Regulation: Australia's ASIC forms plans for credit licensees

ASIC’s Consultation Paper 113 Competence and training for credit licensees explains how ASIC proposes to interpret the competence requirements as they apply to credit licensees.

There are two parts to the competence and training requirements of the new credit regime – competence at the licensee level (organisational competence) and training standards for representatives, including employees and agents of a licensee (representative training).

‘We are seeking feedback on our proposals on competence and training. Our final policy on these important topics will be shaped by our discussions with stakeholders. We encourage everyone who has an interest in this to provide ASIC with feedback’, ASIC Commissioner, Dr Peter Boxall said.

‘Our proposals aim to strike a balance between up-front guidance on our expectations and giving flexibility to industry. We recognise that the credit industry is diverse, and so competence and training needs will vary’, Dr Boxall said.

To assist industry and consumers in transitioning to the new regime, ASIC will publish a range of policy and guidance papers over the next six months.

After the legislation has been passed by the Australian Parliament, ASIC will release regulatory guides, taking into account comments received on these consultation papers, describing the competence obligations, licensing obligations and compensation and financial resources requirements for credit licensees.

The regime outlined in the National Credit Bill requires credit licensees to ensure that they and their representatives are adequately trained and competent to engage in the credit activities authorised by the licence.
Before granting a licence, ASIC must consider whether there is any reason to believe that certain people within the applicant's business (its ‘key people’) are not fit and proper. These key people are the directors, secretary and the senior managers of the applicant (or just the applicant, if they are a single natural person).

Under our proposals on assessing organisational competence, ASIC will look to the qualifications and experience of these key people and use this as a measure of the licensee’s competence. As a general rule, ASIC expects key people to have:

• a relevant qualification (either an industry specific course or a more general qualification), and
• at least two years relevant experience.

ASIC proposes to accept key people without relevant qualifications but with five years relevant experience in the credit industry over the last seven years until December 2013.

The licensee is primarily responsible for assessing the training needs of their representatives (which includes employees and agents) and ensuring they receive adequate initial and ongoing training. Because of the diversity of roles in the credit industry, ASIC proposes not to prescribe particular training for most credit representatives. Licensees will need to document their training regimes.

The exception is for mortgage broking representatives who we will expect to have a Certificate IV in Financial Services (Finance/Mortgage Broking). Existing mortgage brokers who do not have this qualification will be given until December 2013 to obtain it.

Source: ASIC