Do you need a credit license?
Before you apply for this license, you must determine whether you need it. You will need it if you engage or seek to engage in credit activities. Such activities include:
- If you provide credit under consumer lease or credit contract.
- You benefit from mortgages or the guarantees on a credit contract.
- You perform obligations or exercise the rights of a lessor or credit provider.
- You provide assistance or suggestions on a consumer lease or credit contract.
- You act as an intermediary in a credit contract between the consumer and credit provider and consumer lease between the consumer and lessor.
Credit License or authorisation from the person or company you’re representing is a compulsory requirement with sanctions in place for anyone who starts a credit service business without it.
In order to get this license, you must apply through ASIC. While such license authorises an entity to function as a credit services provider, consumers must note that it is not a guarantee of the quality of services provided by the employee of that entity.
- You may not need the license in some instances such as
- If you are a representative of another person or entity that holds a license. This will usually happen if you’re an employee of the credit licensee or the credit licensee authorises you.
- If the kind of credit activities, you deal in is exempted from the licensing requirement
- If ASIC grants you relief against the credit licensing requirement.
Such exemption usually applies to lawyer, insolvency professional, tax agent, financial counsellor or counselling agency, cashier or clerk, and a licensed repossession agent or debt collector. Certain activities are also exempted, such as referral of the consumer to credit licensee and the provision of factual information and documents as a response to a request.
Credit License Application
The process is quite simple and can be done online. You can register on ASIC where parts of the form would be pre-filled if ASIC already has your information in its register, for instance, if you’re a company. The pre-filled information cannot be changed so you must ensure your details on all ASIC registers are current.
ASIC assess the information you provide and determine your application on two grounds;
- If you are capable of complying with the general obligations on conduct guiding the operations of credit business.
If you are fit and proper to carry out credit activities
Obligations of a credit licensee
The obligations include general obligations regarding proper conduct and specific duties contained in the credit legislation.
The general obligations cover conduct, the competence of you and your representatives, avoidance of conflict of interest, risk management, dispute resolution, compliance, compensation scheme, and having adequate financial, human and technological resources. There are many other obligations usually arising from the license or relevant legislations, and you must comply with all.