Authorisation of credit activities

You will be asked to select the authorisation that covers the types of credit activities you want to engage in.

You can choose:

You should only choose the authorisation that is necessary to cover the credit activities that you propose to engage in if you are granted a licence.

You should not choose an authorisation that covers credit activities that you do not propose to engage in ‘just in case’ your business changes. If your business changes after you are granted a licence, you should apply for a variation to your licence. See Section H for more information on varying your credit licence.

We will check the authorisation you have selected against the information you include in your application about your intended business activities (i.e. your ‘Details of business activities’ and the supporting document ‘Summary business description’). If the selected authorisation does not seem to be appropriate for the description you have provided, we will contact you. This may cause a delay in our assessment.

We will take into account the authorisation you select when we assess the information in your application about your competence to engage in the credit activities that will be covered by the licence (if granted). If we consider that you are not competent to engage in credit activities covered by the authorisation that you select, we may refuse your application or decide to offer you a licence with a different authorisation.

What do the authorisations cover?

Engage in credit activities other than as a credit provider or lessor

This authorisation covers:

  • the provision of credit services (including providing credit assistance and acting as an intermediary) in relation to a credit contract or consumer lease where you are not the credit provider or lessor; and

  • performing the obligations or exercising the rights of a credit provider, mortgagee, beneficiary of a guarantee or a lessor in relation to the following where you are not the credit provider or lessor:

    • a credit contract;

    • a mortgage that secures obligations under a credit contract;

    • a guarantee that guarantees obligations under a credit contract; or

    • a consumer lease.

We expect that this authorisation will be appropriate for all non-credit providers. For example, we expect that you will need to select this authorisation if you are:

  • a mortgage broker, finance broker, financial planner or adviser or other type of intermediary between the consumer and credit provider;

  • a mortgage manager who manages a credit contract on behalf of a credit provider (but who has not been assigned any rights under the contract); or

  • an aggregator.

Engage in credit activities as a credit provider or lessor

This authorisation covers:

  • carrying on a business of providing credit to which the National Credit Code applies or providing consumer leases;

  • being a credit provider under a credit contract or a lessor under a consumer lease;

  • performing the obligations or exercising the rights of a credit provider, mortgagee, beneficiary of a guarantee or a lessor in relation to the following where you are the credit provider or lessor:

    • a credit contract;

    • a mortgage that secures obligations under a credit contract;

    • a guarantee that guarantees obligations under a credit contract; or

    • a consumer lease, and

  • providing credit assistance to a consumer in relation to a credit contract or consumer lease where you are the credit provider or lessor.

You may be carrying on a business of providing credit or consumer leases if you engage in pre-contractual conduct for the purpose of entering into credit contracts or consumer leases as a credit provider or lessor.

You will be the credit provider or lessor where you are either:

  • the original credit provider or lessor; or

  • a person to whom the rights of another credit provider or lessor have been assigned or passed by law.

An original credit provider or lessor is a person who provides credit under a credit contract or consumer lease that is the initial holder of rights under the credit contract or consumer lease (i.e. a person who has not become a credit provider or lessor by being assigned rights under the credit contract or consumer lease). Assignment of rights means that those rights have been transferred. You will not be an assignee merely because you exercise rights on behalf of another person.

We expect that this authorisation will be appropriate for most credit providers and lessors. For example, we expect that you will need to select this authorisation if you are:

  • an ADI (a bank, credit union or building society);

  • a responsible entity of a managed investment scheme that provides credit, such as a mortgage scheme; or

  • a seller of goods or real property by instalments.

We also expect that this authorisation will be appropriate for applicants that are credit providers because they are a lenders mortgage insurer, a life insurer that lends in accordance with the terms and conditions of a life policy entered into before 1 July 2010 or an assignee of debts for the purpose of collecting those debts (assignee debt collector). However, because lenders mortgage insurers, life insurers and assignee debt collectors engage in credit activities in a limited capacity, we will limit the usual ‘credit provider’ authorisation. For more information, see RG 204.126–RG 204.130 and RG 204.135–RG 204.143.

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Engage in all credit activities

There may be some credit providers or lessors who will also provide credit services, or perform obligations and exercise rights, in relation to credit contracts or consumer leases that are provided by other licensees. These credit providers or lessors should select this authorisation.

For example, some ADIs may engage in credit activities in relation to credit contracts or consumer leases that are provided by other licensees.

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What do I select if I am a streamlined applicant?

ADI

You may select either ‘Engage in credit activities as a credit provider or lessor’ or ‘Engage in all credit activities’ as appropriate.

Lenders mortgage insurer or a life insurer

A lenders mortgage insurer is a person who:

  • is authorised by APRA as a general insurer under s12 of the Insurance Act;
  • is included on the Register of General Insurers and Authorised NOHCs maintained by APRA;
  • offers a lenders mortgage insurance product; and
  • engages in credit activities as an assignee in relation to providing the mortgage insurance product.

If you are a lenders mortgage insurer, you will only be entitled to a streamlined application process if you only engage in credit activities as an assignee in relation to the lenders mortgage insurance products provided by you (i.e. you only engage in credit activities as a credit provider by reason of assignment of the rights of a credit provider under a lenders mortgage insurance product): see reg 8(7) of the National Credit Regulations. You will only be given the benefit of the full streamlined process if you select ‘Engage in credit activities as a credit provider or lessor’.

If you are a life insurer, you will only be entitled to a streamlined application process if you only engage in credit activities because of the operation of the terms and conditions of a life policy, or a document issued or given in relation to a life policy, that was entered into by you before 1 July 2010: see reg 8(8) of the National Credit Regulations. You will only be given the benefit of the full streamlined process if you select ‘Engage in credit activities as a credit provider or lessor’.

If you select one of the other authorisations, we will contact you to check whether you want to engage in credit activities other than as a lenders mortgage insurer or as a life insurer that lends in accordance with the terms and conditions of a life policy entered into before 1 July 2010. If you:

  • only want to engage in credit activities in these limited capacities, we will assess you as a streamlined applicant (see RG 204.21–RG 204.22 for an explanation of the benefits of this process); or
  • want to engage in credit activities other than in these limited capacities, we will assess you as a standard applicant. We may need to ask you to provide documents that support your application (see Section E for a description of the supporting documents that are required for standard applicants).

This means that if you want to engage in credit activities other than in these limited capacities, in making our decision we may take into account whether there is any reason to believe that you are:

  • likely to contravene the general conduct obligations; or
  • not a fit and proper person.

This information comes from Regulatory Guide 204.

Last updated: 20/10/2014 12:00