What are the requirements for an Australian Credit License?

The new National Consumer Credit Protection Act 2009 (Cth) is currently in the process of coming into force and it is now necessary for any person or business involved in ‘credit activities’ to be licensed to do so under the act.  There are heavy penalties for non-compliance and although the Australian Securities and Investments Commission appears to be taking  a tentative approach to enforcement in the early period of the registration under the legislation because of the enormous volume of registrations under the new regime which must now be processed and the enormous volume of credit licenses which now need to be applied for it is anticipated that the regulator will be devoting much of its resources at present to ensuring that the registration and initial application process is correctly administered rather than weeding out the operators who are dishonest or non-compliant with the terms of the legislation.  However, when this initial period has ceased, there will most likely be a different emphasis which will emerge in the enforcement strategy of the regulator.

Broadly, the licenses are supposed to cover three areas of activities.  There are credit activities, credit services and credit providers.  Credit providers are the persons and entities which are most likely to come under the most scrutiny as a result of the introduction of the new legislation.  They will need to have much more stringent checks on the ability of people to repay under a debt agreement which they enter into with a new client and they will need to be able to prove that they have been through this process with each client that they involve themselves with.  There will also be far stricter controls on practices like predatory lending.  If you or your organisation needs to apply for a credit license, we are more that happy to assist you with the process and offer advice and information on the introduction of the Australian Credit License regime.  Please do not hesitate to contact about this if you would would like formal advice or information.