Australian Credit Licence Obligations by Structure: What Natural Persons, Trustees, Partnerships & Companies Must Comply With

Introduction

Holding an Australian Credit Licence (ACL) brings with it significant compliance obligations under the National Consumer Credit Protection Act 2009 (Cth). Enforced by the Australian Securities and Investments Commission (ASIC), these responsibilities apply to every credit licensee, whether they operate as a natural person, a partnership, a trustee, or a corporation.

While the core duties are universal, the approach to meeting them can vary significantly depending on the legal structure of the licence holder. This guide provides essential information to help navigate these requirements, from satisfying the fit and proper people test to fulfilling ongoing financial and reporting obligations, ensuring sustained compliance.

What Is an ACL & Who Needs One?

Definition & Scope of Credit Activities

An ACL is defined as a legal document issued by ASIC. It authorises a person or entity to engage in specified credit activities under the National Consumer Credit Protection Act 2009 (Cth) (National Credit Act). This licence ensures that credit activities are conducted efficiently, honestly, and fairly, in compliance with the general conduct obligations set out in the National Credit Act.

Engaging in credit activities without authorisation is prohibited unless an exemption applies or the person acts as a representative of a licensed or exempt entity.

Credit activities covered by the ACL include:

• Providing credit or consumer leases under credit contracts or consumer leases regulated by the National Credit Code
• Acting as a credit provider or lessor, including original credit providers or lessors and assignees of rights under credit contracts or consumer leases
• Providing credit services such as credit assistance or acting as an intermediary between consumers and credit providers

Entities Required to Hold a Credit Licence

The requirement to hold an ACL applies broadly to various entities engaging in credit activities. These entities include:

Entity Type	Licensing Requirement
Natural Persons	Individuals who engage in credit activities in their own right must hold an ACL unless exempted.
Partnerships	All partners in a partnership engaging in credit activities must be covered by a credit licence, which may be held by the partnership itself.
Multiple Trustees	When two or more trustees act together for a trust, they are treated as a notional person holding the licence, which is unaffected by changes in trustees.
Corporations	Companies or other bodies corporate engaging in credit activities must hold an ACL. Officers are assessed as part of the fit and proper person test.

Certain exemptions exist for specific entities. For instance, authorised deposit-taking institutions (ADIs), general insurers registered with the Australian Prudential Regulation Authority (APRA), and life insurers under specific conditions may benefit from a streamlined application process or be exempt from holding an ACL altogether.

Representatives who engage in credit activities on behalf of a licensed credit licensee or an exempt person do not need their own credit licence. A representative may be:

• An employee
• A director
• A credit representative authorised under sections 64 or 65 of the National Credit Act

Applicants must provide detailed information about their fit and proper people, including officers, partners, trustees, senior managers, and controllers, as ASIC assesses their suitability to manage credit activities. This assessment includes:

• Criminal history checks
• Bankruptcy checks
• Statements of personal information

In summary, holding an ACL is mandatory for natural persons, partnerships, multiple trustees, and corporations engaging in credit activities unless an exemption applies or they act as representatives of licensed or exempt entities. The licence authorises the holder to conduct specified credit activities and ensures compliance with the National Credit Act and related regulations.

Fit & Proper Person Obligations for Australian Credit Licence Holders

Who Are Considered Fit & Proper People

Before granting an ACL, ASIC must be satisfied that the applicant and any person involved in managing the credit business is a ‘fit and proper person’. This obligation, outlined in section 37A of the National Consumer Credit Protection Act 2009 (Cth), extends to a wide range of individuals to ensure the integrity of the credit licensee.

ASIC’s assessment of who is considered a fit and proper person includes:

• Natural persons applying for a credit licence in their own name
• Officers of a body corporate applicant, which includes directors, secretaries, and individuals who significantly influence the company’s business or financial standing
• Partners or trustees of a partnership or trust, especially those performing duties related to the credit activities
• Senior managers of a corporation, partnership, or trust who make decisions affecting a substantial part of the business
• Controllers of the applicant, which are individuals or entities with the capacity to determine the applicant’s financial and operating policies
• Officers, partners, trustees, or senior managers of any entity that is a controller of the applicant

Compliance Obligations for Natural Persons Partnerships Trustees & Corporations Holding an ACL

Arrangements & Systems for Compliance

Holders of an ACL must establish and maintain adequate compliance arrangements tailored to the nature, scale, and complexity of their credit business. These systems are fundamental to ensuring that all credit activities adhere to the legal framework and that the licence obligations are consistently met. ASIC expects these arrangements to be documented in a written plan that outlines the processes for monitoring and reporting on compliance.

Your compliance framework should clearly define:

Framework Component	Description
Monitoring Frequency	Defines how often compliance procedures are monitored and reviewed.
Responsible Individuals	Identifies the people within the business responsible for overseeing ongoing compliance.
Conflict of Interest Management	Outlines procedures for managing conflicts of interest to ensure clients are not disadvantaged.
Oversight of Outsourced Functions	Details processes to oversee delegated tasks, as the licensee remains ultimately responsible for all obligations.

Supervising & Training Representatives

A key obligation for any credit licensee is to ensure that its representatives are adequately supervised, trained, and competent to engage in the credit activities authorised by the ACL. This involves implementing robust processes to monitor their activities, identify any potential breaches, and take corrective action when necessary.

To meet this obligation, licensees should have:

Requirement	Details
Written Training Policy	A policy detailing minimum training standards and ongoing professional development for all representatives.
Training Register	An accurate record-keeping system for all completed training and qualifications.
Supervision Process	A documented process for supervising and monitoring all representatives, including credit representatives.
Recruitment Checks	Thorough checks to ensure the suitability of new representatives.
Minimum Qualifications	Processes to ensure representatives providing third-party home loan credit assistance hold at least a Certificate IV in Finance and Mortgage Broking.

Adequacy of Resources Including Financial Human & IT Resources

Under the National Consumer Credit Protection Act 2009 (Cth), an ACL holder must have adequate financial, human, and technological resources to conduct its credit activities and carry out its supervisory duties. This obligation applies to all entity structures, including natural persons, partnerships, trustees, and corporations. For partnerships or trusts, any partner or trustee can discharge this obligation on behalf of the entity. However, bodies regulated by APRA are exempt from these specific requirements.

The financial resources must be sufficient to meet all debts as they become due and payable. This involves careful planning and monitoring of cash flows and maintaining written records to demonstrate that financial adequacy is regularly reviewed.

Furthermore, licensees must have a business planning process to ensure they have the necessary human resources and appropriate IT systems to support their business operations effectively.

Dispute Resolution & Hardship Application Procedures

All ACL holders must have a dispute resolution system in place that consists of both internal and external procedures. This ensures that clients have access to a clear and fair process for resolving complaints. The system must be structured to handle disputes efficiently and transparently.

The required components of this system include:

Component	Description
Internal Dispute Resolution (IDR)	Licensees must have documented IDR procedures compliant with ASIC’s standards, which should be readily available to clients.
External Dispute Resolution (EDR)	Licensees must be members of the Australian Financial Complaints Authority (AFCA). Clients must be informed of their right to escalate complaints to AFCA.
Hardship Procedures	Credit providers must maintain documented procedures for receiving and assessing applications from clients seeking to vary credit contracts due to financial hardship.

Risk Management & Compensation Arrangements

ACL holders are required to have adequate risk management systems, unless they are a body regulated by APRA. These systems should be appropriate for the size and complexity of the business and involve documented processes to identify, analyse, evaluate, and treat risks. Regular monitoring and reporting on risk management issues are also essential to maintaining compliance.

Additionally, licensees must have compensation arrangements in place to cover losses suffered by clients due to a breach of their obligations. For most licensees, this requirement is met by holding adequate professional indemnity (PI) insurance that complies with ASIC’s guidelines. Certain entities, such as ADIs and insurance companies, are exempt from this requirement, and in some cases, an ASIC-approved guarantee or alternative arrangement may be used instead of PI insurance.

Obligations Specific to Partnerships & Trustees Holding an Australian Credit Licence

Discharging Obligations in Partnerships & Multiple Trustees

Under the National Consumer Credit Protection Act 2009 (Cth), the financial resource and compliance obligations of an ACL holder apply whether the licensee is a natural person, partnership, multiple trustees, or body corporate.

For partnerships and trusts, these obligations may be discharged by any partner or trustee. This means that:

• Any partner in a partnership can fulfil the financial resource requirements and compliance duties on behalf of the partnership as a whole (see s14(1)(a) of the National Credit Act).
• Similarly, any trustee in a multiple trustee arrangement can discharge the obligations for the trust (see s15(3)(a) of the National Credit Act).

This arrangement provides flexibility in managing compliance and financial responsibilities. However, it also means that all partners or trustees must ensure that the entity as a whole maintains adequate financial resources and complies with the licence conditions.

For example, if one trustee manages the financial resources, they must ensure that these resources are sufficient to meet debts as they become due and that supervisory arrangements are in place.

In practice, partnerships and multiple trustees must have clear internal agreements and systems to monitor and manage compliance collectively. They must also maintain written plans documenting:

• How financial resources are monitored.
• How compliance with the general conduct obligations is ensured.

This is essential because ASIC holds the entire partnership or trust accountable for meeting the ACL obligations, regardless of which partner or trustee discharges them.

Identifying Fit & Proper People in Partnerships & Trusts

ASIC assesses the fitness and propriety of individuals involved in managing credit activities under an ACL, including partners, trustees, and senior managers of partnerships or trusts. The fit and proper person test applies broadly to ensure that those responsible for credit activities demonstrate competence, good character, and integrity.

Key points on identifying fit and proper people in partnerships and trusts include:

• Partners and Trustees: All partners in a partnership and all trustees in a multiple trustee arrangement who perform duties related to credit activities must be assessed as fit and proper persons.
• Senior Managers: ASIC also considers senior managers of partnerships or trusts who have significant influence over the credit activities.
• Corporate Partners or Trustees: If a partner or trustee is a body corporate, ASIC assesses the directors, company secretaries, and senior managers of that corporate entity.
• Controllers: ASIC evaluates any controllers of the applicant, including officers, partners, trustees, or senior managers of the controlling entities (see s16A of the National Credit Act for the definition of ‘controller’).

Applicants must provide detailed information about each fit and proper person, including:

• Full name, residential address, position, and description of duties.
• People proofs such as a national criminal history check, bankruptcy check, and a completed Statement of Personal Information, all no more than 12 months old.
• Additional supporting documents if any adverse information arises from the Statement of Personal Information.

ASIC requires this information to ensure that no person involved in the management or control of the credit business has a history that would disqualify them from holding such a role. For example, a partner with a banning order or disqualification under the National Credit Act or relevant state criminal organisation legislation would not be considered fit and proper.

The fit and proper person assessment is a critical component of the ACL application and ongoing compliance. Partnerships and trustees must maintain up-to-date records of their fit and proper people and notify ASIC of any changes, typically through annual compliance certificates or licence variation applications.

By carefully identifying and documenting fit and proper people, partnerships and trusts demonstrate their commitment to operating their credit activities honestly, fairly, and competently under the Australian credit licensing regime.

Key Differences in Compliance for Corporations Holding an Australian Credit Licence

Officers & Senior Managers as Fit & Proper People

Officers and senior managers of a corporation holding an ACL are subject to fit and proper person assessments under the National Consumer Credit Protection Act 2009 (Cth).

An officer, as defined in the Corporations Act 2001 (Cth), includes:

• Directors
• Secretaries
• Any person who makes or participates in decisions affecting the whole or a substantial part of the corporation’s business or financial standing

Senior managers are those who make or participate in decisions affecting a substantial part of the business or have significant influence over the corporation’s financial position.

ASIC requires corporations to provide detailed information about these individuals, including:

• Full names
• Positions
• Roles
• Residential addresses
• Supporting documents such as national criminal history checks, bankruptcy checks, and completed Statements of Personal Information

These checks must be current within 12 months. The assessment ensures that officers and senior managers demonstrate competence, good character, diligence, honesty, integrity, and absence of disqualifications or conflicts of interest that could impair their ability to perform their roles properly.

Controllers & Their Fit & Proper Person Assessment

Controllers of a corporation holding an ACL are also subject to fit and proper person assessments. Under section 16A of the National Credit Act, a controller is an individual or entity that has the capacity to determine the financial and operating policies of the applicant.

Controllers can include:

• Natural persons
• Body corporates
• Partnerships
• Multiple trustees of trusts that control the applicant

ASIC assesses controllers and, if a controller is a body corporate, the officers of that controller; if a controller is a partnership, the partners and senior managers; and if a controller is multiple trustees, the trustees and senior managers.

Each of these individuals must provide People Proofs, including criminal history and bankruptcy checks and Statements of Personal Information, to demonstrate their fitness and propriety. This comprehensive assessment ensures that all persons with significant control over the corporation meet the required standards to maintain the integrity of credit activities.

Governance & Succession Planning for Corporate ACL Holders

Maintaining effective governance and succession planning is essential for corporate ACL holders to ensure ongoing compliance with licensing obligations. Corporations must keep their company registers up to date, including details of directors, secretaries, and senior managers.

ASIC’s credit licensing system accesses the Australian Company Register to pre-fill information about officers, but corporations are responsible for updating any changes through ASIC’s online portal before completing or varying their licence applications.

Changes to key personnel, such as directors or responsible managers, must be managed carefully. If a credit licence includes a ‘key person’ condition, corporations must:

• Notify ASIC promptly if any key person leaves or is about to leave
• Nominate a suitably qualified replacement

Failure to update ASIC or manage succession properly can lead to compliance issues or licence conditions being breached. Corporations should have documented internal processes to monitor and manage these changes, ensuring continuity of competent management and adherence to the National Credit Act and ASIC’s regulatory requirements.

How to Apply for Varying or Renewing Your Australian Credit Licence as a Natural Person, Partnership, Trustee, or Corporation

Application Process & Required Information

To obtain an ACL, you must complete and lodge an online application, known as Form CL01, with ASIC. This process is designed to gather all necessary information to ensure you meet the requirements of the National Consumer Credit Protection Act 2009 (Cth).

It’s important to understand that you are not automatically entitled to a credit licence. Instead, you must demonstrate your ability to comply with all general conduct obligations.

Your application requires extensive supporting information, including core proof documents for each of your fit and proper people. These documents must be submitted through the ASIC MOVEit portal after lodging the online form and typically include:

• A national criminal history check that is no more than 12 months old
• A bankruptcy check that is also no more than 12 months old
• A completed Statement of Personal Information, which details past conduct and any relevant regulatory history
• A written summary business description outlining your proposed credit activities, distribution model, and operational structure

Be aware that providing false or misleading information in your application is an offence and may result in the refusal of your credit licence.

Variation Applications & Updating Fit & Proper People

If your business circumstances change after your ACL is granted, you may need to apply for a variation using Form CL03. Variations become necessary when you:

• Intend to engage in new credit activities not covered by your existing authorisation
• Need to change a condition on your licence, such as updating your nominated ‘key people’

The application is completed online and will be pre-filled with the information ASIC currently holds. When applying for a variation, you must carefully review and update all pre-filled information to ensure it is accurate and current.

This is particularly important for your fit and proper people. If there have been changes, you must:

• Add any new fit and proper people, such as new directors or senior managers, and provide all required supporting documents for them, including criminal history and bankruptcy checks
• Update the details of existing fit and proper people if their circumstances have changed
• Remove any individuals who are no longer part of your organisation

Failure to keep this information current can significantly impact the assessment of your variation application.

Annual Compliance Certificates & Who Must Sign Them

As a credit licensee, you have an ongoing obligation to lodge an annual compliance certificate with ASIC. This certificate must be submitted within 45 days of your licensing anniversary each year and serves to confirm your continued compliance with your ACL obligations, including having adequate financial resources.

The person authorised to sign the annual compliance certificate depends on the legal structure of the entity holding the licence. The specific requirements are as follows:

Entity Structure	Authorised Signatory
Natural Person	The individual licensee must sign the certificate.
Partnership or Trustee	A partner or trustee who performs duties related to the authorised credit activities must sign.
Body Corporate (not an ADI)	The Chief Executive Officer (CEO) or, if no CEO, a person responsible for managing the licensee’s affairs must sign.
Body Corporate (and an ADI)	The CEO or a ‘responsible person’ as defined under Prudential Standard APS 520 must sign.

It is a serious offence to provide misleading information to ASIC in your annual compliance certificate.

Conclusion

Meeting the compliance obligations under the National Consumer Credit Protection Act 2009 (Cth) is essential for all ACL holders, whether they are natural persons, partnerships, trustees, or corporations. To ensure ongoing compliance and avoid regulatory issues, credit licensees should maintain accurate records, regularly review their financial resources, and promptly update ASIC with any material changes.

If you need assistance understanding these requirements or managing your ACL obligations and compliance, contact our experts at AFSL House today. Our trusted expertise and specialised services tailored to your needs can help you achieve peace of mind and maintain compliance with confidence. Don’t miss this opportunity to simplify your workload and secure your credit licence’s future.

Frequently Asked Questions