Consumer Credit: ASIC cancells two credit registrations

In the first deterrent actions since the coming into force of the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009, ASIC has cancelled the credit registrations of Dennis Ian Grant and Express Finance Solutions Pty Limited.

Background checks by ASIC revealed that Grant is an undischarged bankrupt, a fact that disqualifies him from holding a licence. In addition, Grant is company secretary of Express Finance Solutions Pty Limited although not a director. Further, ASIC's checks revealed that Express Finance Solutions is not a member of an approved dispute resolution scheme as required by the Act. In addition, ASIC found material false statements in the company's registration application.

Both have a right of appeal.

In addition to checking applications, ASIC has also begun its first nationwide surveillance activity to detect unregistered persons who provide regulated services.

Since 1 July this year, it has been an offence to engage in credit activities (e.g. acting as a lender, or as a credit broker) if not registered with ASIC.

The licensing process will take some time and, provided that brokers have submitted their registration application, they are permitted to continue to work until that application is determined. But that means that some who would not be granted a licence have some kind of cover for now.

That opens up the question as to the possibility of rogue applications having been made to provide a breathing space for unsuitable persons.

More than 14,000 people or businesses registered with ASIC before 30 June 2010 as a precursor to applying for a credit licence. Licensing is in progress and will be complete by 30 June 2011 or before, says ASIC. There's a long way to go: as of 23 September 2010, just 292 licences have been issued.

The maximum criminal penalties for operating without registration or a licence are AUD22,000 for individuals and AUD110,000 for corporations, or two years imprisonment, or both; or civil penalties of up to AUD220,000 for individuals and AUD1.1 million for corporations, partnerships or multiple trustees.