Mortgage Brokers Licence
Changes and Credit Industry
All Mortgage Brokers are required to hold an Australian Credit Licence or become an authorised credit representative of an Australian Credit Licence if they wish to offer credit services in Australia. This came into effect from the 1st of January 2011.
The Commonwealth Government has introduced a national licensing (National Credit Act) regime requiring licensing and on-going compliance requirements. The licensing regime is ASIC regulated and is similar to the 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 are required to hold an Australian Credit Licence (ACL). Additionally there are specific responsible lending requirements to adhere to when recommending a loan be taken out with a credit provider. The requirements have introduced disclosure to consumers about the application and assessment process and prohibit credit providers from making loans which are unsuitable for borrowers.
Registration and Licensing
All Brokers who wish to work in the industry must either obtain their own credit licence or become a Credit Representative under another registered Australian Credit Licence. Any mortgage broker, current credit provider or credit service provider will not be allowed to operate or provide any credit services until it is granted an ACL or becomes an Authorised Credit Representative under 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 have been required to comply with these new obligations since 1 July 2010.
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 to get the application pack and start the application.
If you do not intend to get your own ACL and wish to be appointed as a credit representative of someone who has an ACL, it is important that you ensure that those arrangements are in place. In any case, you should be aware of the Responsible Lending obligations and ensure that your documents and processes are up to date and compliant.
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