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July 26, 2010

Referrer credit licence exemption, done 4 ways

Referrals are an important source of credit business. The new National Consumer Credit legislation originally provided only a very narrow exemption for referral activity. With this narrow exemption, many types of referral activity would have been regulated as credit activity, and the referrer would have needed to either get an Australian credit licence, be appointed as the credit representative of a licensee, or cease engaging in the referral activity.
 
In response to representations from industry and other stakeholders, the government has amended the exemptions for referral arrangements in the National Consumer Credit Protection Regulations (NCCPR). One amendment was made to the regulations on 29 June 2010. Further amendments were made to the regulations on 19 July 2010.

We thought it would be helpful to summarise the position of referrers with all the amendments in place.

There are now 4 referrer exemptions, and they can be found in regulation 25 of NCCPR. Exemptions 1 and 2 are ongoing. Exemption 3 only operates until 30 September 2010, after which exemption 4 effectively replaces it.
(more...)

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Posted 26th July 2010 by Patrick Dwyer in legislation, licensing

July 22, 2010

More credit regulations: exemptions changes

The National Consumer Credit Protection Legislation Amendment Regulations 2010 (No. 2) (here) were registered on 21 July. They amend the National Consumer Credit Protection Regulations 2010 and the National Consumer Credit Protection (Transitional and Consequential Provisions) Regulations 2010.

The Regulations:
• insert an exemption from licensing for upstream referrers;
• insert an exemption from licensing for locums and employment agencies, and exemptions from certain obligations for temporary employees appointed as credit representatives;
• remove the 12-month sunset clause from the exemption from licensing for state licensed debt collectors (so that the exemption from licensing for state licensed debt collectors will not expire after 12 months, as the states have not yet reached agreement on the regulation of debt collectors);
• insert an exemption from certain licensing obligations for authorised deposit-taking institutions (ADIs) who provide credit assistance under “white labelling” arrangements;
• amend the existing exemption from licensing for providers of incidental membership benefits;
• amend the definition of unsolicited contact (these amendments take effect on 1 October 2010);
• replace references to licensee with references to unlicensed carried over instrument lender (UCOIL) in the Principal Credit Regulations;
• expand the exemption from having to make external dispute resolution (EDR) related disclosures to additional persons and provisions of the Credit Code;
• correct a reference to a prescribed UCOIL; and
• include orders under the Criminal Organisation Act 2009 (Queensland) in the list of prescribed orders relevant to licensing.

These changes have important structuring implications for credit providers and intermediaries.

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Posted 22nd July 2010 by David Jacobson in legislation, licensing

Notification of authorised representatives

ASIC has approved 3 forms for notifications relating to authorised representatives:

  • Form CL30 Appoint a credit representative
  • Form CL31 Cease a credit representative
  • Form CL32 Vary the details of a credit representative

Notification must be given to ASIC by credit licensees within:

  • 15 business days after appointing a credit representative
  • 14 business days after a change to the residential address of a representative if an alternative address is recorded for them
  • 10 business days after a change to any other details of a representative
  • 10 business days after revoking the authorisation of a credit representative

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Posted 22nd July 2010 by David Jacobson in licensing

Prescribed credit regulation forms

As there was a flurry of credit regulation changes leading up to 30 June it is important that you check that the prescribed forms you use are up to date.

You can download a copy of the National Consumer Credit Protection Regulations 2010 consolidated up to 1 July 2010 here. But the National Consumer Credit Protection Legislation Amendment Regulations 2010 (No. 2) (here) are not yet consolidated.

ASIC has helpfully made the individual forms available here.

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Posted 22nd July 2010 by David Jacobson in legislation

July 15, 2010

Notification of securitisation servicing agreement

ASIC has published the form (CL13) in which notice must be given to ASIC when a registered person or credit licensee :

  • enters into a servicing agreement with a special purpose funding entity (notification of agreement); or
  • ceases a servicing agreement with a special purpose funding entity (notification of cessation); or
  • is given certain directions by a person who is a position to control or influence the special purpose funding entity (notification of action).

Notice of a servicing agreement entered before 1 July 2010 must be given within 30 business days after 1 July 2010 (ie 11 August 2010).

Notice of a servicing agreement entered into on or after 1 July 2010 must be given within 20 business days after entry into the agreement.

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Posted 15th July 2010 by David Jacobson in licensing

July 8, 2010

Consumer credit reform Phase 2 Green Paper

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has announced the release of the Consumer Credit Reform Green Paper, National Credit Reform - Enhancing confidence and fairness in Australia's credit law, for public comment by 6 August 2010.

The Green Paper contains reform proposals that are being considered as part of Phase Two of the Council of Australian Governments' (COAG) Credit Reform agenda.

Legislation implementing the changes is proposed to be in place for some projects (listed in Part One below) by mid‑2011, and those requiring more consultation (listed in Part Two) to be in place by mid‑2012.

Part One

The Government will consider:

  • enhancements to the regulation and tailored disclosure for reverse mortgages;
  • extension of the National Credit Code to include disclosure requirements for consumer leases and linked credit providers;
  • regulation of credit for personal use and peer to peer lending;
  • regulation of various aspects of credit card lending;
  • possible extension of unjust conduct provisions to credit service providers; and
  • further enhancements to the National Credit Code.

Part Two

The Government will consider projects requiring more in-depth industry consultation, including:

  • regulation of the provision of credit to small business;
  • regulation of credit for investment loans other than margin loans;
  • examination of mechanisms, including state approaches to interest rate caps, to address predatory or fringe lending;
  • an examination of the need for any enhancements to responsible lending provisions for post-entry conduct;
  • a review of the regulation of credit advertising directed at vulnerable consumers;
  • reform of mandatory comparison rates; and
  • a possible review of credit licensing requirements for debt collectors.

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Posted 8th July 2010 by David Jacobson in legislation, Phase 2

July 7, 2010

ASIC dispute resolution standards for carried over instruments

ASIC has released guidance to clarify dispute resolution requirements for unlicensed carried over instrument lenders (unlicensed COI lenders).

When a complaint is received, unlicensed COI lenders must be responsive to the complaint and their IDR system must handle it within the maximum timeframes and according to other requirements set out in RG 165.

While not compelled to do so, ASIC encourages all unlicensed COI lenders to join an external dispute resolution scheme – either the Financial Ombudsman Service Limited (FOS) or the Credit Ombudsman Service Limited (COSL).

UPDATE: see ASIC's information page on pre-existing credit contracts and carried over lenders

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Posted 7th July 2010 by David Jacobson in licensing

July 4, 2010

More transitional credit regulations

The National Consumer Credit Protection Legislation Amendment Regulations 2010 (No. 1) amending the NCCP Regulations and the Transitional Regulations were registered on 30 June 2010.

You can download a copy of the National Consumer Credit Protection Regulations 2010 consolidated to include these and all other regulations up to 1 July 2010 here.

The new Regulations cover transitional issues as follows:

  • Residential investment property: exempt credit, which is intended predominantly for residential investment property, from the pre-contractual requirements (principally disclosure and responsible lending) under the Credit Act, where the offer of credit is made before 1 July 2010 and is accepted on or after that date. The regulation would cease to have effect from 1 October 2010. Any credit contracts formed after this date would not be exempt from the pre-contractual requirements under the Act and the Code.
  • Referrers: modify the existing exemption for persons who pass on the contact details of a licensee or registered person to a consumer (referrers) to ensure that the exemption covers referrers who facilitate contact via a website link between a consumer and a licensee, registered person or representative;
  • Carried over instruments: provide that the commencement of the responsible lending conduct obligations in relation to COIs coincides with the staggered timeframe set for new contracts.

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Posted 4th July 2010 by David Jacobson in legislation, licensing

New credit licence arrangements applying to temporary employees and locums

The Minister for Financial Services has announced details of the new arrangements applying to temporary employees and locums and on-hire staff and employment agencies under the National Credit Act.

The new arrangements will allow credit businesses to continue to operate without the need to meet additional licensing obligations when they engage individuals to ‘fill in’ for regular employees or they engage employees through an employment or on-hire agency. The arrangements clarify that additional obligations are not required in particular circumstances of engagement where the person is subject to the same level of control and supervision as an employee.

Locums
Locums will be treated in the same way as employees of a licensee where they

  • replace a person who is absent from work as an employee who is reasonably expected to return;
  • be substantially performing the same duties of that employee; and
  • be subject to similar control or direction as that employee.

Temporary and on-hired staff
Temporary and on-hired staff will be treated as credit representatives but excused from the requirement to be a member of an ASIC approved dispute resolution scheme and have the licensee notify ASIC of their authorisation subject to the conditions that they:

  • be only engaged on a temporary basis;
  • be engaged in similar duties and be under a similar level of control, management and supervision as other employees of the licensee;
  • not be engaged because they possess particular skills that would prevent the licensee or registered person exercising the level of control that the person can exercise over its actual employees;
  • be predominantly remunerated other than by way of commission; and
  • be perceived by a reasonable consumer that they are an employee of the licensee.

Employment agencies
Employment agencies that only engages in credit activities by providing temporary or on-hired staff will be exempt from licensing requirements where they:

  • only engage in credit activities by providing individuals to a licensee, registered person or their representative who engage in credit activities on behalf of the licensee or registered person; and
  • these individuals are locums, or temporary or on-hired staff who meet the criteria above.
  • These arrangements do not extend to independent contractors engaged to complete a defined scope of work; they will still need to be authorised as a credit representative.

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Posted 4th July 2010 by David Jacobson in legislation, licensing

July 1, 2010

ASIC online credit licensing opens

Credit providers and intermediaries can now apply online for an Australian Credit Licence.

Whether you are already hold an Australian Financial Services licence or are new to the ASIC licensing regime Langes+ can assist you in preparing for the licence application process, including settling your compliance plan and policies.

Call Patrick Dwyer (02 8234 4713), David Jacobson (07 3878 5098), Shannon Adams (08 8168 9601), Rob Surman (08 8168 9602) or
Ronen Atzmon (03 9867 8977).

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Posted 1st July 2010 by David Jacobson in licensing