NCCP Licensing: Light on licensing

Australia’s brokers may remember December 2010 not just for the usual juggling of the festive season’s arrangements with end-of-year work projects.

There was also the scramble to meet compliance obligations under the National Consumer Credit Protection Act (NCCP) prior to the introduction of licensing.

By 31 December 2010, the choice between Australian Credit Licence (ACL) holder versus Authorised Credit rep should have been made – and the relevant application lodged with the Australian Securities & Investments Commission (ASIC).

At this point, ASIC – like Santa – will have judged who has been naughty or nice.

…AND FOR ASIC

The regulator, however, has also been busy: with around 200 new applications being received every day towards the end of the year, ASIC has been doing its level best to push the paperwork through.

The last minute rush had been “expected”, an ASIC spokesman says.

By 15 December, however, only 5,670 of the 15,000 registrations received earlier in the year had been followed up with applications, while just 1,985 of those received had been approved.

This has left many brokers wanting to be sure of where they stand as they enter the New Year. Fortunately, ASIC’s support is available, positioning the regulator as a welcome light to guide brokers toward NCCP registration.

DIDN’T REGISTER IN 2010?

Practising brokers who did not register by 30 June 2010 are now prohibited under the NCCP regulations from carrying on credit-related activities. That’s the message, pure and simple.

The industry now expects to see a form of natural attrition as some brokers decide that compliance with the NCCP regulations is one for the ‘too hard box’ and that a return to mortgage broking is not something they want.

Some industry analysts have pointed out this perceived burden will see the departure of the ‘part timers’. They are quick to add, however, that the commitment of those who remain will support a more professional industry with higher standards in the new broking era.

REGISTERED, BUT NOT APPLIED?

Other brokers will have completed their registration to carry out credit-related activities by 30 June, as required, but not submitted an application by 31 December 2010.

The situation for these is slightly different, but the message from ASIC is equally clear: “Registered parties that don’t apply by 31 December must stop engaging in credit activities,” the spokesman says.

“Businesses that were registered at 30 June 2010 and which do not have their application lodged but that propose to apply for a licence should contact ASIC for advice.”

The regulator can be reached by email or by calling 1300 300 630.

“They would have to initiate a new application for an Australian Credit Licence,” he says.

“They could not start business until the application had been dealt with and a licence granted.”

ASIC has discretion to grant relief by extending the period for submitting applications, but brokers should be aware the regulator will only do so in exceptional circumstances.

So, while some registered brokers may temporarily need to exit the industry, they are not automatically barred from returning if they so desire.

CHOSEN THE ACR ROUTE?

Not all brokers have chosen to operate as ACL holders, opting instead to act as Australian Credit reps.

In their case, ASIC needs to be advised of the names and details of all credit reps acting on behalf of a licensee. Full details of the requirements are on the ASIC website at www.asic.gov.au.

“Credit licensees must authorise their credit representatives in writing,” the spokesman says.

“The credit activities covered by the authorisation must be within the scope of the licence.”

SUBMITTING AN APPLICATION

Whether or not a licensing application has been submitted, ASIC’s guidance on what brokers now need to do, going into the New Year, is clear – including on how to ensure the application is processed as easily as possible.

The regulator has not hesitated to return applications to the sender where they need further clarification, more information or where errors have been found.

As of mid-December, around eight per cent of broker applications had been returned, mostly because the broker had provided insufficient information.

“Applicants should ensure they have attached all the information required, that it is fully up to date, and that all necessary documents are provided,” the ASIC spokesman says. “We recommend paying the licensing fee at the same time as you submit your application.”

Since late October 2010, ASIC has also sent a weekly online reminder to all registered parties, suggesting they get their application in as soon as possible and including information on how to ensure it is accepted first time around.

WHAT HAPPENS NOW?

Provided brokers registered with ASIC by 30 June 2010 and lodged a completed application by 31 December, they can continue to operate their business as normal until ASIC notifies them of the outcome of their application.

“The public and industry can search ASIC’s website to check if a credit participant is registered and has lodged an application for a licence,” the ASIC spokesman says.

“ASIC is committed to completing processing of applications lodged by 31 December 2010 in early 2011,” he adds.

Once licensed, education and compliance will become brokers’ next big project, with educational qualifications under the new National Credit Code to be put in order by 2014.

“ASIC has published extensive guidance on the operational requirements for licensees on its website and via regular credit updates sent to credit subscribers, which are also on the website,” the spokesman said.

Rules are rules, but following ASIC’s guiding light should ensure brokers stay on top of the latest developments, easing the transition into the licensing environment.

The Adviser will also be keeping you up-to-date and reporting on the key issues on licensing, both in the print magazine and online at www.theadviser.com.au.

NEED MORE HELP?

• Call the ASIC Infoline on 1300 300 630

• Check out www.asic.gov.au for more on licensing and the National Credit Code