NCCP Regulation Amendments - Referrers
As you will be aware MFAA has been working over the past few weeks with Treasury and ASIC on a workable method by which brokers and lenders could work with referrers without referrers having to be licensed or a credit rep of a licensee. Without this all referrers would have had have to be been licensed or a credit rep and it would have been a breach of the NCCP to deal with an unlicensed referrer. Below is the media release announcing new regulations to give effect to this and to the position of temporary employees. MFAA will distribute details of the regulatory referrer exemption as soon as it is available.
NATIONAL CONSUMER CREDIT PROTECTION AMENDMENT REGULATIONS - REFERRERS AND TEMPORARY EMPLOYEES
The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP today announced minor changes to the National Consumer Credit Law with respect to the exemption of the referral of customers to banks and brokers from the requirement to hold an Australian credit licence (ACL).
These changes support current industry practice where non-credit businesses, like community or sporting organisations, refer customers' details to credit and credit assistance providers who may subsequently contact the customer.
The exemption will allow lenders and brokers to continue to obtain new business through existing referrer networks.
"Importantly, lenders and brokers will be able to continue to receive referrals from businesses while consumers remain protected under the National Consumer Credit Laws.
"However, a person must give their consent before their contact details can be passed on and banks and brokers can follow up such referrals."
The new regulations will also impose conditions and safeguards on referrers and businesses seeking to rely on such referrals, to ensure consumers are not harassed or pressured into credit they are not seeking.
In addition, lenders or brokers must meet certain obligations that ensure that referrers comply with the terms of the referral and will not act in a way that may be detrimental to consumers.
To further assist industry, the Government will provide a three month transitional period to adapt to the new arrangements. Therefore, some additional requirements which may require referrers and licensees to put in place new processes will not commence until 1 October 2010.
The Australian Securities and Investment Commission will monitor and where necessary, review the appropriateness of these proposed arrangements to safeguard against abuse. Further details of the new arrangements applying to referrers are attached.
Further changes include allowing temporary employees engaged by ACL holders or their credit representatives, to be treated as employees of the ACL holder. This will ensure that contractors or employment agencies will not need to be licensed if their employees engage in credit activities, provided that these persons are largely supervised and managed in the same way as the employees of the licensee. Further details will be announced after consultation with relevant stakeholders.
These changes will be effected by amendment to National Consumer Credit Protection Regulations 2010 and the National Consumer Credit Protection (Transitional and Consequential Provisions) Regulations 2010 proposed in July 2010.
ASIC has agreed not to take action against people and entities covered by the policy changes announced by the Minister, for failure to be registered in the short period up until the changes are implemented by Regulation.
Updates and further information on the new national consumer credit regimeare available at www.treasury.gov.au/consumercredit or www.asic.gov.au/credit.
MFAA - 09/11/2010
