Complying with your trust account obligations as a credit licensee

This is Information Sheet 136 (INFO 136). It is for holders of an Australian credit licence (credit licensees).

It explains how to meet your trust account obligations when you hold money received on behalf of another person in the course of providing a credit service: see Part 2–5, Div 3 of the National Consumer Credit Protection Act 2009 (National Credit Act), including:

how to determine if the trust account obligations apply to you
your obligations relating to the handling of trust account money
completing and lodging your trust account statement and trust account audit report
your obligations relating to the appointment of an auditor of your trust account, and their cessation, replacement and resignation
the lodgement process.

How to determine if the trust account obligations apply to you

Under the National Credit Act, you must maintain a trust account if:

you hold a credit licence that authorises you to provide a credit service, and
in the course of providing that service, you or one of your representatives receives money on behalf of another person: see section 97.

Examples of receiving money on behalf of another person while providing a credit service include, but are not limited to:

collecting funds from a customer to cover valuation fees payable to the credit provider or valuation company, and
collecting application fees on behalf of the credit provider.

If the payment is made directly in favour of the other person (such as a cheque or money order) and you are only forwarding the means by which payment is being made, you are not required to maintain a trust account.

If you hold money on trust, but not in the course of providing a credit service (e.g. because of obligations under an Australian financial services (AFS) licence), the trust account obligations under the National Credit Act do not apply.

Handling of trust account money obligations

If you receive trust money, you must:

keep a trust account with an Australian authorised deposit-taking institution (ADI) (the ADI must be an Australian ADI as defined in section 9 of the Corporations Act 2001 (Corporations Act)) (section 98(2))
designate the account’s title as your trust account (section 98(3))
pay into the trust account any money received by you or your representatives on behalf of another person in your capacity as a credit licensee (section 99(1)), and
only withdraw money from the trust account to pay a person who is lawfully entitled to that money (sections 99(2)–(3)).

Trust money is not to be used for the payment of any other debt or for any purpose other than the purpose for which it was collected. Criminal and civil penalties apply if trust money is withdrawn otherwise than in accordance with the National Credit Act.

Trust money held under an AFS licence

If you also hold an AFS licence and maintain a trust account to hold funds while providing a financial service, you cannot use the same account to keep trust funds you receive as part of your credit service business, even if the same client is involved.

Completing and lodging your trust account statement and trust account audit report

For each financial year that you operate a trust account, you must lodge:

Form CL70 Australian Credit Licence – Trust account statement (section 100(1))
Form CL71 Australian Credit Licence – Trust account audit report, prepared by an eligible auditor (sections 100(2) and (4)).

Completion and lodgement of these forms is a multi-step process. First, you will need to complete and sign Part 1 of Form CL70, including trust account details for the financial year, and give this to your appointed auditor.

After auditing Part 1 of Form CL70, the auditor should give you the completed and signed Form CL71.

After you have received the Form CL71 from your auditor, you must complete and sign Part 2 of Form CL70 and then lodge these two forms, together, with ASIC: see the lodgement process below.

These forms must be lodged with us within three months after the end of the financial year to which they relate (s101). Having regard to the meaning of ‘financial year’ in s100(6), this means:

by 30 September if you are not a body corporate, or
within three months after your financial year end if you are a body corporate.

You do not need to pay a fee when you lodge Form CL70 or Form CL71. These activities will be funded by the ongoing annual cost recovery levies. Fees still apply if you lodge these forms after the due date, and if you do not lodge electronically: see the lodgement process below.

Extensions of time

We may grant an extension to the usual time limits if you and your auditor make a request for an extension before your due date for lodging Form CL70 and Form CL71. Our approval of such a request may be subject to conditions.

To request an extension of time, you and your auditor will need to submit a jointly signed letter that provides a reasonable explanation for why the forms cannot be lodged within the required time. The letter should also specify the end date of the extension period you are seeking. The letter can be submitted in the same manner that you lodge forms: see the lodgement process below.

Auditor of your trust account

Appointment of an auditor

You must appoint an auditor within three months of the obligation to maintain a trust account applying to you and notify us within 14 days of their appointment: see reg 19(3) of the National Consumer Credit Protection Regulations 2010 (National Credit Regulations). The form to notify us is Form CL16 Australian Credit Licence – Notification of appointment of a trust account auditor. Fees apply to lodging Form CL16 after the due date and if you do not lodge electronically: see the lodgement process below.

Your auditor must be a person who meets the eligibility requirements set out in the National Consumer Credit Protection Regulations 2010 (National Credit Regulations). To meet these requirements, they must:

be eligible for appointment as an individual auditor or as an authorised audit company under the Corporations Act (regs 18(1)(a), 18(1)(b) and 19(2)(a))
not owe money to, or be owed money by, you or a related body corporate, subject to an exemption for particular mortgage loans (regs 18(1)(c), 18(1)(d) and 18(2))
not be an employee, director or partner of you or of any other person carrying on a business that engages in credit activities (regs 18(1)(d) and 19(2)(b)(i)), and
not be carrying on a business that engages in credit activities (reg 19(2)(b)(ii)).

There is no provision to appoint a firm of auditors. Your auditor can either be an individual registered company auditor, including a partner of a firm, or an authorised audit company.

Cessation of an auditor’s appointment

Your auditor’s appointment is continuous until:

you are no longer required to keep a trust account
they cease to engage in the business of being an auditor (e.g. they retire or the authorised audit company is wound up)
they are unable to perform their duties as your auditor – for example, due to the auditor:

falling ill
being no longer eligible to be an auditor under the Corporations Act, or
commencing their own credit business

we approve the auditor’s resignation (an auditor can apply to resign by lodging Form CL18 Australian Credit Licence – Application for approval to resign as a trust account auditor)
we approve your request to replace the person as an auditor (you can apply to replace an auditor by lodging Form CL17 Australian Credit Licence – Application for approval to replace a trust account auditor), or
the auditor dies.

If a person ceases to be your auditor and you are still required to maintain a trust account, you must appoint another eligible person as your auditor within 28 days. You must also notify us of the appointment within 14 days after the appointment of the new auditor by lodging Form CL16: see reg 19(5) of the National Credit Regulations.

Replacement and resignation of auditors

Detailed guidance on how we will apply the provisions of the National Credit Regulations relating to the replacement and resignation of auditors of an Australian credit licensee’s trust account is in Regulatory Guide 26 Resignation, removal and replacement of auditors (RG 26), particularly RG 26.108–RG 26.113. A brief summary is provided below.

A credit licensee trust account auditor who wishes to resign, or a credit licensee that wishes to replace an auditor from office, must apply to ASIC for our consent.

In general, we will consent to the resignation or replacement of a credit licensee trust account auditor to take effect at any time of the year if:

our criteria for consent are satisfied (see RG 26.21), and
all relevant supporting information is provided with the application (see RG 26.112).

However, we will generally not consent to the resignation or replacement of an auditor at any time of the year if:

concerns are raised by the outgoing auditor about a disagreement with the licensee, including management or directors of a company that is a credit licensee (see RG 26.26–RG 26.31), and/or
other evidence indicates that we should not provide our consent, including the outgoing auditor being made aware that their resignation or replacement may be connected with ‘opinion shopping’ (see RG 26.22–RG 26.25).

We will decide whether to consent to a resignation or replacement on the merits of each application.

If the auditor intends to resign, they must advise the credit licensee of their intention in writing. We will notify both the auditor and the licensee in writing when our decision has been made.

If the credit licensee intends to end the auditor’s appointment, the licensee must advise the auditor of their intention in writing. We will notify the licensee of our decision in writing. The licensee should give written notice of our decision to the auditor. Such notice should not be given until after the licensee has received notification of our decision.

When to lodge an auditor application

An application may be lodged, using either Form CL17 or Form CL18 as applicable, at any time of the year subject to the requirements in RG 26. The auditor continues to hold office until consent has been granted. For this reason, auditor arrangements should not be changed before our consent is received.

We do not have the power to allow a resignation to take effect before the date on which we give consent, nor can we backdate our consent. You should lodge your application within a reasonable time so we can give due consideration to the information provided and arrive at a decision.

Generally, a reasonable time is at least four weeks before the intended date of change.

Applications that do not sufficiently address the matters referred to in RG 26, or that are incomplete or deficient, will not be assessed by us until all relevant information is provided. In this case, we will return the application to you with an ‘Intent to refuse’ letter, seeking correction of the deficiencies and asking for further information to support the application.

The lodgement process

Lodge your forms by emailing completed and scanned copies to creditlicensing@asic.gov.au.

If you are unable to lodge the forms by email, you can mail them to us at:

Australian Securities and Investments Commission
PO Box 4000
Gippsland Mail Centre VIC 3841

Lodgement fees

You do not need to pay an application fee when you lodge Form CL16, Form CL17, Form CL18, Form CL70 or Form CL71 as such activities are funded by the ongoing annual cost recovery levies. However, a fee of $25 applies if you do not lodge the forms electronically (this fee does not apply to a request for an extension of time to lodge Form CL70 and Form CL71).

In addition, fees may apply for late lodgement of certain forms as follows:

$67 if up to one month late
$278 if more than one month late.

Where can I get more information?

For more information, see:

RG 26 Resignation, removal and replacement of auditors.
Credit on the ASIC website
Contact us.

Important notice

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. We encourage you to seek your own professional advice to find out how the applicable laws apply to you, as it is your responsibility to determine your obligations.

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.

Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.

This information sheet was reissued in October 2024.