Change to standard conditions on licenses
A review of the standard conditions placed on finance broker licenses, undertaken in consultation with the Mortgage Industry Association of Australia (MIAA) and the Finance Brokers Association of Australia (FBAA) has recently been finalised by the Commissioner for Consumer Protection.
As a result, minor amendments have also been made to a few of the standard conditions and others have been removed altogether where they duplicated provisions of the Act.
Perhaps most significantly, the standard restricted (B, C & D Class) licence condition has been amended.
Restricted licensees are precluded from dealing with private lenders and are therefore generally limited to dealing with institutional lenders (e.g. banks, building societies, etc).
The previous standard restricted licence condition accounted for lenders who only provide commercial loans not regulated by the Consumer Credit Code by referring to "A specific entity held on a list maintained by the Commissioner, which may be amended from time to time. It is the broker’s responsibility to ensure the entities with which they are negotiating or arranging any loans of money appear on the above list which may change from time to time."
It was previously considered that there were not many lenders which fell within this area and the list currently contains no entities. However, sectors of the credit and finance industry have suggested there are, in fact, a number of such lenders with whom finance brokers are currently dealing.
Consequently, the standard restricted licence condition has been changed to the following:
That the licensee shall not negotiate or arrange any loans of money unless, in respect of that loan, the lender is either:
- an Australian Financial Services licensee authorised to operate a managed investment scheme registered under Chapter 5C of the Corporations Act;
- regulated by the Australian Prudential Regulation Authority (APRA);
- a licensed credit provider under the Credit (Administration) Act 1984;
- a person exempt from the licensing requirements of Section 6 of the Credit (Administration) Act 1984 pursuant to Section 7(1) of that Act;
- both a "financial corporation" and a "registered entity" within the meanings given to those terms in the Commonwealth Financial Sector (Collection of Data) Act 2001; or
- any other person specifically noted on the licence as an approved lender.
See full list of new standard conditions.
The new conditions will be updated on existing licenses at the time of their next renewal.
However, if you feel that the new conditions will be of benefit to you now (e.g., you deal with non-bank commercial lenders who are not regulated by the Credit (Administration) Act 1984) you are invited to apply by email to have your licence updated with the new conditions and reissued immediately.