheme is an important requirement for Australian credit licensees, and as the consumer credit regulator ASIC will not hesitate to act against those who fail to comply with their responsibilities’, ASIC Commissioner, Peter Kell said.

Nova has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.

Background

Under the National Consumer Credit Protection Act 2009, credit licensees are required to be members of an ASIC-approved EDR scheme.

ASIC is empowered under the Act to suspend or cancel a credit licence if the licensee has contravened its obligation to maintain membership of an approved EDR scheme.

EDR schemes are independent and impartial dispute resolution services. External dispute resolution gives consumers alternatives to legal proceedings for resolving complaints with their credit service providers. Compulsory EDR scheme membership is an important feature of the national credit regime regulated by ASIC.