Credit Licence General Conduct Obligations

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The general conduct obligations are principles based and the National Consumer Credit Protection Act 2009 (National Credit Act) places the onus on you to decide how to comply with them. You must comply with these obligations on an ongoing basis from the time your credit licence is granted.

What you will need to do to comply with these requirements will depend on the nature, scale and complexity of you business. Factors that influence this include:

  • the credit activities that you engage in
  • the diversity and structure of your operations
  • the geographical spread of your operations
  • the extent to which you outsource any function
  • the volume and size of the transactions you are responsible for
  • if undertaking credit activities if your main business; and
  • the number of people in your business.

You must also:

  • document your measures, including who is responsible for the compliance, the timeframes involved and any associated record keeping and reporting requirements
  • ensure they are fully implemented and integrated with your day to day business, monitored and that you report on their use
  • regularly review their effectiveness and ensure they are up to date.

Even if you choose to outsource a function in relation to your licence, you will remain responsible for complying with your obligations as a licensee. You should also exercise due diligence when selecting a suitable service provider and ensure that you monitor their ongoing performance.

INFO 97 Guidance for small credit businesses can provide further guidance on this issue for small credit and finance broking practices.

Key Australian Securities and Investments Commission (ASIC) reference: Regulatory guide 205: Credit licensing: General conduct obligations

Your broad compliance obligations refer to the obligations to:

  • do all things necessary to ensure you engage in credit activities efficiently, honestly and fairly
  • comply with the credit legislation
  • comply with the conditions of your credit licence

ASIC view these obligations as both stand-alone and obligations encompassing the other general conduct obligations. They therefore expect that your compliance measures cover both the broad compliance obligations and your other obligations which include:

  • your internal systems, your people and your resources
  • your licence conditions
  • any other credit legislation that is applicable to you

Importantly your compliance measures must allow you to communication to your representatives what they must do to comply, monitor all of your licensee obligations and address any compliance breaches. These measures will also depend on the nature, scale and complexity of your business.

The responsibility for overseeing compliance and reporting to ASIC should be delegated to a director or senior manager in the business. The area responsible for compliance should also be independent, adequately resourced and have access to all relevant records.

Key ASIC reference: Regulatory guide 205: Credit licensing: General conduct obligations Section C

 

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