Credit licensing and the Pension Loan Scheme
Following the Governments recent Budget announcement about the revised Pension Loan Scheme, we have clarifies with ASIC the licensing requirements around providing advice to clients in this area.
Reverse mortgage arrangements made available through the Pension Loan Scheme involve a credit contract which bind the Crown and consumer. Therefore loans made under this scheme meet the elements set out in sections 4 and 5 of the National Consumer Credit Code that define the types of credit and credit contract that are regulated (i.e. provided to a natural person, for personal, domestic or household reasons, there is charge for providing credit, and the credit is provided in the course of, or incidentally to, a business carried on in Australia).
This means that while the credit provider and mortgagee (being the Crown) is not required to hold an Australian credit licence, a person who provides credit services (by providing credit assistance or acting as an intermediary) would need to be covered by a licence, or be able to rely on an exemption. In this way, the provision of advice about reverse mortgage arrangements through the Pension Loan Scheme would involve the same requirements as provision of advice about any other reverse mortgage arrangement.
Limited conduct in making a mere referral to a person who is able to provide particular credit activities is generally exempt from the credit licensing requirements (see reg 25 of the National Consumer Credit Protection Regulations 2010). This exemption covers a very limited range of conduct, being informing the consumer that a person can engage in particular credit activities and giving them information about how to contact that person. If your advice is limited in this way, you would not need to hold or operate under a credit licence. However if you provide more extensive information, this exemption will not apply.