National consumer credit reform
Latest news:
- Latest information on the national consumer credit regime and links to various consultation papers released by ASIC are available from the ASIC website.
- Commonwealth announces changes to implemention timeframe for national credit reform - see below
Information for licensees, prospective applicants and the public
The Council of Australian Governments has agreed responsibility for all consumer credit regulation (including licensing or registration of finance brokers) will be transferred to the Commonwealth Government. From the date of transition, administration of the regulation will be undertaken by the Australian Securities and Investments Commission (ASIC).
The National Consumer Credit Protection Bill 2009 tabled in the Commonwealth Parliament on 25 June 2009 provided for the transfer to commence with registration of existing credit providers and finance brokers by ASIC on 1 November 2009 to be followed by the National Credit Code commencing on 1 January 2010. However, on 17 September 2009, the Minister for Financial Services, Superannuation and Corporate Law, the Hon Chris Bowen MP, announced a number of enhancements to the national consumer credit protection legislation, including a change to the commencement date.
The key change is to defer the commencement of the consumer credit reforms to 1 July 2010 to allow the credit industry more time to make the necessary changes to move to the new regime. However, the start date for the new responsible lending obligations on authorised deposit-taking institutions (ADIs) and registered financial corporations (RFCs) will remain 1 January 2011. This follows a recommendation by the Senate Economics Committee in their report on the National Consumer Credit Protection Bill 2009 and related bills, released on 7 September 2009.
Revised timeframes for implementation of the national consumer credit reforms are as follows:
- Anyone who engages in certain credit activities will need to register with ASIC between 1 April and 30 June 2010 (inclusive).
- Registered credit participants will then have six months to apply for an Australian credit licence (ACL) with ASIC, between 1 July 2010 and 31 December 2010.
- New entrants to the credit market will have to apply for an ACL with ASIC from 1 July 2010.
- New National Credit Code requirements (e.g. application to credit for residential investment properties, amendments to business purpose declarations and default notices, new notices in response to application for hardship variations and postponements) commence 1 July 2010.
- Requirement not to arrange or provide credit that is unsuitable – non-ADIs and non-RFCs commences 1 July 2010.
- Other responsible lending obligations (including disclosure requirements, such as upfront disclosure of broker fees and charges) and requirement not to arrange or provide credit that is unsuitable – ADIs and RFCs commence 1 January 2011.
Arrangements for registration of existing industry participants will need to be modified to take account of the revised commencement date. Details on the timeframe for registration are yet to be announced by the Commonwealth.
State credit and finance broking regulation will remain in place until 30 June 2010. You are reminded that it is unlawful to carry on the business of a finance broker without a licence in Western Australia.
If your licence(s) is due to expire prior to 1 July 2010, applications for renewal of the licence must be submitted to the Department of Commerce as usual.
Options regarding fees paid with respect to Western Australian licences are currently being considered. Updates will be published on this website, when available.
A guide to the national consumer credit reform package, together with relevant draft legislation can be found on the Australian Treasury website at www.treasury.gov.au/consumercredit. For information about ASIC or to check for regular updates regarding the national credit reform you may wish to visit ASIC’s dedicated credit website at www.asic.gov.au/credit.