What to do if you missed the deadline for credit registration

“Information Overload” is a term popularised by Alvin Toffler that refers to the difficulty a person can have understanding an issue and making decisions that can be caused by the presence of too much information. While the term pre-dates ASIC by 3 decades, the concept has definitely rung true for me as I have waded through countless Draft Proposals, Regulatory Guides, Information Sheets, Registration Forms and Licensing Documents just to make sure that my Compliance Team is on top of all the ASIC compliance requirements.

Having tapped into many of my industry contacts and called in lots of favours from my risk services partners, this article attempts to provide you with some practical tips to help you understand and navigate your way through the quagmire of ACL Regulations. The aim here is not to regurgitate the ASIC regulatory guides and information sheets (they can be found at www.asic.gov.au/credit ) but to offer useful tips and suggestions.

Getting your Licence

Why get your Own Licence?

There are lots of different reasons to obtain your own licence, some of the most common include:

1. You are not happy with paying licence fees for the privilege of being authorised.
2. Although operating as an Authorised Representative, you want to be “your own boss” in a more true sense.
3. You’re a specialist who sits on the fringe of the Credit Industry, but have some big deals that require an ACL for you to be involved in.
4. You want to set up a Aggregation or Sub-aggregation Group.
5. You are a multi-national company wanting to set up in Australia.
6. You have been issued a stop order from ASIC for operating an unlicensed credit or credit related service business.
7. You run a Property Investment business and would like to hold an ASIC licence for “marketing” purposes.

Can you relate to any of these? Well read on as we discuss the pros and cons of obtaining a licence.

Pros

The advantages of holding an ACL are more obvious than the disadvantages. You are your own boss. You have a licence that sets out exactly the scope of your business. You can authorise others (and potentially charge a fee as in the financial planning industry) to come under your banner. You can apply to vary your licence to include other credit services as long as you can demonstrate organisational competency. You can operate your business anywhere in Australia. You will be on the front foot to tackle any changes to legislation such as anti money laundering.

Cons

Many see the cost of compliance as the main barrier to obtaining their own ACL. If outsourced there will be costs involved in obtaining the licence. There will also be costs involved in annual compliance reviews, adviser reviews, financial audits, monitoring, supervising and training representatives, external dispute resolution scheme membership, legal costs and insurance costs are factors that must be considered by potential licensees. Some of the obligations listed above are waived depending of the scope of licence you will be applying for.

There is also uncertainty about whether you will even succeed in your application to obtain a licence, as some aspects of the assessment by ASIC are subjective. However this uncertainty can be minimised by enlisting the help of a professional to help with your submission and correspond with ASIC during the licensing process. In any application, ASIC will make its own assessment as to: whether you actually need the licence for what you propose to do; whether you’re asking for the right authorisations; whether you or other proposed Responsible Managers have the competency required; and whether there are any other issues that merit further questioning.

If ASIC decides to reject your application, it then goes to a delegate and you get to attend an informal hearing to put your case before it is formally denied.

Varying

As is evident for the financial planning industry, licensees often want to vary their licences to branch out into other sectors of the market. One advantage of holding an ACL is that you don’t need to apply for another one – you just add to the one you have.

The disadvantage of varying your licence is that it is very similar to, and almost as onerous as, applying for a new licence. However you won’t need to provide as many supporting documents as with the original application.

Don’t be caught out! Some licensees treat a variation with contempt and don’t devote adequate resources or attention to the detail associated with the variation. This can lead to a number of problems including rejection of the application, at great cost to the licensee.

If you are interested in obtaining professional assistance with your Australian Credit Licence Application please have a look at our competitively priced ACL solutions by clicking here.