Module Scope
- Does your organisation engage in or intend to engage in credit activities by offering a credit contract or consumer lease to individuals for personal, household or domestic purposes?
- Does your organisation currently hold or intend to acquire an Australian credit licence?
- Does your organisation currently have or intend to have representatives undertaking credit activities on its behalf?
- Does your organisation have a compliance program in place to manage its credit licence obligations?
Module Application
The AUSTRALIAN CREDIT LICENSEES module provides an organisation licenced to operate or intending to become licenced to operate in Australia as a credit provider or credit assistance provider, an understanding of their legal obligations under Australian national credit legislation. The module also provides practical assistance and guidance to ensure these obligations are complied with by demonstrating the establishment and maintenance of best practice processes within the organisation.
All individuals and organisations operating or intending to operate as credit provider or credit assistance provider in Australia should be subscribing to this module.
The AUSTRALIAN CREDIT LICENSEES module covers the consumer credit regulatory sector in Australia and includes obligations imposed on credit licensees in relation to:
- consumer credit contracts
- consumer leases, and
- credit cards.
The primary piece of legislation governing consumer credit in Australia is the National Consumer Credit Protection Act 2009 (Cth) (NCCPA), which includes the National Credit Code as a Schedule to the NCCPA. In addition to the NCCPA, obligations are imposed on credit providers and credit assistance providers by several other pieces of legislation, primarily:
- The National Consumer Credit Protection Regulations 2010 (Cth), made under the NCCPA and significantly affecting its operation and application
- The Privacy Act 1988 (Cth), which establishes principles in relation to the collection, storage, use and disposal of personal information by public sector and certain private sector entities
- The Australian Securities and Investments Commission Act 2001 (Cth)
A licensee who is a subscriber to the ePayments Code must ensure it complies with all applicable requirements within the code.
The Australian Securities and Investment Commission (ASIC) is the primary regulator of credit services in Australia and is tasked with the role of licensing and monitoring credit services businesses to ensure compliance with the credit legislation. To fulfil this role ASIC has issued numerous regulatory guides and legislative instruments that provide practical guidance on compliance issues and assist credit licensees to understand how ASIC will exercise its powers. The AUSTRALIAN CREDIT LICENSEES module covers the role and function of ASIC as well as guidance issued by ASIC together with the obligations owed by a credit licensee during an ASIC investigation.
Australian credit providers and credit assistance providers must establish a robust compliance framework to ensure they comply with their core regulatory obligations. The framework should include systems for ensuring that the licensee:
- Is appropriately licensed for all credit activities it engages in and that any authorised credit representatives have been properly appointed
- Engages in credit activities efficiently, honestly and fairly
- Appropriately manages conflicts of interest
- Has access to sufficient resources on a continuing basis
- Maintains organisational competence
- Has risk management and breach reporting systems in place
- Complies with its disclosure requirements
In addition to the stated core regulatory obligations, Australian credit licensees are also obligated to ensure that their compliance framework.
- Satisfies responsible lending requirements in relation to standard home loans, credit card contracts, short-term loans and small amount credit contracts, including providing a Key Facts Sheet (KFS) to all consumers
- Satisfies its consumer and small business protection obligations in relation to consumer credit
- Creates credit contracts in the correct form and provides the debtor or guarantor under such contracts with all required information, including when the contract is terminated
- Has procedures in place to ensure that mortgages and guarantees are valid and enforceable
- Provides a debtor with written notice if there is any change to the terms of a credit contract, mortgage or guarantee
- Has procedures in place to ensure that sale contracts are not based on misrepresentation, breaches or a failure of consideration
- Informs a debtor of all relevant information under a sale contract or insurance contract
- Has procedures in place to ensure that consumer leases are created in the correct form and provide the lessee with all required information.
- Performs consumer remediations in accordance with ASIC’s requirements
- Satisfies its privacy obligations in relation to information obtained from a credit reporting body
- Complies with the Payment Card Industry Security Standards when sending credit or debit cards
- If participating in the Home Guarantee Scheme, has procedures to ensure that the requirements of the scheme are being met on an ongoing basis
Continued or systemic failure to meet its legal obligations exposes the Australian credit licensee to consequences including criminal liability, significant pecuniary penalties and reputational damage. The AUSTRALIAN CREDIT LICENSEES module comprehensively covers the range of specific consequences that apply to different breaches or failures to of the credit licensee to meet its obligations.
The AUSTRALIAN CREDIT LICENSEES module provides comprehensive coverage of the legal obligations of Australian credit licensees providing credit to consumers. The module does not cover the procedures or processes to be followed by individuals or entities relying on Australian credit licensees who have suffered damages or losses due to breaches of obligations by Australian credit licensees.