Banking Services Alert

Consumer Credit Licensing Update

 

Christmas is coming and Consumer Credit Licensing is not far behind!  The traditional Christmas and New Year lull in business gives you a chance to review your policies and procedures in readiness for credit licensing from April 2010.

 

The Consumer Credit Licensing regime is similar to the Financial Services Licensing regime but simpler.  If you already have an Australian Financial Services License, you will appreciate how much time you will need to spend on Consumer Credit Licensing - you will also be better equipped to prepare for Consumer Credit Licensing.

 

Delays in the Senate have meant that Credit Licensing has been pushed back by six months.

 

If your business has anything to do with the provision of Consumer Credit or the giving of advice on Consumer Credit and you wish to continue in business after 30 June 2010, then, before that date you must:

 

< register with ASIC; or

 

< become a Credit Representative of someone who is registered (or registering) with ASIC.  With the end of the registration period coinciding with the end of the financial year, you should plan to register early in April or May 2010 to avoid the end of financial year rush.

 

ASIC has just released some guidelines for businesses wishing to register as a credit licensee.  A link to the guidelines is at the end of this bulletin.

 

If you are a potential licensee you need to be aware that you will be liable for the actions of any Credit Representatives appointed as if they were your employees.  In addition you will need to make sure that you complete all of the necessary procedural requirements for their appointment.

 

While the changes to the Credit Code are old news, we remind everyone that the definition of Consumer Credit has been expanded to include credit provided for the purchase of investment properties.

 

Round two of the reforms will occur later and is likely to further expand the meaning of Consumer Credit to include small business loans.

 

Once you register, you will then need to commence the licensing process and lodge your license application before 31 December 2010.  If you are becoming a Credit Representative and the Principal doesn’t do this, neither of you will be able to trade after this deadline until after the Principal gets licensed.

 

Do not leave registration until the last minute.  If there is a flood of applications at the last minute, the system may be slow or may crash and you may not be able to complete the registration process before the deadline.

 

Written by Gordon Perkins - Associate, Banking Services.

 

To view ASIC’s guidelines select this link.#