Mortgage Brokers Licence

Changes and Credit Industry

All Mortgage Brokers will be required to hold an Australian Credit Licence or become an authorised representative of an Australian Credit Licence if they wish to continue to offer credit services after the 1st of January 2011, and register with ASIC by 30 June 2010.  

The Commonwealth Government has introduced a national licensing (National Credit Act) regime requiring new licensing and on-going compliance requirements. The licensing regime will be ASIC regulated and will be very similar to the current financial services regime (Financial Services Refom ACT).

A person or entity who engages in credit activities, such as credit providers or lenders, credit service providers, brokers or intermediaries in a credit/loan transaction will be required to hold an Australian Credit Licence (ACL). Additionally there will be specific responsible lending requirements to adhere to when recommending a loan be taken out with a credit provider. The requirements introduce disclosure to consumers about the application and assessment process and prohibit credit providers from making loans which are unsuitable for borrowers.

Registration and Licensing

This initial process of registering with ASIC will begin on the 1st of April 2010 and close on the 30th of June 2010. All Mortgage Brokers who wish to obtain a Mortgage Brokers Licence will need to register along will all current credit providers and all credit service providers who wish to obtain an Australian Credit Licence (ACL). Only those who have registered will be allowed to apply for a licence to operate as a Mortgage Broker. Licence to operate will be issued to suitable candidates in the form of an Australian Credit Licence (ACL). Application for this licence will be available between 1st of July 2010 and 31st of December 2010.

If a mortgage broker, current credit provider or credit service provider does not register within the above time, it must apply for an ACL after 1st of July 2010 and will not be allowed to operate or provide any credit services until it is granted an ACL.

New entrants to the industry (from 1st of July 2010) will have to apply for an ACL and will not be permitted to provide credit services until their ACL is issued by ASIC.

Responsible Lending Obligations

Mortgage Brokers will be required to comply with these new obligations as of 1 July 2010.

Authorised Deposit-taking institutions (ADIs) and Registered Finance Companies (RFCs) will have until 1 January 2011 to become compliant.

Considerations

It is important that Mortgage Brokers consider whether they will operate under their own ACL (Mortgage Brokers Licence) or seek to be a credit representative of someone who will get an ACL. If you intend to get your own ACL then it is important to register with ASIC before 30 June 2010.

If you do not intend to get your own ACL and wish to be appointed as a credit representative of someone who will get an ACL, it is important that you ensure that those arrangements are in place by December 2010. In any case, you should be aware of the new Responsible Lending obligations and ensure that your documents and processes are updated to be effective from the above dates.

Please feel free to contact us for additional informaiton