What is an Australian Credit Licence?

If you engage in credit activities with consumers, you will generally need to have an Australian credit licence (ACL). There are two basic streams for ACL holders, one being for lenders and another referred to as being for intermediaries, being brokers or other arrangers of finance for consumers.

To be able to apply for an ACL, a company must have at least one responsible manager with at least two years of relevant problem-free experience and either:

1. Credit industry qualifications to at least Certificate IV and either;
2. Another general level relevant higher-level qualification such as a diploma or degree.

The ACL Application Process

ASIC has an online application process for ACL applications. David Butterfield can manage this process for you. The Online process, being a CL01 contains numerous questions about your business including your proposed credit activities, the types of loans that propose to provide or arrange, details of your responsible managers, their qualifications and experience, etc., details of your compliance, conflict management, representatives, adequacy of resources, dispute resolution and hardship applications, compensation arrangements, etc.

Numerous proofs need to be prepared before an online application can be lodged.

As well as the online process you need to prepare and lodge the following:

1. Business description so that ASIC can understand how your business works, including the types of credit activities you propose to engage in under the credit licence.
2. Fit and proper people information for your responsible managers and others in relation to people who are involved in the management of your credit business. Numerous documents need to be lodged with this.

Other requirements.

ACL holders need to:

1. Appoint a compliance officer.
2. Hold PI Insurance that provides at least $2million in cover per claim. See RG 210.
3. Join an External Disputes Resolution Scheme.

An ACL holder has the following ongoing obligations:

• ensure that credit activities are engaged in efficiently, honestly and fairly;
• conflict of interest arrangements;
• comply with any licensing conditions;
• comply with credit legislation;
• maintain competence to engage in credit activities;
• ensure representatives are adequately trained;
• internal dispute resolution procedures;
• compensation arrangements (including professional indemnity insurance) for breaches of its obligations;
• adequate and documented compliance arrangements and systems;
• adequate resources and adequate risk management systems;
• cite its ACL number on documents;
• breach reporting to ASIC within 10 business days.