Do I need an ACL?

The NCCP requires that businesses be licensed where they provide credit services for the purpose of personal, domestic or household use, or for the purchase, renovation or improvement of the value of a residential investment property. Credit provided for other purposes is excluded.

The credit licensing regime covers individuals or businesses engaging in credit activities as:

  • Credit Providers;
  • Credit Assistance Providers; and
  • Debt Management services.

These activities are referred to as ‘authorisations’ on the licence.

The ‘Credit Providing’ authorisation is required for services such as being a direct lender under credit contracts or acting as a lessor under a consumer lease. The ‘Credit Assistance’ authorisation enables individuals or businesses to assist consumers in entering into a credit contract or consumer lease. It authorises services such as brokers, mortgage managers or aggregators and other intermediaries who manage a credit contract on behalf of a credit provider.

The Debt Management authorisation covers individuals and businesses providing debt management assistance and/or credit reporting assistance.

An ACL is required for individuals or businesses engage in any of the following:

  • providing credit or consumer leases, including engaging in pre-contractual conduct;
  • activities in relation to a mortgage or guarantee where the mortgage or guarantee is taken to secure or guarantee obligations under a credit contract or consumer lease;
  • collecting money due under a credit contract (including where the lender is no longer providing credit, or where debt collectors or mortgage managers manage the contract on the credit provider’s behalf);
  • receiving by assignment and subsequently exercising the rights of a credit provider or lessor; or
  • providing debt management services.

There are exemptions from holding an ACL in certain circumstances for:

  • receivers and managers;
  • liquidators and registered debt agreement administrators; and
  • financial counselling agencies.

There are serious penalties and repercussions for operating without an ACL or without the correct authorisation. If it’s not clear whether you need an ACL or which authorisations are appropriate for your business, please contact Sophie Grace.