Consumer lending in Australia is regulated by the NCCP Act, which includes the National Credit Code (NCC), and the NCCP Regulations.

Under the NCCP Act, any persons that engage in a credit activity must hold an ACL. There are several exemptions from the requirements to hold an ACL including the making of business-to-business loans.

Responsible lending

Chapter 3 of the NCCP Act details the responsible lending obligations for credit licensees, which vary between different types of credit activity. Key obligations include giving a credit guide (when applicable) to collect and verify financial information about a prospective debtor and assessing the unsuitability of a credit contract for a particular consumer.

ASIC’s guidance regarding responsible lending is set out in Regulatory Guide 209: Credit licensing: Responsible lending conduct, which ASIC released in December 2019, to provide more specific guidance about responsible lending obligations.

External dispute resolution

All ACL holders and most AFSL holders must be a member of the Australian Financial Complaints Authority (AFCA) scheme, which is the mandatory external dispute resolution scheme for financial services providers.

By Andrew Fish, Principal