ASIC RG 203 — ASIC Regulatory Guide – RG 203 Do I need a credit licence?

Page 1 REGULATORY GUIDE 203 Do I need a credit licence? October 2017 About this guide This guide is for people who may engage in credit activities as defined in the National Consumer Credit Protection Act 2009 (National Credit Act). It gives guidance to help you decide whether you need to obtain an Australian credit licence (credit licence). Note: From 27 July 2020, applications for relief should be submitted through the ASIC Regulatory Portal. For more information, see how you apply for relief. Page 2 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 2 About ASIC regulatory documents In administering legislation ASIC issues the following types of regulatory documents. Consultation papers: seek feedback from stakeholders on matters ASIC is considering, such as proposed relief or proposed regulatory guidance. Regulatory guides: give guidance to regulated entities by:  explaining when and how ASIC will exercise specific powers under legislation  explaining how ASIC interprets the law  describing the principles underlying ASIC’s approach  giving practical guidance (e.g. describing the steps of a process such as applying for a licence or giving practical examples of how regulated entities may decide to meet their obligations). Information sheets: provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Reports: describe ASIC compliance or relief activity or the results of a research project. Document history This version was issued in October 2017 and is based on legislation and regulations as at the date of issue. The note on the front page was inserted on 27 July 2020. In May 2025, we made changes at RG 203.12, RG 203.14, RG 203.29, RG 203.31, RG 203.80, RG 203.96 and RG 203.100, and in Table 1 and Table 2. These changes were made to reflect regulation of buy now pay later products as credit under amending legislation. Previous versions:  Superseded Regulatory Guide 203, issued in December 2009, reissued June 2010 and May 2013 Disclaimer This guide does not constitute legal advice. We encourage you to seek your own professional advice to find out how the credit legislation and other applicable laws apply to you, as it is your responsibility to determine your obligations. Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements. Page 3 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 3 Contents A Overview ........................................................................................... 4 National licensing regime................................................................... 4 Am I engaging in credit activities for which I need to be licensed? ... 4 Who does not need to be licensed? .................................................. 5 B What credit contracts and consumer leases are covered by the National Credit Code? ..................................................................... 6 What is ‘credit’? ................................................................................. 6 What is a ‘credit contract’?................................................................. 7 What is a ‘consumer lease’? .............................................................. 7 What is the purpose for which the credit or consumer lease is provided? ........................................................................................... 8 Is the credit provider or lessor carrying on a business in Australia? . 9 Exclusions from the National Credit Code ....................................... 11 C Am I engaging in credit activities for which I need to be licensed? ........................................................................................ 12 What is a credit activity? .................................................................. 12 Credit activities relating to the provision of credit contracts and consumer leases .............................................................................. 13 Provision of credit services .............................................................. 18 Use of disclaimers ........................................................................... 25 Other prescribed or exempt activities .............................................. 25 D Who does not need to be licensed? ............................................ 27 Representatives ............................................................................... 27 Carried over instrument lenders ...................................................... 31 Exemptions from the licensing requirement .................................... 33 Appendix 1: When you need a credit licence ..................................... 41 Appendix 2: Credit and consumer leases excluded from regulation . 45 Appendix 3: Roles with licensing exemptions ................................... 49 Key terms ............................................................................................... 55 Related information ............................................................................... 58 Page 4 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 4 A Overview Key points If you engage in credit activities you will generally need an Australian credit licence (credit licence) or an authorisation from a credit licensee before commencing business. ‘Credit activity’ is defined in the National Consumer Credit Protection Act 2009 (National Credit Act) and includes providing credit contracts and consumer leases, securing payment obligations by related mortgages and guarantees, and providing credit services. You will only be engaging in credit activities if your conduct relates to credit contracts or consumer leases to which the National Credit Code applies. Not everyone engaging in credit activities regulated under the National Credit Act will need a credit licence. If you are authorised to engage in credit activities on behalf of a licensee, you will not need a credit licence for those activities. Your credit activities may also be exempt from the licensing requirements under regulations or you may be exempted by ASIC. National licensing regime RG 203.1 Since 1 July 2010 a national licensing scheme has applied for people who engage in credit activities in relation to consumers under the National Credit Act. RG 203.2 If you are involved in the provision of credit or consumer leases to consumers, you need to be aware of whether you need to be licensed. It is an offence under s29 of the National Credit Act to engage in credit activities while unlicensed. If you hold a licence to engage in credit activities, you also need to be aware of whether any other person with whom you conduct business needs to be licensed. It is an offence under s31 of the National Credit Act for a licensee to conduct business with unlicensed persons. Note: All section references in this guide relate to the National Credit Act unless specified as relating the National Credit Code. The Code is contained in Sch 1 to the National Credit Act. Am I engaging in credit activities for which I need to be licensed? RG 203.3 To decide whether you engage in credit activities for which you may need to be licensed, you will need to consider: (a) whether your activities relate to a type of credit or consumer lease to which the National Credit Code applies; and Page 5 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 5 (b) if the National Credit Code does apply to the credit or consumer lease, whether your activities are the types of credit activities specified in the National Credit Act. Note: The National Credit Code largely replicates the Uniform Consumer Credit Code (UCCC), which was enacted in uniform state legislation in 1996. However, the National Credit Code has been extended in a number of areas. For more information about amendments to the UCCC in the National Credit Code, see Ch 8 of the Explanatory Memorandum to the National Consumer Credit Protection Bill 2009 (Explanatory Memorandum). RG 203.4 For more information on what credit contracts and consumer leases are covered by the National Credit Code, see Section B. For more information on what credit activities are covered by the National Credit Act, see Section C. RG 203.5 Table 1 (Appendix 1) provides an overview of some common roles in the credit industry and indicates whether you will generally need to hold a credit licence to perform these roles. Table 2 (Appendix 2) sets out types of credit contracts and consumer leases that are specifically excluded from the application of the National Credit Code. Who does not need to be licensed? RG 203.6 You do not need to hold a credit licence if: (a) you are an authorised credit representative acting on behalf of a licensed principal (unless you are also engaging in credit activities on your own behalf); (b) you are an employee or director of a licensed principal, or of a related body corporate of a licensed principal, engaging in credit activities on your principal’s behalf; (c) your credit activities are exempt under the National Credit Act or associated regulations; or (d) we grant you an exemption from the licensing requirement. RG 203.7 For more information on exemptions, see Section D. Licensing exemptions under the National Credit Act and associated regulations, and under ASIC legislative instruments, are outlined in Table 3 (Appendix 3). See also our information on credit relief on our website. RG 203.8 Certain credit providers and lessors who engage in credit activities in relation to a credit contract, consumer lease, mortgage or guarantee entered into before 1 July 2010 do not need to be licensed. However, they still need to comply with a modified statutory regime: see Section D. Page 6 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 6 B What credit contracts and consumer leases are covered by the National Credit Code? Key points To decide whether you engage in credit activities for which you may need to be licensed, you will need to consider: • whether the credit contract or consumer lease that you provide, or provide services in relation to, is covered by the National Credit Code; and • whether your activities in relation to that credit contract or consumer lease are the types of credit activities specified in the National Credit Act. RG 203.9 Whether the licensing requirements apply will depend on whether your activities relate to a type of credit or consumer lease to which the National Credit Code applies. If the Code does not apply to a particular provision of credit or consumer lease, your activities are not ‘credit activities’ and the licensing requirements will not apply. RG 203.10 Some types of credit and consumer leases are specifically excluded from the application of the National Credit Code. These exclusions are outlined in Table 2 (Appendix 2). What is ‘credit’? RG 203.11 Under the National Credit Code, credit is provided if under a contract: (a) the payment of a debt owed by a consumer to a credit provider is deferred; or (b) a consumer incurs a deferred debt to a credit provider. Note: See s3 of the National Credit Code. The definition of ‘credit’ in the National Credit Act incorporates the definition in s3 of the Code. RG 203.12 The National Credit Code applies only to credit that is: (a) provided to a natural person or strata corporation (i.e. a consumer); (b) provided wholly or predominantly for: (i) personal, household or domestic purposes; or (ii) residential property investment; Note: See RG 203.20 for the definition of ‘predominantly’. Page 7 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 7 (c) charged for, or may be charged for, by the credit provider; and Note: From 10 June 2025, the meaning of ‘credit’ includes credit that is provided under a low cost credit contract or a buy now pay later contract. For these contracts, there does not need to be a charge for the credit by the credit provider. For more information, see s13D and 13E of the National Credit Code, and Regulatory Guide 281 Low cost credit contracts (RG 281) at RG 281.7–RG 281.15. (d) provided in the course of carrying on a business of providing credit in this jurisdiction (i.e. Australia) or as part of, or incidental to, any other business of the credit provider carried on in this jurisdiction. Note: For the definition of ‘this jurisdiction’, see s204 of the National Credit Code, which incorporates the definition in s21 of the National Credit Act. In s21, ‘this jurisdiction’ is defined as the geographical area consisting of each referring state and each territory (including their coastal seas). Where all of the states are referring states (i.e. states that have referred credit matters to the Commonwealth Parliament), ‘this jurisdiction’ therefore consists of the whole of Australia. As all of the states are referring states, ‘this jurisdiction’ currently consists of the whole of Australia. For the remainder of this guide, we refer to ‘Australia’ instead of ‘this jurisdiction’ where possible. RG 203.13 For a full definition of credit covered by the National Credit Code, see s5 of the Code. What is a ‘credit contract’? RG 203.14 A credit contract is a contract under which credit is or may be provided. The credit must be credit that is covered by the National Credit Code. Common types of credit contracts include personal loans, credit cards, small-amount loans, housing loans (including for residential investment property) and contracts for the sale of goods or land by instalments. Credit contracts also include: (a) low cost credit contracts (see RG 281.7–RG 281.10); and (b) buy now pay later contracts (see RG 281.11–RG 281.15). Note: ‘Credit contract’ is defined in s4 of the National Credit Code. Sections 10-12 of the Code apply when deciding whether a contract for sale of goods or land by instalments is a credit contract. What is a ‘consumer lease’? RG 203.15 Under the National Credit Code, a consumer lease is a contract for the hire of goods that is entered into by a natural person or strata corporation (i.e. a consumer) and under which the consumer does not have a right or obligation to purchase the goods. For a consumer lease to be regulated under the National Credit Code: (a) the goods must be wholly or predominantly hired for personal, domestic or household purposes; Page 8 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 8 (b) the fees and charges payable under the consumer lease must exceed the cash price of the goods; (c) the lessor must hire out the goods in the course of carrying on a business of hiring out goods carried on in Australia or as part of, or incidentally to, any other business of the lessor carried on in Australia; and (d) the borrower must not have a right or obligation to purchase the goods. Note: See s169–171 of the National Credit Code. If the condition in RG 203.15(d) is not met, the contract may be a contract for sale of goods by instalments, and so regulated as a credit contract. RG 203.16 An example of a consumer lease is a rental agreement for furniture or whitegoods where ownership of the furniture or whitegoods never passes to the consumer. In contrast, a lease containing a right or obligation to purchase the goods, such as a hire-purchase agreement, is regulated as a credit contract, not a consumer lease. What is the purpose for which the credit or consumer lease is provided? RG 203.17 If the credit is provided or goods are hired wholly or predominantly for business or investment purposes (other than investment in residential property), the National Credit Code will not apply. For example: (a) businesses often use leases to hire goods such as cars, plant and equipment; and (b) a person may obtain credit to use in a business, such as to purchase equipment to be used in the business. RG 203.18 The National Credit Code and the National Credit Act do not apply to such leases and credit, even if the lessee or borrower is a natural person, because they are for business purposes. RG 203.19 Credit that is obtained by a consumer for the purpose of an investment (e.g. the purchase of shares or interests in managed investment schemes) is generally not covered by the National Credit Code, unless the investment is in residential property. Meaning of ‘predominantly’ RG 203.20 Credit is defined as provided ‘predominantly’ for a particular purpose if more than half of the credit is intended to be used for that purpose. Note: See s5(4)(a) of the National Credit Code. Page 9 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 9 Example 1: Credit to purchase a number of goods A person obtains a personal loan of $20,000. They intend to use $15,000 to purchase household goods, and $5,000 to purchase shares as an investment. As more than 50% of the credit is intended to be used for a personal, domestic or household purpose, the National Credit Code will apply to this provision of credit. RG 203.21 If the credit is to be used to obtain goods or services that will be used for several purposes, the purpose for which the goods or services are intended to be most used is the predominant purpose. Note: See s5(4)(b) of the National Credit Code. Example 2: Credit to purchase a car for both personal and business use A person who has a small courier business obtains credit for the purpose of purchasing a car that is to be used both in the person’s business and for their own personal use. The person intends to use the car mostly (more than 50% of the time) for the courier business. The National Credit Code will not apply to the provision of this credit. Is the credit provider or lessor carrying on a business in Australia? RG 203.22 The National Credit Code will only apply to a provision of credit or consumer lease if the credit provider or lessor provides the credit or hires out goods: (a) in the course of a business of providing credit or hiring out goods carried on in Australia; or (b) as part of, or incidentally to, any other business of the credit provider or lessor carried on in Australia. Note: For the definition of ‘carried on in this jurisdiction’, see s204 of the National Credit Code, which incorporates the definition in s12 of the National Credit Act. This definition also applies Div 3 of Pt 1.2 of the Corporations Act 2001 (Corporations Act) for the purpose of working out whether a business is carried on in this jurisdiction. We have published guidance about this in Regulatory Guide 121 Doing financial services business in Australia (RG 121) at RG 121.41-RG 121.50. This guidance may be useful for deciding whether you, or the credit provider or lessor who provides the credit or hires the goods in relation to which you engage in activities, are carrying on a business in Australia for the purpose of the National Credit Code and the National Credit Act. RG 203.23 This means that the National Credit Code may apply to a credit contract or consumer lease even if the credit provider or lessor does not regularly provide credit or hire out goods. It is sufficient that the credit provider or lessor carries on some other business in Australia, and provides credit or hires out goods as part of, or incidentally to, that other business. Page 10 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 10 Example 3: Store owner providing ‘book up’ arrangements The owner of a general store offers a customer a ‘book up’ arrangement to pay for goods purchased at the store. Under this arrangement, the customer receives the goods now and pays for them later. The store owner charges the customer a fee to use this arrangement. The store owner operates a business in Australia—the operation of the general store. The credit that is provided under the book up arrangement is provided as part of, or incidentally to, the business of operating the general store. The book up arrangement will be a provision of credit to which the National Credit Code applies, even if the store owner only occasionally provides such arrangements. Example 4: Vendor of land under instalment contract A land owner enters a contract for sale of land by instalments, which involves a provision of credit. The landowner is a natural person and is only selling one parcel of land. The landowner also runs a real estate business, but is selling their own land as a private individual. The landowner is unlikely to be considered to be carrying on a business of providing credit. Although the landowner carries on another business, this contract is not entered as part of, or incidentally to, that business. Accordingly, the National Credit Code is not likely to apply to this contract. However, if the landowner subdivided their land and sold a number of parcels of land using instalment contracts that involve the provision of credit, they are more likely to be considered to be carrying on a business of providing credit. RG 203.24 A credit provider or lessor will be carrying on a business in Australia if, in the course of carrying on the business, they engage in conduct that: (a) is intended to induce people in Australia to use the goods or services the credit provider or lessor provides; or (b) is likely to have that effect. RG 203.25 A credit provider or lessor does not need to have a physical presence in Australia to be treated as carrying on a business in Australia. It is sufficient, for example, if the credit provider or lessor uses the internet or intermediaries to provide credit or hire out goods to consumers in Australia: see para 8.17 of the Explanatory Memorandum. Note: Foreign entities may apply for a credit licence but must meet additional requirements regarding the appointment of a local agent for legal processes: see reg 8 of the National Consumer Credit Protection Regulations 2010 (National Credit Regulations). RG 203.26 If one, but not all, of the borrowers or lessees in a particular credit contract or consumer lease is in Australia, then the business is carried on in Australia and the provision of credit or the consumer lease is subject to the National Credit Code. Page 11 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 11 RG 203.27 The National Credit Code and the National Credit Act apply to acts and omissions taking place outside Australia if those acts or omissions relate to credit contracts or consumer leases to which the Code applies. An example of this is the operation of an off-shore back-office that deals with credit contracts or consumer leases to which the National Credit Code applies. RG 203.28 Credit or consumer leases provided in the course of a business carried on outside Australia will not necessarily be subject to the National Credit Code, even if the credit provider or lessor also carries on a business in Australia. For example, a person may operate a business in Australia and also provide credit outside Australia that has no connection to that business. In this case, the National Credit Code may not apply because the person does not provide credit in the course of, as part of, or incidentally to a business carried on in Australia. Exclusions from the National Credit Code RG 203.29 Some types of credit and consumer leases are excluded (either wholly or partially) from the application of the National Credit Code. The licensing requirements do not apply to activities in relation to these types of credit and consumer leases: see Table 2 (Appendix 2). Note 1: For exclusions from the National Credit Code, see s6 (credit) and s171 (consumer leases) of the Code, and associated regulations. We may also exclude a provision of credit or a consumer lease from the Code: see s6(14) and (17) and s171(4) and (6). Note 2: Certain exclusions do not apply to low cost credit contracts (see RG 281.7– RG 281.10 and buy now pay later credit contracts (see RG 281.11–RG 281.15). RG 203.30 If an exclusion from the National Credit Code ceases to apply because of a change to the terms of an existing contract, you should consider whether you need to be licensed before engaging in credit activities in relation to that contract. Page 12 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 12 C Am I engaging in credit activities for which I need to be licensed? Key points There are two broad categories of credit activities for which you may need to be licensed: • activities relating to the provision of a credit contract or consumer lease, and securing obligations under contract contracts; and • credit services. Credit activities covered by these broad categories are: • providing credit under a credit contract; • being a lessor under a consumer lease; • benefiting from mortgages or guarantees relating to a credit contract; • exercising the rights or performing the obligations of a credit provider, lessor, mortgagee or beneficiary of a guarantee; • suggesting a consumer apply for a credit contract or consumer lease, or an increase to a credit limit; • assisting a consumer to apply for a credit contract or consumer lease, or an increase to a credit limit; • acting as an intermediary to secure provision of a credit contract or consumer lease for a consumer; and • providing other prescribed credit activities. What is a credit activity? RG 203.31 There are two broad categories of credit activities for which you may need to be licensed: (a) activities relating to the provision of a credit contract or consumer lease, and securing obligations under contract contracts—these types of credit activities are outlined in more detail in RG 203.32–RG 203.55; and (b) credit services—these type of credit activities are outlined in more detail in RG 203.56–RG 203.77. Note 1: The full list of activities that are ‘credit activities’ is set out in the table in s6. Note 2: The definitions of ‘credit contract’ and ‘consumer lease’ incorporate the definitions of these terms in s4 and Pt 11 of the National Credit Code. The terms ‘credit contract’ and ‘consumer lease’ used in the National Credit Act therefore only cover those credit contracts and consumer leases to which the National Credit Code applies. For more information, see Section B. Note 3: From 10 June 2025, the meaning of ‘credit’ includes credit that is provided under a low cost credit contract or a buy now pay later contract. For more information, see s13D and s13E of the National Credit Code, and RG 281.7–RG 281.15. Page 13 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 13 Credit activities relating to the provision of credit contracts and consumer leases RG 203.32 This category generally covers: (a) providing credit under a credit contract; (b) being a lessor under a consumer lease; (c) benefiting from mortgages or guarantees relating to a credit contract; and (d) exercising the rights or performing the obligations of a credit provider, lessor, mortgagee or beneficiary of a guarantee (either as, or on behalf of, the credit provider, lessor, mortgagee or beneficiary). Providing credit under a credit contract RG 203.33 Credit providers engage in credit activities by being ‘a credit provider under a credit contract’, and by ‘carrying on a business of providing credit to which the National Credit Code applies’. Note: See the definition of ‘credit activity’ in items (1)(a) and (b) of the table in s6. A ‘credit provider’ is a person who provides credit or who intends to provide credit. For a definition of ‘credit provider’, see s5, which incorporates the definition in s204 of the National Credit Code. RG 203.34 Some common types of credit provider include banks, credit unions, building societies, finance companies, small-amount lenders and vendors offering sales contracts by instalment (e.g. hire-purchase agreements). A credit provider may be an individual. RG 203.35 You are also a credit provider if you are legally assigned the rights of a credit provider under a credit contract: see s10. This is because you become the person to whom the debt under the credit contract is legally owed, and can take action to recover payment in your own name and without the agreement of the original credit provider. RG 203.36 An example is when a credit provider sells a debt to a third party debt collector. If the debt is legally assigned to the debt collector, the assignee becomes the person who legally owns the debt and to whom the consumer must make repayments. The assignee debt collector is now the credit provider, and so needs to be licensed. The original credit provider would no longer be considered the credit provider because the debt is no longer legally owed to them. For more information about assignment of rights of a credit provider, see RG 203.51–RG 203.55. RG 203.37 Once you have entered a credit contract as a credit provider, you will continue to be the credit provider under that contract for so long as you are the person to whom the debt is legally owed. This means you will still be engaging in credit activities as a credit provider if you receive or are entitled Page 14 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 14 to receive payments under an existing credit contract, even if you do not enter any new credit contracts. RG 203.38 If you wish to cease being a credit provider, you may need to sell your existing loan book and novate, or legally assign your rights under, your existing credit contracts. If you assign your rights under existing credit contracts in order to cease engaging in credit activities for which you need to be licensed, you should make sure that: (a) the assignment of the debt under the credit contract is a legal assignment; (b) you do not continue to be the mortgagee or beneficiary of a guarantee that secures or guarantees obligations under the credit contract; and (c) there is no possibility that the debt could be reassigned to you (e.g. if the assignment entitles the assignee to reassign the debt to you in specified circumstances). RG 203.39 Conduct you engage in before entering into a contract with a consumer may be the credit activity of ‘carrying on a business of providing credit’. You may therefore need a credit licence to advertise your lending facility or to negotiate a credit contract. Providing consumer leases RG 203.40 Lessors engage in credit activities by being ‘a lessor under a consumer lease’, and by ‘carrying on a business of providing consumer leases to which the National Credit Code applies’. Note: See the definition of ‘credit activity’ in items (3)(a) and (b) of the table in s6. RG 203.41 A lessor is a person who hires goods to another person. You are also a lessor if you are legally assigned the rights of a lessor under a consumer lease: see s10. This is because you become the person to whom the payments under the consumer lease and the right to return of the goods at the end of the lease are legally owed, and you can take action to recover payment or return of the goods in your own name and without the agreement of the original lessor. Note: For a definition of ‘lessor’, see s5, which incorporates the definition in s204 of the National Credit Code. RG 203.42 Conduct you engage in before entering into a consumer lease with a consumer may be the credit activity of ‘carrying on a business of providing consumer leases’. You may therefore need a credit licence to advertise your services or to negotiate a consumer lease. Page 15 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 15 Benefiting from mortgages and guarantees relating to credit contracts RG 203.43 The performance by a consumer of the payment obligations under a credit contract may be secured using a mortgage or guarantee. Note: ‘Mortgage’ is defined in s204 of the National Credit Code, and includes:  any interest in, or power over, property securing obligations of a debtor or guarantor;  a credit provider’s title to land or goods subject to a sale by instalments; and  a mortgage taken to have been entered under s9(3) of the National Credit Code (where the credit contract is a goods lease under which the hirer has a right or obligation to purchase the goods). RG 203.44 A mortgagee (generally the credit provider) engages in credit activities if the mortgage is covered by the National Credit Code. A mortgage will be covered by the National Credit Code if: (a) it secures obligations under a credit contract, which is itself covered by the Code, or a related guarantee; and (b) the mortgagor (the debtor under the credit contract) is a natural person or a strata corporation. Note 1: See item 4(a) in the table in s6. Note 2: The National Credit Code defines mortgages to which it applies in s7 and 204 of the Code. ‘Mortgagee’ is defined in s5 of the National Credit Act. RG 203.45 A beneficiary of a guarantee (generally the credit provider) engages in credit activities if the guarantee is covered by the National Credit Code. A guarantee is covered by the National Credit Code if: (a) it guarantees obligations under a credit contract, which is itself covered by the Code; and (b) the guarantor (i.e. the person who gives the guarantee) is a natural person or a strata corporation. Note 1: See item 5(a) in the table in s6. Note 2: The National Credit Code defines the guarantees to which it applies in s8 and 204 of the Code. ‘Beneficiary of a guarantee’ is defined in s5 of the National Credit Act. RG 203.46 If you receive, by legal assignment, the rights of a mortgagee or beneficiary of a guarantee, you will be regarded as the mortgagee or beneficiary of the guarantee and required to hold a credit licence: see s10. RG 203.47 A mortgagee or beneficiary of a guarantee may be someone other than the credit provider. For example, where a person legally assigns a debt but only equitably assigns rights under the mortgage that secures repayment of the debt, the person will continue to be the mortgagee but will no longer be the credit provider. In this case, both the mortgagee and the credit provider will need a credit licence. Page 16 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 16 Performing obligations or exercising rights of a credit provider, lessor, mortgagee or beneficiary of a guarantee RG 203.48 Credit providers, lessors, mortgagees and beneficiaries of guarantees have: (a) contractual obligations (e.g. the obligation to provide credit on request by the consumer under a continuing credit contract); (b) statutory obligations (e.g. the responsible lending obligations in Ch 3 of the National Credit Act and obligations under the National Credit Code); and (c) contractual rights (e.g. the right to repayment of a debt and to take action to recover repayment of the debt, and the right to determine the interest charge on a debt). RG 203.49 The performance of these obligations, and exercise of these rights, is a credit activity. You will engage in this credit activity whether you: (a) are the credit provider, lessor, mortgagee or beneficiary and perform the obligations or exercise the rights yourself; or (b) perform the obligations or exercise the rights on behalf of the credit provider, lessor, mortgagee or beneficiary (i.e. as their agent). Note: See items 1(c), 3(c), 4(b) and 5(b) in the table in s6. RG 203.50 For example, a person who demands and receives payments owed under a credit contract or enforces rights to take possession of goods secured by a mortgage will engage in this credit activity. If the person is the original credit provider or has been legally assigned the debt, the person will exercise this right on their own behalf and will need a credit licence. If the person has been engaged by the credit provider to collect the payments for them, the person will exercise this right on behalf of the credit provider. In this case, the agent will need to either hold a credit licence, or be authorised by the credit provider to engage in this credit activity on their behalf: see Section D. Note: Some debt collectors are exempt from the requirement to be licensed: see reg 21 of the National Credit Regulations. For more information, see Table 3 (Appendix 3). Assignees of rights of credit providers, lessors, mortgagees and beneficiaries of guarantees RG 203.51 If you receive, by legal assignment, the rights of a credit provider, lessor, mortgagee or beneficiary of a guarantee, you will be regarded as the credit provider, lessor, mortgagee or beneficiary under the National Credit Act: see s10. This is because you become the person to whom a debt or payment is legally owed, and who is entitled to take action to recover payment. You must hold a credit licence if you engage in the credit activities described in RG 203.32–RG 203.50. Page 17 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 17 RG 203.52 For example, if a credit provider (the original credit provider) sells its loan book to you and legally assigns to you its rights to repayment of the debt, you become the credit provider. The original credit provider ceases to be the credit provider in relation to that credit contract from the time that the assignment takes effect. You will be engaging in credit activities and will need to hold a credit licence. RG 203.53 To legally assign a debt or other legal chose in action (i.e. under the common law, a right that is enforceable by an action or a right to take action that can be legally recovered or enforced), the credit provider must meet the requirements of the state and territory conveyancing and property law legislation. Generally, to be legally effective: (a) the assignment must be an absolute assignment of an existing debt or other legal chose in action; (b) the assignment must be made by writing; and (c) express written notice of the assignment must be given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim the debt or legal chose in action. RG 203.54 Although debts may be legally assigned, ongoing obligations may not be transferred in this manner. Some credit contracts or consumer leases may contain ongoing obligations on the lender. Where this is the case, the contract may need to be novated for the original credit provider to effectively transfer those obligations to the new credit provider and cease engaging in credit activities. Alternatively, the credit provider could consider whether the contract could otherwise be varied to cease the ongoing obligations. RG 203.55 If rights of a credit provider, lessor, mortgagee or beneficiary of a guarantee are only equitably assigned to you, you will not be regarded as being a credit provider, lessor, mortgagee or beneficiary. You do not legally own the right to payment, and cannot take action to recover payment, recover the hired goods, or discharge the debt or any mortgage once payment has been received, in your own name or without the agreement of the assignor. In this case: (a) the assignor will continue to be the credit provider, lessor, mortgagee or beneficiary of the guarantee and will still need to hold a credit licence; and (b) you may be exercising rights of the credit provider, lessor, mortgagee or beneficiary on behalf of the credit provider, and may also need to hold a credit licence. Page 18 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 18 Provision of credit services RG 203.56 You are providing a credit service if you: (a) give credit assistance to a consumer; or (b) act as an intermediary between a credit provider and a consumer (in relation to a credit contract) or between a lessor and a consumer (in relation to a consumer lease). Note 1: See s7. ‘Credit assistance’ is defined in s8 and covers ‘suggesting’ and ‘assisting’. ‘Acts as an intermediary’ is defined in s9. See also paras 2.36–2.43 of the Explanatory Memorandum. Note 2: Some types of credit services are exempt from the licensing regime. These are set out in Pt 2-4 of the National Credit Regulations. An overview of the licensing exemptions is set out in Table 3 (Appendix 3). RG 203.57 These credit activities are not mutually exclusive: you can provide credit assistance and act as an intermediary simultaneously. Provision of credit assistance RG 203.58 You are giving credit assistance to a consumer if, by dealing directly with a consumer or the consumer’s agent in the course of, as part of, or incidentally to a business carried on in Australia, you: (a) suggest that the consumer: (i) apply for a particular credit contract with a particular credit provider, or apply for a particular consumer lease with a particular lessor; (ii) apply for an increase to their credit limit on a particular credit contract; or (iii) remain in their current credit contract or consumer lease; or (b) assist the consumer to: (i) apply for a particular credit contract with a particular credit provider, or apply for a particular consumer lease with a particular lessor; or (ii) apply for an increase to their credit limit on a particular credit contract. RG 203.59 To be providing credit assistance, you must be dealing directly with either the consumer or the consumer’s agent. For example, if you deal with a relative who is acting on a consumer’s behalf, or if you deal with another intermediary who acts for the consumer, you will be assisting the consumer. RG 203.60 To be providing credit assistance you also need to be dealing with the consumer or their agent in the course of, as part of, or incidentally to a business carried on in Australia. Page 19 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 19 Suggesting RG 203.61 The term ‘suggest’ is not defined in the National Credit Act. We consider that it involves proposing to a consumer, or introducing into their mind, the idea that they should: (a) apply for a particular credit contract or consumer lease with a particular credit provider or lessor; (b) apply for an increase in that credit contract or consumer lease; or (c) remain in that credit contract or consumer lease. RG 203.62 We consider that ‘suggesting’ can extend to offering a consumer advice or making a recommendation that they follow one of the courses of action in RG 203.61(a)–RG 203.61(c). RG 203.63 Whether you are providing credit assistance by making particular suggestions may be affected by the circumstances in which your suggestions are made, including statements made and other conduct engaged in by you in the promotion of your services. RG 203.64 The following example illustrates that ‘suggesting’ will be credit assistance in some circumstances, while in other circumstances it will not be credit assistance. Example 5: Borrowing to finance residential property A suggestion to a consumer that they consider borrowing in order to finance residential property, but not referring to a particular credit provider or specific credit product, would not be ‘credit assistance’ under s8. However, a suggestion that a consumer approach a particular finance company or bank about a specific product would be credit assistance, even if the person making the suggestion does not arrange or help with setting up the credit contract. If the suggestion is to approach a particular credit provider who offers a very limited range of credit products, then it may still be credit assistance even though it does not mention the credit products specifically, given the limited choice of products available with that provider. In contrast, a suggestion to approach a range of specific credit providers, all carrying a wide range of credit products, would not be credit assistance unless the suggestion related to specific credit products offered by those credit providers. Note: Where the information given to the consumer constitutes a mere referral to a credit licensee or representative, the adviser may be able to rely on an exemption if they also disclose any benefits, such as commissions, they may receive for giving the referral: see regs 25(2), 25(2A) and 25(5) of the National Credit Regulations. Page 20 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 20 Financial and credit advisers RG 203.65 Financial and credit advisers will often provide budgeting and debt management advice. This can be in the context of providing personal financial advice, but can also be a discrete activity. It may involve considering particular credit products or providers. Note: The law exempts not-for-profit financial counselling services and registered debt agreement administrators from the requirement to hold a credit licence. Registered debt agreement administrators need to be registered with the Australian Financial Security Authority. This exemption is not extended to other commercial debt management services: see reg 20 of the National Credit Regulations. For more information, see Table 3 (Appendix 3). RG 203.66 This advice will not always be credit assistance, even though a particular course of action may be suggested. The following examples illustrate different situations in which financial advice may or may not be credit assistance. Note: Providers of financial advice should also consider whether the advice they give is ‘personal advice’ within the meaning of s766B of the Corporations Act, for which an Australian financial services (AFS) licence may be required. Further information on AFS licensing requirements may be found on our website. Example 6: Debt management A consumer approaches an adviser for advice about managing their debts after becoming redundant. The consumer does not seek advice on whether they should stay in their current credit contracts or not. The adviser suggests that, as a general principle, the consumer pay off the loans with the highest interest rate first. This advice is not credit assistance, even if the specific loans owed by the consumer are identifiable as particular credit products. If an adviser tells a consumer seeking advice about debt management that they can approach their credit provider to discuss renegotiating a loan on the basis of hardship, then this would not be credit assistance. However, it is credit assistance if the adviser: • suggests that the consumer remain in the existing credit contract; or • negotiates a new credit contract with the credit provider on the consumer’s behalf. Note: See s72 of the National Credit Code for more information about changes on the grounds of hardship. If an adviser suggests to or advises a consumer that they make extra payments to pay off their loans faster, or that they repay more than the minimum monthly payment on their credit cards, this would not be credit assistance. If the consumer has only one loan or credit card, such a suggestion or advice is still not credit assistance, even though it relates to a particular loan or credit card. However, if an adviser suggests that a consumer consolidate their credit cards (or other loans) to a specific card (or loan) with a low interest rate, Page 21 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 21 then this would be credit assistance. In contrast, a suggestion that a consumer review their multiple credit cards, consider cancelling them all, and then find the cheapest card suitable to the consumer’s needs would not be credit assistance. Note: Advice to a consumer that they pay off existing debts is not ‘suggesting’ under the National Credit Act because it does not suggest that the consumer apply for a new credit contract, apply for an increase under an existing credit contract or remain in an existing credit contract. Example 7: Advice about existing mortgages If a financial adviser prepares a financial plan that presupposes the continuation of an existing home loan, it is not credit assistance. However, if the adviser positively advises the client to continue in the current home loan then that is credit assistance. A consumer asks their financial adviser for advice about their existing home loan. The financial adviser suggests that the home loan may not be the best product for the consumer that is available in the market at that time and suggests that the consumer look at some other mortgage products and, if necessary, consult a mortgage broker for advice. This is not credit assistance because the advice is generic in nature, and is not about specific credit products or providers. The provision of information about market interest rates and desirable features of home loans would not be credit assistance if the financial adviser does not relate these to specific products in the market. If it is apparent that a consumer has a home loan with an interest rate set well above market rates, then advising the consumer of this and recommending the consumer make sure they have the most suitable home loan by consulting a licensed credit service provider (such as a finance broker or comparison website) would not be credit assistance. Example 8: Salary packaging A consumer approaches their financial adviser for advice about salary packaging in circumstances where their employer has a default arrangement with a particular credit provider. The consumer wants to know if they should use the default credit provider or use another credit provider. The financial adviser is not providing a credit service if they only provide information to the effect that different arrangements carry different features, and refer the consumer to a licensed credit service provider for further advice. However, if the adviser explains the different features or draws comparisons between them, then that is likely to be credit assistance. Note: Employment-related leases are not covered by the National Credit Code (s171 of the Code). If the salary package consists entirely of an employment-related lease, advice about it will not be credit assistance. RG 203.67 If you are a financial adviser and your advice amounts to credit assistance under the National Credit Act, you will need to hold a credit licence or be covered by a principal’s credit licence (unless you are otherwise exempt Page 22 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 22 under the National Credit Act). If you are not licensed or covered by a principal’s credit licence, you will need to ensure that you: (a) do not provide credit assistance; and (b) make it clear to the consumer, when discussing different types of credit products, such as loans or credit cards, that you are not recommending a particular loan or credit card and you are not licensed to advise on particular credit products. Assisting RG 203.68 You are also providing credit assistance if you assist a consumer to: (a) apply for credit relating to a particular credit contract or consumer lease; or (b) apply for an increase to the credit limit on a particular credit contract. RG 203.69 The term ‘assist’ is not defined in the National Credit Act. We consider that it involves helping the consumer to apply for a particular credit contract or credit limit increase. For example, you may be assisting a consumer to apply for a particular credit product if you help the consumer to: (a) negotiate the terms of a credit contract with a particular credit provider; or (b) complete the application form by providing guidance on what information to include in the application. RG 203.70 The level of help that you give to the consumer may affect whether you are regarded as ‘assisting’ the consumer to make an application. For example, if you merely give the consumer the credit provider’s application form, you may not be assisting. However, if you also explain questions asked in the form, identify and compile particular information to include in the application, or receive application payments to pass on to the credit provider, you may be providing credit assistance. Note: A person who is a clerk or cashier and who engages in some of these activities (such as receiving and passing on a payment together with a completed application form) in the ordinary course of their activities as a clerk or cashier may be covered by an exemption from the licensing requirements: see Table 3 (Appendix 3) and RG 203.122–RG 203.125 for more information. Acting as an intermediary RG 203.71 You are acting as an intermediary under the National Credit Act if, in the course of, as part of, or incidentally to a business carried on in Australia, you act as an intermediary between a credit provider or lessor and a consumer for the purpose of securing a provision of credit or a consumer lease for the consumer. Note 1: The term ‘acts as an intermediary’ is defined in s9. Page 23 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 23 RG 203.72 The term ‘intermediary’ is not defined in the National Credit Act. We consider that you may act as an intermediary between a consumer and a credit provider or lessor if you are an intermediate agent or ‘go-between’ who prepares or passes on information. To be engaging in the credit activity of ‘acting as an intermediary’ your role must also be, wholly or partially, engaged in for the purpose of securing a provision of credit or a consumer lease for the consumer. RG 203.73 You do not need to deal directly with the consumer or with the credit provider or lessor to be an intermediary. There may be a chain of intermediaries between the consumer and the credit provider or lessor. RG 203.74 The definition of ‘acts as an intermediary’ does not require your role to be in relation to a particular credit provider or lessor or a particular credit contract or consumer lease. You can be acting as an intermediary before the consumer has made a decision about what particular credit contract or consumer lease they should apply for. RG 203.75 Intermediaries can include: (a) persons who refer the consumer to another person who engages in credit activities, if this is done for the purpose of securing a provision of credit or a consumer lease for the consumer; Note: Some referrers may be able to rely on exemptions from the requirement to be licensed. For more information, see RG 203.110–RG 203.116. (b) finance brokers who, after recommending a particular credit contract, arrange the credit with a credit provider; Note: In this case, the finance broker is also likely to be providing credit assistance. (c) aggregators, where they act as a conduit between a broker and a credit provider in arranging the credit; and (d) mortgage managers and product designers, if they are involved in arranging the credit. RG 203.76 In general, if your activities are only engaged in after a credit contract or consumer lease has been secured by the consumer, you will not be acting as an intermediary because your activities will not be engaged in for the purpose of securing a credit contract or consumer lease for that consumer. For example, if you are involved in looking after the administration of a credit contract and mortgage for a credit provider, but you are not involved in securing credit for the consumer, you will not be acting as an intermediary (though you are likely to be engaging in other credit activities on behalf of the credit provider). RG 203.77 However, if your activities in relation to an existing credit contract involve securing a new provision of credit under that contract, you may be acting as an intermediary. For example, a deferral of an amount payable under an existing credit contract can be a further provision of credit. If you negotiate Page 24 REGULATORY GUIDE 203: Do I need a credit licence? © Australian Securities and Investments Commission October 2017 Page 24 on behalf of a consumer to obtain a change to an existing credit contract that involves a further provision of credit, you may be acting as an intermediary. Note: Although a deferral or postponement of repayments as part of a hardship variation may involve a new provision of credit under the existing credit contract, it would generally not constitute an increase to a credit limit under that credit contract. However, you may be providing credit assistance if, in the course of discussing with a consumer whether to seek a change to the contract, you suggest that the consumer remain in the contract (e.g. instead of applying for bankruptcy and terminating the contract). Example 9: Referral by a real estate agent A real estate agent refers a consumer to a finance broker to arrange finance for the purchase of a house. The agent is paid a ‘finder’s fee’ by the broker. The agent is likely to be acting as an intermediary between the consumer and a credit provider because they gave the referral for the purpose of securing a provision of credit for the consumer. It does not matter that the consumer has not yet made a decision about which credit provider to apply to. Note: Some referrers may be able to rely on exemptions from the requirement to be licensed. For more information, see RG 203.115–RG 203.121. Example 10: Comparison website A website provides comparisons of the rates and features of credit cards and home loans that are available, and refers users of the website to the credit providers for those products by using links to their websites and application forms. The operator of the website may be acting as an intermediary if they provide this information and the referrals for the purpose of securing a provision of credit for the consumer. The operator is more likely to be considered to be giving the information and referrals for this purpose if they receive a benefit based on the consumer applying for the credit card or home loan. Note: In some circumstances, operators of comparison websites could also be providing credit assistance. For example, the operator of the website may suggest a consumer remain in or apply for a particular credit product if the consumer is able to enter details of a current credit product for comparison with other credit products available in the market, and the comparison identifies the existing product or other particular products as being the best product for the consumer. However, websites that do not enable information to be tailored to a particular consumer (i.e. it is generic information that is available to all consumers, whether or not it can be sorted or filtered by the consumer to some extent by specifying particular parameters) are less likely to be considered credit assistance. Example 11: Financial adviser giving information to a credit provider A credit provider asks a consumer’s financial adviser to provide information about the consumer’s earnings, investments and financial commitments to verify information provided in an application for a personal loan. If the financial adviser provides factual information to verify the information already supplied to the credit provider by the consumer, they will not be acting as an intermediary. However, if the financial adviser provides additional inform