Regulation of consumer credit

Do you need to be licensed?

Since 1 July 2010, a national licensing scheme has been in force for the provision of consumer credit activities, regulated by the Australian Securities and Investments Commission (ASIC) under the National Consumer Credit Protection Act 2009 (National Credit Act).

Products and services that are regulated include home loans, personal loans, credit cards, consumer leases, overdrafts and line of credit accounts, among others.

Importantly, the National Credit Code includes the provision of credit to purchase, renovate, improve or refinance a residential investment property.

If you engage in consumer credit activity, you will general need to either hold an Australian credit licence (ACL) or be authorised as a credit representative. 

What are credit activities?

Credit activity is defined in the National Credit Act and includes:

• providing credit under a credit contract or consumer lease
• benefiting from mortgages or guarantees relating to a credit contract
• exercising rights or performing obligations of a credit provider or lessor (either as the credit provider or lessor or on behalf of another person who is the credit provider or lessor)
• suggesting or assisting with a particular credit contract or consumer lease
• acting as an intermediary between a credit provider and a consumer (for a credit contract) or between a lessor and a consumer (for a consumer lease).
  
  

Licensing exemptions

Registered tax agents are exempt from the licensing provisions, provided the credit activities you engage in as a registered tax agent are in the ordinary course of your activities as a tax agent.

Importantly, your activities must not involve providing a certificate or assessment about whether a consumer will be able to meet their financial obligations under a credit contract or consumer lease.

For example, you will be covered by this exemption where you provide a statement of financial position to assist a client in applying for finance but express no view as to whether the consumer can meet the repayments.

Understanding the regulation of consumer credit

It is important to understand what consumer credit and finance broking advice and services require licensing, as some activities provided by accountants could be captured. The following pages provide further detail:

• Regulated credit activities
• Activities that can be provided without holding a credit licence
• Requirements to apply for your own Australian credit licence
• Becoming a credit representative
• Signing client declarations for loans