Australian Credit Licence

Hi Matt

So far, I too haven't been able to discover what the cost of the licence will be.

In relation to your one existing Instalment Contract, if you plan to not do anymore, you may be covered by Regulatory Guide 203.31 and not require a licence.  However it's early days and I certainly advise you look for assistance from the Vendor Finance Association of Australia and a real estate vendor finance specialist lawyer.

Cheers,  Paul

Hi Ryan

The National Consumer Credit Protection Act will come into effect on 1 July.  It looks like the only vendor finance technique that won't be covered by the new Act will be Lease/Options.  For the rest, you'll need a licence for all new transactions, after 1 July.  Also, there are provisions in the new Act for licence holders to appoint representatives.

Cheers,  Paul

Hi Kane

Sounds interesting.  Do you know if it includes both ACL authorisations, i.e.
1.  "Engage in credit activities other than as a credit provider", and
2.  "Engage in credit activities as a credit provider"?

Most Mortgage Brokers only need the first authorisation, so if the underlying ACL only has this authorisation, Mortgage Brokers will be fine.  Provided, of course that the Licensee provides adequate monitoring and supervision of it's Credit Representatives.

However Vendor Finance businesses need both authorisations, if they are going to sell their own properties with a vendor finance based loan.  If Vendor Financiers are considering becoming a Credit Representative I'd suggest they check their Licensee has both the authorisations.

It's quite possible the ACL licence holder mentioned by Kane has both authorisations.  This is just a suggestion that everybody considering becoming a Credit Representative do their due diligence.

Cheers,  Paul

Hi Glen

In relation to "researching options for investing", I'll assume your reference to "options" is a reference to using options for vendor finance.  If it's more along the lines of using options to control a property, while you get a DA, then the following isn't really what you need.

Here's an overview of how the National Consumer Credit Protect Act regulates some vendor finance:  

As one of Australia’s most experienced Vendor Finance lawyers wrote recently, “anyone serious about vendor finance cannot be a one trick pony – that is, do lease options only.“

The new National Consumer Credit Protection Act requires anybody or any company who “in the course of a business” provides consumer credit or consumer credit advice, to hold an Australian Credit Licence (ACL) or to be a Credit Representative (CR) of an ACL holder.

• You do not need ACL coverage if you only plan to use Lease/Options only..
• If you plan to use Instalment Contracts and/or vendor financed Mortgages in your vendor finance (VF) business, you need to be an ACL holder or a CR.
• All Vendor Financiers who intend to become VF Joint Venturers, or who desire to advertise on websites or in the media need to obtain an ACL or be authorised as a CR.

In an effort to get ACL coverage for as many Vendor Financiers as possible, the Vendor Finance Institute has released the ACL Application – Assistance Pack (ACL Pack) and our authorised Credit Representative Program.

I only know of one vendor finance educator that ran a 3 day course in Perth last year.  I'm not sure what's planned for 2011.

Cheers,  Paul

Hi Glen

In relation to your " Would  this be  a correct assumption????" I'd refer you to: