The Financial Planning Association of Australia The Financial Planning Association of Australia

Consumer Credit

On 1 July 2010, ASIC took over the regulation of consumer credit and finance broking under the National Consumer Credit Protection Act 2009 (National Credit Act), signalling the completion of Phase One of the reforms.

The products that are regulated under this national regime include home loans, personal loans, credit cards, consumer leases, or any credit product which is provided, or intended to be provided, for personal, domestic or household purposes, or to purchase, renovate or improve an investment property.

Consumer Credit and financial planning

Financial planners who engage in ‘credit activities’ will need to apply for a license with ASIC or be a representative of someone who is licensed. In Section 6 of the National Credit Act, a credit activity is defined by:

  • Providing credit by way of a credit contract or consumer lease, benefiting from mortgages or guarantees relating to a credit contract or consumer lease
  • Providing credit services in relation to credit contracts and consumer leases.

Reverse Mortgages

Reverse mortgages also fall under the National Credit Act, which includes a statutory ‘negative equity protection’ on all new reverse mortgage contracts (introduced September 2012).

Reverse mortgages are becoming more readily available to older home owners and have associated risks that may not be suitable for all clients.

Margin lending

The end of 2009 saw the introduction of the Corporations Legislation Amendment (Financial Modernisation) Act which provides for the regulation of margin lending facilities.

Amongst other things, the Act requires:

  • Issuers and advisers of margin lending facilities to be licensed by ASIC under an AFSL
  • Advisers to only provide advice that is appropriate to the client’s individual circumstances
  • Margin lenders to meet new responsible lending requirements
  • Consumers to have access to external dispute resolution services
  • Clarity around responsibility for notifying clients, in the case of a margin call.

Financial planners who advise on margin loans should have already applied to ASIC for an AFSL authorisation. ASIC’s Information Sheet 100 Margin Lending should help with your application.

The following ASIC updated guidance documents are designed to you in complying with Margin Lending requirements.

Contact ASIC

The ASIC website provides information on all you need to know about the ASIC Credit Reform. You can also sign up for regular updates from ASIC as they occur:

If you’d prefer to speak to someone at ASIC, the ASIC Credit Infoline can be reached on 1300 300 630 or by emailing [email protected].

Any questions?

We are always keen to hear your valuable feedback and suggestions. Please let us know if there are any policy issues or concerns that affect you.

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