FAQs: Getting a credit licence
This information sheet (INFO 103) answers frequently asked questions about getting an Australian credit licence (credit licence) under the National Consumer Credit Protection Act 2009 (National Credit Act). It covers:
- applying for a credit licence
- credit licence numbers
- Australian financial services (AFS) licensing
- rejection of a credit licence application
- criminal history and bankruptcy checks
- financial resources
- employees, contractors and aggregators
- organisational competence and training
- compensation and insurance
For more detailed guidance on these issues, see Where can I get more information? at the end of this page.
How do I know which authorisation to select?
The credit licensing process is much simpler than the AFS licensing process, as there are only three possible authorisations:
- engage in credit activities as a credit provider or lessor
- engage in credit activities other than as a credit provider or lessor (e.g. as a credit representative or broker)
- engage in all credit activities.
You should only select the authorisation that suits your business model. For example, if you just want to provide credit as a lender, you should apply for an authorisation to ‘engage in credit activities as a credit provider’. You should not apply for an authorisation to ‘engage in all credit activities’ because you would then be assessed on your ability to be a credit provider as well as your ability to provide credit services like broking.
For more information on authorisations, see Section C of Regulatory Guide 204 Applying for and varying a credit licence (RG 204).
Do I need to provide a Statement of Personal Information and other supporting documentation for fit and proper people who are not actively involved in credit activities?
Each person who is required to be assessed as a fit and proper person must complete the Statement of Personal Information. This is because ASIC needs to determine whether a credit licensee meets the minimum requirements to be licensed under the National Credit Act. You can download a copy of the Statement of Personal Information from Information Sheet 244 Credit licence applications: Providing information for fit and proper people (INFO 244). In INFO 244 you can also review a list of who ASIC must assess as a fit and proper person.
I am a credit provider and a broker. Will I need two credit licences?
It will depend on how your business is structured. If, for example, you have a single company or partnership, you should only need one credit licence but the authorisation you select upon completing your licence application would need to cover both types of credit activities, so you would need to select the authorisation to ‘engage in all credit activities’.
See Section C of RG 204 for more information about authorisations.
Do I get a credit licence number? What do I need to do with it?
If you are granted a licence, you will get a credit licence number. If you are an Australian financial services (AFS) licence holder, your credit licence number will be the same as your AFS licence number.
Whenever a licensee identifies itself in certain documents, it is required to include its Australian credit licence number in the document and identify that number as being the licensee’s Australian credit licence number (see section 52(2) of the National Credit Act).
In these documents, the licensee must include its licence number in the following way:
‘Australian credit licence 12345’
It is not sufficient to only use an abbreviated form, such as ‘ACL 12345’.
However, we think that if a licensee or a licence number is referred to in a document more than once, it will be sufficient for the full description of the licence to be used once, and the abbreviated form to then be used following that in the document.
The documents in which the Australian credit licence number must be included are prescribed in regulation 13 of the National Consumer Credit Protection Regulations 2010 (National Credit Regulations), as:
- a document that is required to be created or produced in accordance with Chapter 3 of the National Credit Act
- a printed advertisement that relates to the provision of credit to which the Code would apply
- a document that is required to be created, produced, given or published by a provision of the Code
- a document lodged with ASIC that relates to the provision of credit to which the Code would apply.
The Australian credit licence number does not have to be included in other business documents, such as business cards and letterheads. However, licensees should still ensure that this documentation is not confusing or misleading to consumers.
Is the AFS licensing process different from credit licensing? Do I need a separate AFS licence and credit licence?
Yes. If you are seeking to provide financial services for which an AFS licence is required, you will need to apply separately for an AFS licence.
When will ASIC reject a credit licence application?
ASIC must not grant a credit licence if, for example:
- ASIC has reason to believe that an applicant is likely to contravene the general conduct obligations imposed by the National Credit Act, or
- the applicant is not a fit and proper person to engage in credit activities (e.g. a banning order has been made against the person or they are a bankrupt person).
See RG 204 for detailed guidance on the licence application process.
Who do I have to provide criminal history and bankruptcy checks for?
All applicants need to provide criminal history and bankruptcy checks for:
- if you are a natural person, you
- if you are a company or other body corporate, all the officers of the applicant, regardless of whether they perform duties in relation to credit
- if you are a partnership or multiple trustees of a trust, any partner, trustee or senior managers of the applicant
- any controller of the applicant
- if a controller is a body corporate, any officer of the controller
- if a controller is a partnership, any partner or senior managers of the controller
- if the controller is multiple trustees of a trust, any trustees or senior managers of the controller.
How recent do criminal history and bankruptcy checks need to be?
Criminal history and bankruptcy checks must be no more than 12 months old at the date of your licence application.
Do I need to do a criminal history check every year?
While this is not a legislative requirement, as a credit licensee, you must ensure as part of your compliance arrangements that any relevant persons continue to be fit and proper persons.
Where can I get a criminal history check? Is a state police check sufficient?
For the purposes of applying for a credit licence, the criminal history check must be a national criminal history check. ASIC will accept national criminal history checks obtained from the sources in Table 1. For details of how to apply, see the relevant websites in Table 1.
For more information about getting a criminal history check, see RG 204.
Table 1: Where to get national criminal history checks
Australian Federal Police
In the application form, insert code number 25: Australian Securities and Investments Commission (ASIC) Consumer Credit/Financial Services Licensing Requirements
State and territory police services
New South Wales: www.police.nsw.gov.au
Northern Territory: www.pfes.nt.gov.au/police
South Australia: www.police.sa.gov.au/
Western Australia: www.police.wa.gov.au
Brokers accredited by Australian Criminal Intelligence Commission
Where can I get a bankruptcy check?
ASIC accepts searches obtained directly from the Australian Financial Security Authority’s Bankruptcy Register Search (BRS) or from other entities registered to access the BRS. The search must contain all the information supplied by the National Personal Insolvency Index.
For more information on getting a bankruptcy check, see RG 204.
What are the financial resource requirements for getting a credit licence?
Credit licensees should ensure that they have access to sufficient financial resources to be able to meet all their debts as and when they become due and payable. As a credit licensee, you must also:
- plan and monitor cash flows to make sure they are sufficient to adequately meet your obligations as a credit licensee under the National Credit Act
- document the process for determining whether you have adequate financial resources.
See Regulatory Guide 207 Credit licensing: Financial requirements (RG 207).
Will ASIC be issuing further guidance on the level of financial resources I must maintain?
It is not possible to prescribe a level of resources for each credit licensee – it depends entirely on the nature, size and complexity of your business. RG 207 provides detailed guidance about how to assess what is appropriate for your business. However, it is designed to be principles based, rather than prescriptive.
What are the human resource requirements for getting a credit licence?
Whether your human resources are adequate will depend on the nature, scale and complexity of your business. We have provided some guidance about human resources in Section F of Regulatory Guide 205 Credit licensing: General conduct obligations (RG 205). In essence, you need to have enough people so you can comply with all of your obligations under the legislation, carry out monitoring and supervision, and meet your current and anticipated future operational needs.
See also our page on general conduct obligations for credit licensees.
Do I need to authorise my staff or contractors to be credit representatives or require them to be licensed?
If you have a credit licence, you do not need to separately authorise your employees, or require them to apply for their own credit licence. If you use independent contractors, you can either require them to get a credit licence or you can authorise them to be a credit representative. If you have authorised a company as a credit representative, you can also authorise that company’s employees or approve the company sub-authorising some or all of them. You are legally liable for their conduct under the authorisation or sub-authorisation.
We have a group structure and various members of the group will provide some credit activities. Should we apply for a credit licence or become credit representatives?
You need to assess the group structure and the type of services the members of the group provide. ASIC’s licensing system is flexible to suit a wide range of business models. Under the National Credit Regulations, a related body corporate is exempt from the requirement to get a credit licence if they engage in credit activities on behalf of the related body corporate that holds a credit licence.
See Regulatory Guide 203 Do I need a credit licence? (RG 203).
I am an aggregator. How do I structure my business? Do my brokers need credit licences or can I appoint them as my credit representatives?
Brokers, aggregators and other intermediaries have the flexibility to choose how to structure and operate their business models under the credit legislation – that is, whether to get their own credit licence or operate under the umbrella of someone else’s credit licence as an authorised credit representative.
What are the organisational competence and training requirements?
The organisational competence and training requirements are summarised below in Table 2.
See also Regulatory Guide 206 Credit licensing: Competence and training (RG 206).
Table 2: Organisational competence requirements for responsible managers of credit licensees
What your responsible manager(s) must have
Credit assistance business
Note: After you are granted a licence, your responsible managers should undertake at least 20 hours of continuing professional development each year.
You must also ensure that your representatives are adequately trained and competent to engage in the credit activities authorised by your licence: see section 47(1)(g).
We generally expect you to determine what is appropriate initial and ongoing training for your representatives and to embed this in your recruitment and training systems.
When do I have to pay the licence application fee, and how much is it?
Fees are due when you lodge your licence application.
We use a tiered fees model that is designed to reflect the varying complexity of the applications we receive. This ensures that regulated entities pay an appropriate fee for the service we provide and allows us to recover the actual cost of the time we spend on an application.
To find out how much you have to pay, see Information Sheet 108 Fees for Australian credit licences and annual compliance certificates (INFO 108).
How do I pay the licence application fee?
You can pay the licence application fee:
- through BPay or Post Bill Pay (including by credit card)
- via Electronic Funds Transfer, or
- by posting a money order or cheque directly to Australian Securities and Investments Commission, Locked Bag 5000 Gippsland Mail Centre, VIC 3841.
Do I need to hold professional indemnity insurance? When do I need to get it?
As a credit licensee, you will need to have adequate arrangements in place for compensating your consumers for any loss they might suffer if you breach your obligations under the National Credit Act. For most applicants, the way to comply with this obligation is to have adequate professional indemnity (PI) insurance cover.
Some applicants, such as credit providers, general insurance companies, life insurance companies and authorised deposit-taking institutions, are exempt from the obligation to have PI insurance: see regulation 12(3)(c), (d) and (e) of the National Credit Regulations. Despite this exemption, if granted a licence these applicants are still subject to the general obligation to have adequate arrangements in place for compensating consumers.
Before you start your application, you should think about what arrangements would be needed to compensate consumers if a successful claim were made against your business for a contravention of the National Credit Act. We will not be able to make a final decision to grant you a licence until you confirm that you have adequate arrangements in place.
Why does the application form ask about outsourcing?
The information is useful in determining the risk profile and the business model of credit licensees.
- See RG 203 Do I need a credit licence?
- See RG 204 Applying for and varying a credit licence
- Visit our Credit page for the latest information on credit
- Contact us online or call 1300 300 630.
Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. Omission of any matter in this information sheet will not relieve a company or its officers from any penalty incurred by failing to comply with the statutory obligations of the National Credit Act.
You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.
This is Information Sheet 103 (INFO 103), reissued in October 2020.