Introduction

Credit or finance brokers establishing an independent credit business generally need an Australian Credit Licence (ACL) before engaging in regulated credit activities under the National Consumer Credit Protection Act 2009 (Cth) (‘NCCP Act‘), unless otherwise permitted to act as a credit representative. This distinction matters for mortgage brokers moving from an aggregator or lender arrangement to their own credit licensing structure.

The Australian Securities and Investments Commission (‘ASIC’) assesses an ACL application against organisational competence, responsible manager qualifications, fit and proper requirements, supporting documents and capacity to comply with ongoing obligations. This article explains when credit and finance brokers need an ACL, what ASIC assesses, which documents to prepare and how to apply step by step, as well as the obligations that apply once a licence is granted.

When Do Credit and Finance Brokers Need an Australian Credit Licence?

Understanding Credit Assistance and Intermediary Activities

Under Section 29 of the NCCP Act, a person must not engage in a credit activity without an ACL, unless an exception applies. Section 6 defines credit activity to include providing a credit service, which Section 7 describes as providing credit assistance or acting as an intermediary.

Under Section 8, a person provides credit assistance by, for example, suggesting that a consumer apply for a particular credit contract with a particular credit provider, or assisting the consumer to apply for it. Section 9 covers acting as an intermediary, directly or indirectly, between a credit provider and a consumer for the purpose of securing credit for the consumer.

The relevant credit activities may include providing third-party home loan credit assistance or acting for a lender in activities authorised by the licensee’s ACL. A new broker business must not begin those activities before ASIC grants the licence, unless the business operates under an existing authorised credit representative arrangement.

Distinguishing Consumer Credit from Commercial Lending

The ACL requirement depends on whether the proposed business involves credit activities covered by the NCCP Act. ASIC’s application guidance directs businesses to assess the nature of their proposed credit activities before deciding whether an ACL is required.

Operating as a Credit Representative Versus Holding an ACL

A credit or finance broker engaging in these credit activities can generally do so through one of two pathways:

• becoming a credit licence holder; or
• acting as an authorised credit representative of a credit licensee.

A mortgage broker can operate without holding an independent ACL when authorised as a credit representative of a credit licensee. Under Information Sheet 126 (INFO 126), a credit representative may engage in some or all of the credit activities authorised by the licensee’s ACL, but cannot operate beyond that authorisation.

This structure can suit a broker building experience within an aggregator or another licensed business. A broker establishing an independent credit business may apply for an ACL instead, provided the applicant satisfies the requirements of the NCCP Act, including the assessment of the applicant’s fit and proper people under Section 37A.

What Does ASIC Assess When You Apply for an Australian Credit Licence?

Under Sections 36 and 37 of the NCCP Act, an applicant must lodge an approved application. ASIC must be satisfied that the applicant can comply with the obligations in Section 47 of the NCCP Act, meets the fit and proper person test under Section 37A, and satisfies other prescribed requirements. The following sections explain how ASIC assesses these criteria in practice and the evidence it generally expects applicants to provide.

ASIC’s Licensing Assessment and Fit and Proper Requirements

Since the amendments that commenced on 18 February 2020, Section 37A of the NCCP Act extends the assessment beyond people directly performing credit duties. ASIC may assess all officers and controllers of the applicant, including:

• relevant officers;
• partners;
• trustees;
• senior managers; and
• officers of corporate controllers.

Under Section 37B of the NCCP Act, ASIC must consider matters such as:

• criminal convictions within the previous 10 years, subject to the rules on spent convictions;
• insolvency;
• licence cancellations;
• banning orders;
• disqualification orders;
• adverse regulatory action; and
• failures to follow an Australian Financial Complaints Authority determination.

Responsible Managers and Organisational Competence

ASIC assesses whether an applicant has the organisational competence to conduct its authorised credit activities. ASIC’s Regulatory Guide (RG) 206 Credit licensing: Competence and training (RG 206.39) identifies responsible managers as the people whose qualifications and experience support the quality of the business’s credit activities. The number of responsible managers may depend on the credit activities, business structure, representatives, client numbers, and operational size.

RG 206.53 expects responsible managers to have at least two years of relevant problem-free experience plus either a credit industry qualification at Certificate IV level or a higher qualification in a relevant discipline. In addition, responsible managers for a business providing third-party home loan credit assistance are expected to hold at least a Certificate IV in Finance and Mortgage Broking under RG 206.57. ASIC may examine whether experience was gained in a licensed business, including through work as a credit representative or support person.

Compliance and Financial Requirements

An ACL applicant must show that it can comply with Section 47 of the NCCP Act from the time the licence is granted. RG 206.14 identifies organisational competence as an entry requirement, while maintaining competence remains an ongoing obligation under Section 47(1)(f) of the NCCP Act after the licence is granted.

The application should address the business’s compliance arrangements and financial capacity. Relevant matters include:

• Australian Financial Complaints Authority membership for external dispute resolution;
• adequate professional indemnity insurance, supported by the required questionnaire and certificate of currency;
• systems for supervising representatives; and
• processes supporting compliance with the authorised credit activities.

What Documents Are Required for a Credit Broker ACL Application?

What Documents Must Be Submitted With an ACL Application?

An ACL application under the NCCP Act must include a summary business description, and finance brokers can obtain Australian Credit Licence application assistance for finance brokers when preparing the required materials. This should explain the proposed credit activities, the authorisations sought, the business structure, responsible managers, credit representatives, lender relationships, and the role of each responsible manager.

ASIC also requires information about responsible managers and other fit and proper people. The application materials include:

• Qualifications and relevant work experience for each responsible manager
• National criminal history checks, or overseas checks for overseas people
• Bankruptcy checks
• Statements of Personal Information

RG 204 Applying for and varying a credit licence sets out the application process, including the supporting information ASIC may require. Information Sheet 244 (INFO 244), Credit licence applications: Providing information for fit and proper people, also explains the People Proofs required for relevant officers, partners, trustees, controllers, and other fit and proper people.

ASIC generally requires criminal history checks, bankruptcy checks and Statements of Personal Information for relevant fit and proper people to be no more than 12 months old, subject to permitted exceptions or alternative evidence under INFO 244.

Can ASIC Request Additional Documents During an ACL Application?

ASIC may reject an incomplete application or request further information under Section 37(4) of the NCCP Act. Failure to respond to a statutory request within the specified time can result in the application being treated as withdrawn under Section 37(7).

ASIC may request further documents during its assessment, even where the initial ACL application has been lodged. Depending on the applicant’s structure, ASIC may accept permissible certification or alternative evidence for some people instead of criminal history checks, bankruptcy checks, and Statements of Personal Information. ASIC may later request those documents if the available evidence does not satisfy its assessment.

How Do Credit and Finance Brokers Apply for an ACL?

Navigating the Application Process and Lodgement

Under Section 36 of the NCCP Act, an applicant must lodge an application with ASIC in the approved form. The application process generally involves the following steps:

1. Determine the relevant credit authorisations: Identify the credit activities the business will engage in, such as providing credit assistance or acting as an intermediary, and select the corresponding authorisations in the application. The licence will only cover the credit activities ASIC authorises.
2. Assess responsible manager suitability: Confirm that each proposed responsible manager meets ASIC’s experience and qualification expectations explained above, and that the business has enough responsible managers for its size and credit activities.
3. Prepare the supporting evidence: Gather the business description, responsible manager qualifications and experience, People Proofs for each fit and proper person, and evidence of compliance arrangements such as Australian Financial Complaints Authority membership and professional indemnity insurance. Check that People Proofs are no more than 12 months old.
4. Complete ASIC’s online application: Complete the online ACL application, attach the supporting documents and check that the information is consistent across the application and its attachments.
5. Lodge the application: Pay the prescribed application fee and submit the required declarations. A natural person applicant, a director of a corporate applicant, or an authorised agent must submit the application and declare that the information provided is complete and accurate.
6. Respond to ASIC’s requests: After lodgement, monitor correspondence from ASIC and provide any further information it requests within the specified period, as explained below.

What Happens After You Lodge an ACL Application?

After lodgement, ASIC assesses the application against the statutory licensing criteria outlined above, including the applicant’s capacity to comply with its Section 47 obligations and the fit and proper person test.

ASIC may issue a written notice requesting further information, an audit report, or a statement about material changes to the application. An application may be delayed where:

• supporting documents are missing;
• information is incomplete; or
• responses to ASIC requests are not provided within the specified period.

Understanding ASIC’s Refusal Process and Hearing Rights

ASIC must refuse an ACL application under Section 37(2) of the NCCP Act if the application or lodged information is materially false, misleading, or omits a material matter. ASIC may also refuse the application where the statutory requirements for granting a licence are not satisfied.

Under Section 41 of the NCCP Act, ASIC may refuse to grant a licence only after giving the applicant an opportunity to appear, be represented at a private hearing, and make submissions about the proposed refusal. This gives the applicant an opportunity to respond before ASIC makes its refusal decision.

What Happens After ASIC Grants an Australian Credit Licence?

Licence Authorisations and Conditions

An approved ACL authorises a broker to engage in the credit activities specified in the licence. Sections 35 and 45 of the NCCP Act address licence authorisations and conditions that apply to the licensee.

A finance broker must stay within the scope of those authorisations. As explained earlier, INFO 126 provides that a credit representative may be authorised for some or all activities covered by the licensee’s licence, but cannot operate beyond that authority. The same principle applies when an independent broker conducts mortgage or other authorised credit activities under an ACL.

Ongoing Obligations for Credit Licensees

Under Section 47(1)(f) of the NCCP Act, an ACL holder must maintain organisational competence for its authorised credit activities. Breaching this obligation can attract a civil penalty under Section 47(4). ASIC may also suspend or cancel a licence, or impose additional licence conditions, where the relevant statutory requirements are met. ASIC explains its approach in RG 206.15–RG 206.16.

Credit licensees must also ensure representatives are adequately trained and competent under Section 47(1)(g) of the NCCP Act, as explained in RG 206.21. In addition, ASIC’s licensing guidance identifies ongoing obligations such as:

• Australian Financial Complaints Authority membership;
• representative supervision;
• compliance arrangements; and
• records supporting those activities.

Conclusion

Obtaining an ACL requires selecting suitable credit activities, demonstrating organisational competence, identifying qualified responsible managers and preparing complete supporting documents for ASIC. The process also requires careful attention to fit and proper requirements, application accuracy, professional indemnity insurance and ongoing credit licensing obligations under the NCCP Act.

For brokers establishing an independent credit business, contact AFSL House to request a consultation about Australian Credit Licence applications for finance brokers. ACL application lawyers for finance brokers at AFSL House can assist with ACL application strategy, preparation, ASIC lodgement and ongoing credit licensing compliance, helping create a clear structure for the mortgage or finance broker business.

Frequently Asked Questions

Disclaimer: All information provided in this article is strictly general in nature and is not intended to be, nor should it be relied upon as, legal advice.