How to get a Credit License

1. What is an Australian Credit License?
2. How do I get an Australian credit licence (ACL) or become an authorised credit representative (ACR)?
3. Basic requirements to get an Australian credit licence (ACL) or become an authorised credit representative (ACR)
4. ACL holder obligations

What is an Australian Credit License?

If you engage in credit activities, you will generally need to have an Australian credit licence (ACL) or become an authorised credit representative (ACR) of a licence holder. This includes anyone lending money, or any intermediary between the person lending the money and the person getting the money, which includes brokers.

If you’re just starting out in financial services, the basic requirement is the Certificate IV in Finance and Mortgage Broking however you cannot just apply for an ACL with the Australian Securities and Investments Commission (ASIC). The reason is that you need finance experience as an authorised rep to be eligible to apply.

How do I get an Australian credit licence (ACL) or become an authorised credit representative (ACR)?

The company assessing applications of the credit licenses is the Australian Securities and Investment Commission (ASIC). They ensure the potential licencee  can demonstrate they comply with the licence conditions in the credit legislation (RG206). If you’re really keen, you can read the Regulatory Guide 204 which explains what you need to do, to apply for a credit licence (all 78 Pages) or you can call us on 1300 136 947.

Most brokers operate under their aggregator’s ACL because of the difficulty in getting approved for a credit licence. The other issue is the ongoing administrative costs and compliance requirements you need to meet. This means you need to apply to become a credit representative instead. However, if you’re a PAYG mortgage broker working for a brokerage that is a credit representative of an aggregator, you don’t need to become an ACR as well, you will automatically be covered by your employer along with the costs.

Basic requirements to get an Australian credit licence (ACL) or become an authorised credit representative (ACR):

1. Complete a Cert IV and commit to undertaking 20 hours of continuing professional development each year.
2. Carry out a credit and police history check successfully.
3. Apply for External Dispute Resolution (EDR) membership. (such as the Credit and Investments Ombudsman or the Financial Ombudsman Service).
4. Obtain Professional Indemnity Insurance (PI Insurance).
5. Join an industry association (MFAA/FBAA.)
6. Provide proof of identity.
7. Organise your Australian Business Number (ABN).
8. Sign a sub-origination agreement.
9. Obtain a credit representative number or credit license.
10. Choose an aggregator.
11. Get a mentor.

ACL holder obligations

Your licensee (the ACL holder) will undertake your background checks and provide written consent to you to confirm that you have been accepted as an ACR.

It’s the ACL holder that needs to notify ASIC of the appointment including:

• The date of authorisation.
• Your credit representative number.
• Your name, date and place of birth, or body corporate name and ABN.
• Your principal business address (and an alternative address if applicable)
• Details of your EDR scheme membership.

An ACL holder has the following ongoing obligations (unless an exemption applies):

• ensure that credit activities are engaged in efficiently, honestly and fairly;
• conflict of interest arrangements;
• comply with any licensing conditions;
• comply with credit legislation;
• maintain competence to engage in credit activities;
• ensure representatives are adequately trained;
• internal dispute resolution procedures;
• member of an approved EDR scheme;
• compensation arrangements (including professional indemnity insurance) for breaches of its obligations;
• adequate and documented compliance arrangements and systems;
• adequate resources and adequate risk management systems;
• cite its ACL number on documents;
• regular reporting to ASIC;
• breach reporting to ASIC within 10 business days; and
• financial record-keeping.