FAQs - Complying with your credit obligations

This information sheet (INFO 104) answers frequently asked questions about complying with your credit obligations under the

National Consumer Credit Protection Act 2009 (National Credit Act). It covers:

For more detailed guidance on these issues, see Where can I get more information? at the end of this page.

Annual compliance certificates

What is an annual compliance certificate?

Credit licensees are required to lodge a compliance certificate with ASIC on an annual basis: see s53 National Credit Act. ASIC has published Information Sheet 135 Annual compliance certificates for credit licensees (INFO 135) to assist licensees to meet their lodgment obligations.

Why does the Chief Executive Officer (CEO) have to sign the annual compliance certificate? Can the compliance leader or another senior officer sign it?

INFO 135 provides information on who can sign an annual compliance certificate, and, in many cases, the certificate must be signed by the licensee’s CEO. This is because the legislation is aimed at ensuring that compliance be addressed at the very highest level of the business. ASIC recognises that the CEO may need to act on the information and advice of key persons, depending on the size and complexity of the business.

Does a credit licence have to be renewed each year?

No, however licensees must pay an annual fee when lodging their annual compliance certificate.

How is the fee for lodging the annual compliance certificate calculated?

The fee for lodging an annual compliance certificate is determined based on the total amount of credit activity undertaken in the previous financial year. ASIC has issued Information Sheet 108 Fees for credit licence and annual compliance certificate (INFO 108) to help business calculate their fee.

Responsible lending

See also Information Sheet 105 Dealing with consumers and credit (INFO 105).

What guidance is available on responsible lending?

Regulatory Guide 209 Credit licensing: Responsible lending conduct obligations (RG 209) sets out ASIC's expectations for meeting the responsible lending obligations in the National Credit Act.

How does responsible lending work in practice?

RG 209 includes scenarios on how the responsible lending obligations might apply for a range of borrowers (e.g. self-employed borrowers, people consolidating loans, impulse buyers on weekends). While these scenarios illustrate our guidance on the responsible lending obligations, they are not intended to be exhaustive.

As a credit provider, can I rely on an assessment of the customer carried out by my broker?

A credit provider is required to make its own suitability assessment. You cannot rely on a preliminary assessment by the broker. RG 209 provides more detail on the use by credit providers of material collected by a broker.

Compliance plans

What should be covered in the compliance plan?

The compliance plan should cover how you will meet your credit obligations under the legislation. The content of your compliance plan depends on the nature, size and complexity of your business. A written plan serves to clarify the obligations that apply to your business, who in your business is responsible for monitoring compliance with those obligations, what steps will be taken to monitor compliance, and how often this will happen. It also provides a record of what has been done, so you can review your procedures and performance periodically.

Has ASIC be issued guidance on compliance plans and suitable content?

Yes, ASIC has issued some guidance for small businesses, including tips for preparing compliance documents. See Information Sheet 97 Guidance for small credit businesses (INFO 97).

However, ASIC cannot provide sample compliance plans given that businesses vary greatly in size and complexity. Each credit licensee must consider their individual requirements and procedures.

Conflicts of interest

What are the obligations in relation to conflicts of interest?

Credit licensees must ensure their customers are not disadvantaged by any conflicts of interest. You should make adequate arrangements to meet this obligation (e.g. with regard to remuneration or incentive structures). What this means will vary depending on the circumstances.

See Regulatory Guide 205 Credit licensing: General conduct obligations (RG 205) for examples of conflicts of interest and guidance on your obligations.

ASIC registers

What credit registers does ASIC maintain?

ASIC maintains the following registers for credit licensing:

  • Registered/Licensed Persons
  • Credit Representatives
  • Banned Persons (Credit)

What type of information do the registers include?

The details ASIC will maintain are prescribed in the National Credit Regulations. They include business addresses, business names (if any) and external dispute resolution (EDR) scheme membership.

How do I satisfy legal requirements to ensure I don’t appoint a credit representative who has been banned? For example, how often am I expected to check ASIC’s banned persons register?

See Information Sheet 109 Credit licensee offences: Prohibited dealings and unlawful authorisations (INFO 109).

Penalties

What are the penalties for non-compliance with the credit obligations?

The legislation imposes criminal and civil penalties for engaging in credit activities without a licence. The highest monetary penalty for an individual is $360,000. For a body corporate, partnership or multiple trustee, the highest monetary penalty is $1,800,000. If a person is convicted of an offence, the maximum term of imprisonment is two years.

Where can I get more information?

  • Read Regulatory Guide 205 Credit licensing: General conduct obligations (RG 205)
  • Read Regulatory Guide 209 Credit licensing: Responsible lending conduct obligations (RG 209)
  • Click here for the latest information on credit and to download copies of the regulatory guides.
  • Subscribe to ASIC updates on credit at www.asic.gov.au/credit-update
  • Ask a question online.
  • ASIC Infoline 1300 300 630

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. 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 104 (INFO 104), updated in August 2016. Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.

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Last updated: 20/10/2014 12:00