As part of our series of articles on the National Consumer Credit Protection reforms, this article and Parts 2, 3 and 4 which will follow over the coming months, will provide an overview of some of the key aspects of registration and licensing under the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Transitional Act) and the National Consumer Credit Protection Act 2009 (National Credit Act), applicable to persons and businesses engaging in credit activities covered by the National Credit Act.
What you should do and by when
If you wish to engage in credit activities from 1 July 2010, you should:
If you intend to engage in credit activities for the first time from 1 July 2010, you must first apply for and receive an ACL, or be covered by someone else’s. Not all persons engaging in credit activities need to be registered or have an ACL, for example if your credit activities are not regulated by the National Credit Act or if you only engage in credit activities on someone else’s behalf, and that person is registered or has an ACL. This situation might arise if you are authorised as a credit representative or are an employee / director of the company or one of its related bodies corporate.
If you are required to register with ASIC and you do not do so by 30 June 2010, you must stop engaging in credit activities until you have an ACL.
If you only engage in credit activities (other than providing credit services) in relation to carried over instruments, you may not be required to be registered or hold an ACL. A carried over instrument is a contract or other instrument that was made and in force prior to 1 July 2010 and to which an existing State or Territory consumer credit legislation applies. The Transitional Act and associated regulations contain special provisions with respect to carried over instruments. A separate article in this series will provide further information regarding these provisions.
If you are required to be registered you will need to:
The required personal statement is:
If you are not able to agree to the statement for each relevant person, you will not be able to proceed with your application. ASIC may also refuse to register a person if it believes the application is false in a material particular or is materially misleading, or there is an omission of a material matter from the application.
ASIC is required to give written notice of:
The applicant becomes registered when ASIC enters the applicant’s name on the Australian Credit Register maintained by ASIC. ASIC may impose conditions on a person’s registration and vary or revoke conditions imposed on a person’s registration subject to certain special procedures for APRA-regulated bodies and ADI’s, and not in relation to conditions prescribed by the regulations.
Obligations after registration
Registered persons will have a number of general conduct obligations. These include:
Some of the responsible lending obligations in Chapter 3 of the National Credit Act will also apply from 1 July 2010. For example, the requirement not to arrange or provide credit that is unsuitable will apply to authorised deposit-taking institutions and registered finance companies from 1 January 2011. For all other persons, that requirement will apply from 1 July 2010. This requirement includes obligations to make reasonable enquiries about the consumer as required by the National Credit Act. Other responsible lending obligations such as upfront disclosure of fees and commissions, provision of quotes, credit guides and assessments will commence on 1 January 2011.
As a registered person, you may also be required to give information to ASIC at certain times. For example, if there are any changes to your details on the Australian Credit Register, if you authorise a credit representative, or if you are directed by ASIC to provide a written statement or obtain an audit report about your credit activities or those of your representatives.
Registered persons will need to be familiar with all of these obligations.
When does a registration end?
Registration will continue until it is cancelled or suspended by one of the following occurring, or is otherwise cancelled or suspended by ASIC under other applicable provisions of the Transitional Act:
If your registration has not been cancelled by one of the above events your registration will be cancelled after 30 June 2011.
What to do next
It is important that you start getting ready now. All persons and businesses who engage in credit activities under the National Credit Act should consider the extent to which they need to comply with the legislation and requirements, including being ready to make the necessary applications for registration and an ACL within the prescribed time.
In relation to registration, you should:
For further information please contact Kylie O'Keeffe, Partner, on (08) 9288 6852 or email her at email@example.com.