Once you have understood what is meant by ‘credit’ under the National Consumer Credit Protection Act 2009 (National Credit Act) and decided whether the activities you engage in will be regulated or if you wish to engage in these regulated activities, you will need to decide on the best option to address the implications of the National Credit Act for your practice. This is important to ensure that you are complying with the new legislation. There are four options that you can consider.
Option 1 – Apply for your own Australian credit licence (ACL)
A credit licence authorises you and your representatives to engage in the credit activities that are specified on your licence. To hold your own licence, ASIC requires the specific criteria to be met including the ‘responsible managers’ of the business to meet both education and experience requirements.
If you do not meet these requirements, it is unlikely that applying for your own licence will be something that you could consider in the first instance, however this may be something that you wish to pursue in the future.
Option 2 – Become an authorised credit representative
You or one of the existing members of the practice could become a credit representative. ASIC have set minimum training requirements for representatives working as mortgage brokers, however it is up to the credit licensee to determine the appropriate initial and ongoing training for all other credit representatives.
Selecting, agreeing terms and maintaining your relationship with the credit licensee is pivotal to this option and has ramifications across your business model, succession planning and the value of your business. However, this option could also be considered an intermediary step to obtaining your own ACL.
Option 3 – Recruit an authorised credit representative
You may wish to consider recruiting a credit representative into your business. This option requires a strong commitment, however it will provide a more comprehensive offer for your clients.
If you wish to consider this option, it is important that you employ someone who will suit your practice and will work well as part of your team. It should also be remembered that the credit representative will be responsible to the credit licensee.
Option 4 – Refer your consumer credit business
Another option is to refer all consumer credit queries to a licensed credit representative.
Even if you decide to simply avoid activities covered under the National Credit Act you should still have a credit solution to address the risk that your clients may become dissatisfied with the restricted services you provide.
It is also imperative that you know and understand what advice and services you can continue to offer to clients without being licensed.
As a public practitioner, you will need to address the implications of the National Credit Act on your practice to ensure you are complying with the new legislation. Licensing is one option and it ensures that you can provide a complete service and control how that service is delivered.
Which option is right for you will depend on your past experiences, current situation and the future goals for your business. CPA Australia has developed a quick quiz which may provide you with some insight as to which option may best suit you.