If you engage in credit activities you will generally need an Australian credit licence or authorisation from a credit licensee before starting business.
Steps in deciding whether you need a credit licence
To decide whether you engage in activities that can only be provided under an Australian credit licence you need to consider:
- whether your activities relate to a type of credit or consumer lease to which the National Credit Code applies
- The Code applies to some kinds of credit that you may not think of as being 'credit', for example if you are a store owner or trader who offers book up (a common practice in many remote and regional communities where customers buy goods or services and pay later) you are providing a type of consumer credit. You are likely to need a credit licence if you charge consumers interest or fees for using book up
- The Code also excludes some types of credit and consumer leases. If you only engage in activities in relation to these kinds of credit and leases, you will not need a licence
- if the Code does apply, whether your activities are a kind of credit activity that is covered by the licensing requirements in the National Consumer Credit Protection Act 2009 (National Credit Act).
Credit activity (as defined in the National Credit Act) 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 for 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).
Who doesn't need a credit licence?
You do not need to hold a credit licence if:
- you are a representative of another person who holds a licence and you engage in credit activities on their behalf – you may be able to act as representative if:
- you are authorised as a credit representative to engage in credit activities on behalf of a credit licensee
- you are an employee or director of a credit licensee or one of its related bodies corporate
- you, or the type of credit activity you engage in, are exempt from the credit licensing requirements, or
- ASIC grants you relief from the requirement to hold a credit licence.
There are a number of exemptions from the credit licensing requirements in the National Credit Act and the National Consumer Credit Protection Regulations 2010, for certain kinds of persons and activities.
For example, you may be able to rely on an exemption if you are:
- a corporate or personal insolvency practitioner, lawyer or registered tax agent
- a point-of-sale retailer
- a financial counsellor or financial counselling agency that engages in credit activity as part of a financial counselling service
- a clerk or cashier
- a state-licensed debt collector or repossession agent.
Examples of activities that are covered by exemptions include:
- passing on prepared documents or factual information in response to a request
- referring a consumer to a credit licensee.
Many of the exemptions from the licensing requirements only apply in certain circumstances, and if certain requirements are met. If you want to rely on an exemption you should make sure you meet each of the requirements.