Australian Credit Licence (ACL) obligations
If you engage in credit activities in Australia — lending, brokering, or leasing consumer credit — you need an Australian Credit Licence (ACL) and must comply with the National Consumer Credit Protection Act 2009. Non-compliance can result in licence cancellation, civil penalties, and criminal sanctions. This guide covers 10 core obligations.
Coverage
Lenders, mortgage brokers, finance brokers, credit assistance providers, and lessors who engage in credit activities with consumers. Credit representatives acting under a licensee are covered by their principal's ACL.
Legal basis
National Consumer Credit Protection Act 2009 (Cth) (NCCP Act), National Credit Code (Schedule 1), and ASIC regulatory instruments. ASIC is the regulator.
The obligations
Engage in credit activities efficiently, honestly, and fairly
Conduct the credit business efficiently, honestly, and fairly. This overarching conduct standard applies to all interactions with borrowers and guarantors.
Comply with responsible lending obligations
Make reasonable inquiries about the consumer's requirements, objectives, and financial situation. Verify the information and make an assessment that the credit contract is not unsuitable before entering it or increasing its limit.
Provide required disclosure documents
Give consumers a credit guide before providing credit assistance and, where relevant, a credit proposal disclosure document, quote, and pre-contractual statements in compliance with the National Credit Code.
Maintain internal and external dispute resolution
Operate an internal dispute resolution procedure that meets ASIC standards and hold membership of the Australian Financial Complaints Authority (AFCA) for external dispute resolution.
Handle hardship applications
Respond to hardship notices from consumers within the prescribed timeframes. Agree to a variation if the consumer can reasonably meet the varied obligations, or give written reasons for refusal.
Ensure competence of representatives
Take reasonable steps to ensure that credit representatives and employees are adequately trained and competent to engage in the credit activities authorised under the licence.
Maintain adequate financial resources
Hold financial resources sufficient to engage in the licensed credit activities and to carry out supervisory arrangements, including meeting the base-level financial requirements set by ASIC.
Report breaches and significant events to ASIC
Self-report breaches and likely breaches of the credit legislation to ASIC within 30 calendar days under the reportable-situations regime. Notify ASIC of changes to key persons and other significant events.
Keep adequate records
Maintain records of credit assessments, suitability assessments, disclosure documents, hardship applications, and complaints for at least 7 years from the date of the relevant credit contract.
Manage conflicts of interest
Have adequate arrangements for managing conflicts of interest, including commissions and volume-based payments that may influence the credit assistance provided to consumers.
What happens if you do not comply
Civil penalties up to $1.11 million per contravention for individuals and $11.1 million (or three times the benefit or 10% of turnover) for bodies corporate. ASIC can cancel or suspend an ACL, impose additional conditions, or issue banning orders.
Reporting requirements
Reportable situations within 30 calendar days. Annual compliance certificate lodged with ASIC. Notification of changes to key persons, business names, and contact details.
What firms should do today
- Document a responsible lending assessment process with clear file-note templates
- Establish a hardship team or procedure with defined response timeframes
- Keep a breach register and escalation procedure for reportable situations
- Conduct annual compliance audits aligned with ASIC RG 205
- Train all staff and credit representatives before they engage in credit activities
- Review commission structures annually for conflict-of-interest risks
Compliance with Quillio
Quillio helps credit licensees by surfacing responsible lending requirements, flagging incomplete assessments, and drafting hardship response letters. See /resources/security or start a free trial.
This guide is general information about ACL obligations — not legal, financial, or credit advice. Always consult a specialist credit compliance adviser for your specific situation.
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