ACL – Micro lender and RM

[Archived User]

I am starting a company that will specialise in small short term loans. Loan amounts will under $500 and have duration of about one month. The first 12 months projection cater for less than 1 loan per week. As such I am a Mircro Lender. 

I am having issues obtaining a ACL as I do not hold the required qualifications or experience and my company lacks the turnover to employee a RM. (I want to be the RM)

Is there an exemption based on the small size of my company that will allow a provisional ACL till my company grows in size?

Any other suggestions on how I can obtain suitable experience/qualifications to become a RM while starting up my company?

Jeremy

[Megan Jaksa]

Hi Jeremy,

Thanks for your question. As you are aware, under the National Consumer Credit Protection Act 2009, anyone who engages in a credit activity must be licensed. There is no exemption for a company that is newly formed, nor for a company that has a low turnover. However, the requirement to hold an ACL may not apply if the credit you provide is limited to:

•    a total period that does not exceed 62 days; and

•    the maximum amount of fees and charges does not exceed 5% of the amount of credit; and

•    the maximum amount of interest that may be imposed does not exceed what would be payable if the annual percentage rate was 24% per annum.

If your proposed business meets these restrictions then you may not need an ACL.

However, the Consumer Credit Legislation Amendment (Enhancements) Act 2012 introduces new, stringent requirements around ‘short-term’ and ‘small amount’ credit contracts. The new regulations may impose a requirement to hold an AFSL as well as strict requirements around assessment and disclosure. We suggest you seek legal advice prior to commencing to provide credit services.

If your proposed business does require an ACL, and you do not meet the requirements to be an RM set out in Regulatory Guide 206, then ASIC is unlikely to grant you an ACL unless you hire a suitably qualified person. An alternative would be to approach an existing ACL holder and seek authorisation as an authorised credit representative. If you found a licensee willing to authorise you, then you could work up to two years of problem-free experience while studying for the Certificate IV. You could then consider applying for your own ACL when you meet ASIC’s requirements.

Please feel free to contact us if you require further information.

Author: Paul Derham

Co-contributor: Megan Jaksa

 

 

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