You must be covered by an Australian credit licence to engage in credit activities.
If you engage in credit activities you will generally need to have an Australian credit licence (unless you are exempt or authorised to engage in those activities as a representative of a credit licensee).
Credit activity includes:
- providing credit under a credit contract or consumer lease
- benefiting from mortgages or guarantees relating to a credit contract
- exercising rights or performing obligations of a credit provider or lessor (either as the credit provider or lessor or on behalf of another person who is the credit provider or lessor)
- suggesting or assisting with a particular credit contract or consumer lease
- acting as an intermediary between a credit provider and a consumer (for a credit contract) or between a lessor and a consumer (for a consumer lease).
You will need to have your credit licence or authorisation from the day you start your business. Strict penalties may apply to persons who unlawfully engage in credit activities.
ASIC assesses applications for credit licences as part of our role as regulator of the consumer credit industry.
Consumers should be aware that the licensing process is a point-in-time assessment of the licensee, not of its owners or employees. Holding a credit licence does not guarantee the probity or quality of the licensee’s services.
To engage in credit activities, a business must have a credit licence or an authorisation from a credit licensee.
ASIC is the national regulator for consumer credit and consumer leases under the national credit legislation. This legislation includes:
- the National Credit Code (which is Schedule 1 to the National Consumer Credit Protection Act 2009 (National Credit Act)) – which contains requirements for the entry into and terms and enforcement of credit contracts and consumer leases
- the National Credit Act – which contains requirements that persons who are involved with consumers obtaining credit contracts or consumer leases must be licensed and must comply with responsible lending requirements.
People that engage in credit activities generally need a credit licence or an authorisation from a licensee. This includes both the credit providers and lessors, and other persons, such as finance brokers.
‘Credit activity’ is defined in the National Credit Act and includes activity relating to credit contracts, consumer leases, mortgages and guarantees, and credit services.
On 25 September 2020, the Government announced proposed reforms to the responsible lending obligations contained in Ch 3 of the National Credit Act. The proposed reforms will amend the obligations that apply before entry into a credit product or the provision of credit assistance. ASIC’s guidance relating to the current responsible lending obligations will be reviewed and updated when the proposed reforms are finalised.
Credit guidance and information
We have issued detailed guidance and general information to help you understand the credit licensing process and your obligations under the credit legislation: see Related links.
You can find more information about licensing on our Credit licensees pages.
However, you may also need to get professional advice on how the law applies to your situation.
You might not need an Australian credit licence if you meet an exemption under the legislation, or if ASIC has granted relief. See Regulatory Guide 51 Applications for Relief (RG 51) for more information on applications for relief.
Information for consumers and borrowers on using credit wisely and managing debt and what to do if experiencing financial difficulty is available on the Moneysmart website.
To make a complaint to ASIC about a credit product or service, read the information on How to complain.
You can search and browse the following online registers for free to check a person’s authorisations to engage in credit activities:
Debt management licensing regime has commenced
From 1 July 2021, providers of debt management services (including firms offering ‘debt negotiation’ or ‘credit repair’ services) are regulated under the National Consumer Credit Protection Act 2009 (National Credit Act).
This means providers of these services must:
- hold a credit licence with an authorisation that covers those services (or act as a representative of such an authorised licensee); or
- be operating in accordance with the transitional arrangements, specifically that by 30 June 2021 they:
- applied to ASIC for a credit licence or variation that covers this activity (or have arrangements to act as a representative of a provider that has applied for a licence to cover this activity); and
- are a member of the Australian Financial Complaints Authority (AFCA).
If providers of debt management services have not met these requirements, they must cease engaging in these activities.
The transitional arrangements only apply while ASIC is considering the application for a credit licence or variation. If no licence is granted the provider must cease engaging in these activities.
ASIC will be closely monitoring compliance with the new laws, including identifying unlicensed conduct and taking action where necessary.
Published list of applicants – debt management services
ASIC has published a list of persons/entities that have applied for a credit licence or a variation by 30 June 2021 (seeking the ‘debt management services’ authorisation) and were members of AFCA on that date.
The list reflects licence applications that have not yet been determined by ASIC and where the person/entity has consented to ASIC publishing details of their application.
If you are dealing with a person or entity that provides debt management services, this list may help you to decide whether they can provide those services under the transitional arrangements. You may also need to check on AFCA’s website to determine whether the person or entity has current AFCA membership.
ASIC reminds credit licensees that under section 31 of the National Credit Act they are prohibited from conducting business with unlicensed persons.
On 29 April 2021, the National Consumer Credit Protection Amendment (Debt Management Services) Regulations 2021 were made, which prescribe certain debt management services as a ‘credit activity’ for the purposes of the National Credit Act.