Introduction
For businesses holding an Australian Credit Licence (ACL), ensuring their representatives are adequately trained is a fundamental aspect of maintaining both regulatory compliance and organisational competence. This critical obligation, detailed by the Australian Securities and Investments Commission (ASIC) in Regulatory Guide 206 (RG 206), underscores the responsibility of licence holders to ensure their credit representatives meet the necessary standards for competence and training.
This guide offers essential insights for ACL licence holders on fulfilling these vital training requirements. It explores ASIC’s general expectations as outlined in RG 206 concerning the design, documentation, and implementation of robust initial and ongoing training programs, covering aspects such as continuing professional development and the treatment of overseas qualifications to ensure sustained competence.
Why ACL Representative Training is Crucial
Meeting Licence Obligations & Ensuring Competence
A fundamental requirement for businesses holding an ACL is to ensure their representatives are adequately trained and competent. This obligation stems directly from section 47(1)(g) of the National Consumer Credit Protection Act 2009 (Cth), which mandates that Australian Credit Licensees maintain appropriate competence and training standards.
Proper training ensures that your credit representatives possess the necessary skills and knowledge to:
- Perform their roles effectively
- Operate in accordance with regulatory expectations
- Engage appropriately in credit activities they are authorised to undertake
As outlined in ASIC’s RG 206, the responsibility lies with the credit licensee to establish and implement effective training programs. This commitment to competence and training is a cornerstone of responsible credit licensing and crucial for overall compliance in maintaining the organisational competence expected of licence holders.
Get Your Free Initial Consultation
Consult with one of our experienced AFSL Lawyers today.
Risk Mitigation & Consumer Protection via Training
Investing in comprehensive training for your ACL representatives plays a vital role in mitigating risks for both your business and consumers. Well-trained representatives are significantly less likely to make errors or engage in conduct that could lead to breaches of credit legislation.
The benefits of proper ACL representative training include:
Benefit Category | Impact / Advantage |
Regulatory Compliance | Protection for your business from potential regulatory action by ASIC, reduced risk of penalties, and enhanced adherence to ASIC requirements. |
Operational Effectiveness | Representatives are better equipped to provide appropriate assistance and information, leading to more effective service delivery. |
Consumer Protection | Leads to more informed consumer decisions. Particularly critical for home loan credit assistance, where poorly informed assistance can have severe consequences (RG 206). |
Risk Mitigation | Well-trained representatives are less likely to make errors or engage in conduct that breaches credit legislation, safeguarding consumer interests and the business’s integrity. |
This focus on training is particularly critical in areas such as home loan credit assistance where, as highlighted in RG 206, poorly informed assistance can lead to severe consequences for consumers, potentially jeopardising home ownership.
Ensuring your representatives are adequately trained is a key step in safeguarding consumer interests and upholding the integrity of the credit industry.
Speak with an AFSL Lawyer Today
Request a Consultation to Get Started.
ASIC’s General Expectations for ACL Representative Training
The ACL Duty: Ensuring Representatives are Trained & Competent
A fundamental requirement for holders of an ACL is to ensure their representatives are adequately trained and competent. This obligation, stipulated under section 47(1)(g) of the National Consumer Credit Protection Act 2009 (Cth), applies to all individuals acting on behalf of the licensee, including:
- Staff
- Agents
- Authorised credit representatives
The core purpose of this training is to equip representatives with the necessary skills and knowledge to competently engage in the credit activities authorised by your ACL.
ASIC’s RG 206 clarifies that credit licensees are responsible for determining what constitutes appropriate initial and ongoing training for their representatives. As a licence holder, you need to establish and implement training systems that ensure your representatives meet the required standards of competence and training. This proactive approach is crucial for maintaining compliance and upholding the integrity of your credit licensing.
Adhering to Industry Standards & ASIC Guidance
ASIC has clear expectations regarding adherence to established industry training standards. If specific standards exist for particular sectors of the credit industry or for certain products, credit licensees must ensure their representatives are trained to at least that level. This ensures a baseline level of competence across the industry.
For instance, RG 206.77 specifies that representatives providing third-party home loan credit assistance must attain at least a Certificate IV in Finance and Mortgage Broking.
Furthermore, ASIC regulatory guidance suggests that training courses selected for representatives should ideally be endorsed by relevant industry bodies. According to RG 206.78, this preference exists because established industry bodies are more likely to ensure that training programs are:
- Comprehensive
- Cover the specialised content needed
Training organisations without strong connections to the credit industry may lack the depth of expertise required, potentially impacting:
- The quality of training
- The ability of representatives to provide thorough and competent assistance to consumers
This is particularly important for maintaining the competence and training levels required under your ACL.
Speak with an AFSL Lawyer Today
Request a Consultation to Get Started.
Designing & Documenting Effective ACL Representative Training
Determining Initial & Ongoing Training Needs
As an ACL holder, your business is responsible for determining what constitutes appropriate initial and ongoing training for your representatives. ASIC, through RG 206, generally expects you to make this assessment yourself, ensuring your representatives achieve the necessary competence and training.
This approach acknowledges the diversity of roles within the credit industry, meaning specific educational prerequisites or ongoing training requirements are generally not mandated by ASIC, except in specific circumstances like home loan credit assistance.
The core objective is to ensure that every representative under your ACL is suitably qualified and competent to perform their specific role effectively. Therefore, the training requirements you establish should be tailored to the tasks and responsibilities each representative will undertake. This ensures that your training program directly supports your compliance obligations and the overall competence of your team.
Integrating Training into Recruitment & Operations
To ensure consistent adherence to training requirements, it is crucial to embed your determined training needs directly into your business’s recruitment and ongoing operational systems. ASIC generally expects ACL holders to integrate these training frameworks from the outset of engaging a representative and throughout their tenure.
This integration helps in maintaining a high standard of competence and training across your organisation. By making training an integral part of your recruitment process, you can:
- Ascertain a candidate’s existing skills
- Identify any immediate training requirements upon hiring
Furthermore, embedding ongoing training into your operational systems ensures that your representatives continually update their knowledge and skills, which is vital for:
- Maintaining compliance with your ACL obligations
- Adapting to changes in the regulatory landscape
Get Your Free Initial Consultation
Consult with one of our experienced AFSL Lawyers today.
Tailoring Training to Business Size & Complexity
The nature and extent of the training required for your ACL representatives should be tailored to the specific size and complexity of your business operations. RG 206 acknowledges that a one-size-fits-all approach to training is not practical for all licence holders.
For instance:
Business Size / Complexity | Likely Training Approach |
Small Micro-Lending Business (few representatives) | Responsible Managers conducting personal training sessions covering credit products and legal obligations may be sufficient. |
Larger, More Complex Organisation | Likely requires a more extensive and structured training regime, potentially with dedicated training staff or external providers. |
This flexible approach allows your business to implement training that is both effective and proportionate to your operational scale, ensuring all representatives meet the necessary competence and training standards.
Why Documenting Training Policies is Critical
Documenting your recruitment and training policies and procedures is a critical aspect of meeting your obligations as an ACL holder. ASIC expects licensees to maintain records of these policies, their implementation, and how they are appropriate to the nature, scale, and complexity of their specific business.
This documentation plays a vital role in demonstrating compliance with RG 206. Well-documented training policies provide a clear framework for your training activities and help ensure consistency. These records should detail:
- The initial and ongoing training provided to representatives
- How their competence is assessed
- How training is reviewed and updated
Such documentation is essential not only for internal governance but also for demonstrating to ASIC that your business has robust systems in place to meet its training requirements and maintain the competence of its representatives.
Speak with an AFSL Lawyer Today
Request a Consultation to Get Started.
Ongoing Competence & CPD for ACL Representatives
Setting CPD Hours & Documentation Rules
ASIC expects ACL holders to ensure their representatives engage in an appropriate amount of Continuing Professional Development (CPD) each year. This ongoing commitment is vital for maintaining the necessary competence and training within your business.
While RG 206 does not set a mandatory number of CPD hours for all general credit representatives, it highlights that 10 to 30 hours annually is a common standard in other related industry sectors.
As a credit licensee, you should be aware of two important considerations:
- If you decide that less than 10 hours of CPD per year is sufficient for your representatives, you should be prepared to justify this decision to ASIC, explaining how this level of training still ensures their ongoing competence.
- It is an important part of your licence obligations to document what your business considers a suitable number of CPD hours for its representatives.
Recognised CPD Activities for ACL Training
To fulfil ongoing training obligations and ensure your representatives maintain their competence, a variety of activities can be counted as CPD. ASIC’s RG 206 outlines several types of activities that are generally considered suitable for meeting these requirements under your ACL.
These recognised CPD activities can include:
CPD Activity Type | Description / Key Consideration |
Attending Relevant Professional Seminars/Conferences | Allows representatives to stay informed about current industry practices and regulatory updates. |
Preparing & Delivering Presentations at Events | Deepens understanding and enhances communication skills. |
Publishing Articles in Relevant Credit Journals | Contributes to personal development and broader industry knowledge. |
Viewing Videos of Recent Seminars/Conferences | Access to timely information; typically up to a maximum of 10 hours per year. |
Completing Online Tutorials & Quizzes | Covers recent regulatory, technical, or professional advancements in the credit sector. |
Participating in Internal Training Sessions | Focuses on your business’s specific systems, procedures, and policies relevant to the representative’s role. (Note: Should not constitute the majority of CPD hours). |
Structured Private Study (Audio/Visual) | Private study on its own is generally not adequate, but if it involves structured audio or visual materials specifically designed for training, it may be considered appropriate. |
It is important to note that internal training sessions should not constitute the majority of your representatives’ CPD hours. Additionally, private study on its own is generally not regarded as adequate for CPD purposes. However, if private study involves structured audio or visual materials specifically designed for training, it may be considered appropriate for maintaining competence and training.
Speak with an AFSL Lawyer Today
Request a Consultation to Get Started.
Handling Overseas Qualifications in ACL Training
ASIC’s Stance on Overseas Qualifications
ASIC generally accepts relevant overseas qualifications for your credit representatives, provided they are not engaged in mortgage broking services. This approach helps licence holders leverage a broader talent pool while maintaining standards of competence.
However, there is an important exception: credit representatives intending to provide mortgage broking services must complete a Certificate IV in Finance and Mortgage Broking, irrespective of any overseas qualifications they may hold, to meet specific Australian training requirements.
For authorised credit representatives in non-mortgage broking roles, their overseas qualifications can be recognised through:
- Evidence that a relevant overseas regulatory body has acknowledged the qualification
- Verification by your business of the equivalence of these qualifications with Australian standards
This verification can often be achieved through services such as International Education Online, which offers ‘Country Education Profiles’ to compare qualifications from over 120 countries with Australian qualifications. This process ensures that the foundational knowledge of the credit representative meets a comparable standard necessary for their role under your ACL.
Ensuring Understanding of Australian Regulatory Rules
While an overseas qualification might be deemed equivalent for the purpose of demonstrating initial competence, it is crucial that all representatives, regardless of where they obtained their qualifications, possess a thorough understanding of the Australian regulatory landscape. Therefore, even if a credit representative’s overseas qualification is accepted, your business must ensure they undertake suitable training to familiarise themselves with Australian legal and regulatory requirements.
This supplementary training must cover essential Australian legislation relevant to credit activities. Key among these are the National Consumer Credit Protection Act 2009 (Cth) and the Corporations Act 2001 (Cth). Familiarity with these Acts is fundamental for ensuring compliance and maintaining the competence required under your ACL.
Furthermore, the training for representatives with overseas qualifications should extend beyond these primary Acts. It should also encompass:
- Relevant codes of conduct applicable within the Australian credit industry
- Knowledge of other pertinent Australian legislation, which may include areas such as taxation and superannuation, depending on the scope of credit activities
This comprehensive approach ensures they are well-equipped to operate effectively and ethically within the Australian financial services environment, upholding the standards expected by ASIC and protecting consumers.
Speak with an AFSL Lawyer Today
Request a Consultation to Get Started.
Conclusion
Ensuring your representatives meet the training requirements outlined in ASIC’s RG 206 is crucial for ACL holders. This involves understanding your obligations under the National Consumer Credit Protection Act 2009 (Cth), designing effective initial and ongoing training programs tailored to your business, documenting these processes, and addressing specific areas like CPD and the recognition of overseas qualifications.
Our team of ACL expert lawyers will help you handle these ACL training requirements with confidence and verify your programs are compliant. Contact AFSL House today for trusted expertise and specialised services tailored to your financial services law firm’s needs.
Frequently Asked Questions
ASIC generally expects ACL holders to determine for themselves what constitutes appropriate initial and ongoing training for their representatives and to integrate these training programs into their recruitment and operational systems. This ensures that all representatives are adequately trained and possess the necessary competence to engage in authorised credit activities.
Your business should determine appropriate training by considering the nature, scale, and complexity of your operations, the specific roles and responsibilities of your representatives, and any existing industry training standards relevant to the credit activities or products they handle. This tailored approach ensures that the training directly supports the competence of your representatives and your ACL compliance.
Yes, ASIC expects your business to document its recruitment and training policies and procedures, along with evidence of their implementation. This documentation should be appropriate to the nature, scale, and complexity of your business and demonstrate how you maintain the competence and training of your ACL representatives.
ASIC does not mandate a specific number of CPD hours for all general credit representatives, but it expects ACL holders to ensure their representatives undertake a suitable number of hours annually. While 10 to 30 hours per year is a common benchmark in related sectors, if your business deems less than 10 hours sufficient, you should be prepared to justify this to ASIC.
Recognised CPD activities for your ACL representatives can include attending relevant professional seminars or conferences, preparation time for presenting at such events, publishing articles in industry journals, and viewing videos of recent professional seminars (up to a maximum of 10 hours per year). Additionally, completing online tutorials on new developments and internal training on your business’s systems and policies also count, though internal training should not form the majority of CPD hours.
Yes, ASIC generally accepts relevant overseas qualifications for ACL representatives, provided they are not engaged in mortgage broking services; representatives intending to provide mortgage broking services must complete a Certificate IV in Finance and Mortgage Broking regardless of overseas qualifications. For other roles, you will need evidence of recognition by an overseas regulatory body or verification of the qualification’s equivalence with Australian standards.
Representatives with overseas qualifications who are not providing mortgage broking services must still undertake suitable training to become familiar with Australian legal and regulatory requirements. This training should cover key legislation such as the National Consumer Credit Protection Act 2009 (Cth) and the Corporations Act 2001 (Cth), as well as relevant codes of conduct.
Your ACL representative training approach should be tailored to the specific size and complexity of your business operations, as outlined in RG 206. For instance, a small micro-lending business might find personal training sessions conducted by responsible managers sufficient, whereas a large finance company with numerous branches would likely require a more extensive and formally structured training regime.
Yes, if industry training standards exist for particular sectors of the credit industry or for specific products, ASIC expects that your training for ACL representatives will ensure they are trained to at least that level. This ensures a consistent standard of competence and training across the industry for similar roles or product specialisations.