What Does it Cost to Get an Australian Credit Licence?

Introduction

Obtaining an Australian Credit Licence (ACL) is a necessary step for businesses engaging in credit activities within Australia, as mandated by the Australian Securities and Investment Commission (ASIC). Understanding the financial commitments involved in the ACL application process and ongoing compliance is crucial for any organisation planning to offer credit services.

This guide provides a breakdown of the various costs associated with securing and maintaining an ACL. It covers the initial licence application fees, potential costs for variations, and requirements related to the annual compliance certificate, helping businesses prepare for the financial aspects of ACL ownership.

Breakdown of ACL Application Licence Fees

Application Fees Based on Applicant Type

The fee payable to ASIC for an ACL application depends partly on the type of applicant. ASIC differentiates between:

• Individuals applying for an ACL
• Entities apart from individuals (such as body corporates)

This distinction is a key factor in the tiered fee structure that ASIC has established in their fee schedule outlined in Information Sheet 108 (INFO 108).

Application Fees Based on Authorisation Sought

Another significant factor influencing the ACL application fee is the type of authorisation the applicant is seeking. ASIC distinguishes primarily between:

• Applicants seeking authorisation as a ‘credit provider’
• Those seeking ‘other’ types of credit authorisations

The complexity associated with being a credit provider generally results in a higher application fee.

The specific fees outlined by ASIC are structured as follows:

Applicant Type	Authorisation Sought	Application Fee
Individual Applicants	Seeking authorisation as a credit provider	$3,468
	Seeking other authorisations	$1,798
Applicants Other Than an Individual	Seeking authorisation as a credit provider	$4,624
	Seeking other authorisations	$2,055

These tiered fees reflect the varying complexity and regulatory oversight associated with different types of credit activities and applicant structures.

Online vs. Paper Application Fee Considerations

Applicants must choose between submitting their ACL application online or via a paper form. While both methods are available, there are important considerations to keep in mind:

• Lodging a paper application typically incurs a higher fee compared to the online submission process
• ASIC may view the choice to lodge a paper application unfavourably

Furthermore, this method could be interpreted as an indication that the applicant lacks adequate technological resources, which is a factor ASIC considers when assessing the applicant’s capacity to manage the proposed credit activities.

Costs for Varying an Australian Credit Licence

Variation Application Fees for Individuals

If you hold an ACL as an individual and need to change its authorisations or conditions, a fee applies for this variation application. The specific fee depends on the type of authorisation involved.

ASIC charges the following fees for individuals applying to vary their licence under section 45(2)(b) of the National Consumer Credit Protection Act 2009 (Cth):

• Credit provider authorisation: $2,183
• Other than a credit provider authorisation: $1,156

These tiered fees reflect the assessment required for different types of licence variations.

Variation Application Fees for Other Entities

For entities other than individuals, such as body corporates, fees also apply when seeking to vary an existing ACL. Similar to individual applicants, the fee amount depends on the nature of the authorisation being varied.

The variation application fees for entities besides individuals are:

• Credit provider authorisation: $2,826
• Other than a credit provider authorisation: $1,284

Understanding these costs is important when considering changes to your business’s credit activities under your existing licence.

Annual Compliance Certificate Cost

Lodgement Fee Changes

Holding an ACL involves ongoing compliance obligations, including the submission of an annual compliance certificate. Under section 53(1) of the National Consumer Credit Protection Act 2009 (Cth), licensees must lodge this certificate each year within 45 days of their licensing anniversary.

Since 4 July 2018, ASIC has implemented a significant change regarding the costs associated with this requirement. They no longer charge a fee for lodging the annual compliance certificate when:

• It is submitted electronically
• It is submitted on time

This change simplifies the ongoing compliance costs for ACL holders who meet these lodgement criteria.

Potential Fees for Late or Non-Electronic Lodgement

While the standard lodgement fee for the annual compliance certificate has been removed for timely electronic submissions, penalties can still apply in certain circumstances. Specifically, fees will be incurred if:

• The certificate is lodged after the deadline
• The certificate is not lodged electronically

Therefore, maintaining timely and electronic submission practices is important for avoiding these additional compliance costs associated with your ACL.

Other Potential Cost Considerations in the Application Process

Costs Involved in Preparing Core Proofs and Supporting Documents

Beyond the direct ASIC application fee, preparing your ACL application involves assembling various documents. This preparation requires internal time and resources, representing an indirect cost.

Key documents you must prepare include:

• A detailed business description outlining your operations
• Information identifying the individuals involved in managing the credit business
• Evidence demonstrating these individuals are fit and proper persons
• Documentation supporting your nominated Responsible Managers’ qualifications and experience

Compiling these proofs thoroughly is essential for the licence application process.

Costs Involved in Meeting Organisational Competence Requirements

ASIC scrutinises whether your business possesses the necessary organisational competence to engage in the proposed credit activities. This assessment heavily relies on the demonstrated knowledge and skills of your nominated Responsible Managers.

Ensuring you have appropriately qualified individuals may require investment in:

• Hiring experienced personnel
• Providing specific training to existing staff to meet ASIC’s standards

Demonstrating organisational competence is a critical criterion for a successful ACL application and represents a potential cost factor beyond the standard licence fee.

Costs Involved in Potential Post-Approval Requirements

Before ASIC formally grants the ACL, applicants typically need to fulfil final requirements. These often include:

• Providing proof of adequate Professional Indemnity (PI) insurance coverage relevant to the credit activities
• Obtaining membership with the Australian Financial Complaints Authority (AFCA), the external dispute resolution scheme

Both securing PI insurance and obtaining AFCA membership involve associated costs. These expenses must be factored into the overall budget when planning for an ACL application, as they are necessary steps before the licence is officially issued.

Conclusion

Securing and maintaining an ACL involves several key financial considerations, including tiered application fees based on applicant type and authorisation sought, potential costs for licence variations, and ongoing compliance obligations such as the annual compliance certificate lodgement. Understanding these direct ASIC fees, alongside indirect costs like preparing documentation, ensuring organisational competence, and meeting post-approval requirements like PI insurance and AFCA membership, is crucial for businesses engaging in credit activities.

Managing the complexities of the ACL application and compliance process requires careful planning and expert guidance. For trusted expertise in handling your ACL requirements, contact the specialists at AFSL House today to ensure your business meets all necessary financial services law obligations efficiently.

Frequently Asked Questions