On 5 January 2007 the final part of the Finance Brokers Licensing regime in WA was gazetted removing the last hurdle facing businesses from obtaining a finance brokers licence in WA.
Finance broking businesses who conduct business in WA need to take action now to obtain a licence. Finance broking is widely defined and includes aggregators and mortgage managers. A licence is required even if only arranging or managing non-UCCC regulated credit.
What's new? – D class licences
New regulation 16(5a) provides for the issue of D class licences to individuals who do not satisfy the education and experience requirements for an A, B, or C class finance brokers licence in WA.
The new D class licence allows directors/partners of companies and partnerships to obtain a licence (thereby enabling the company or partnership to obtain a licence) when the directors/partners cannot satisfy the education and experience requirements provided the company or partnership has an A or B class licensee in bona fide control of the finance broking operations in WA of the business.
Prior to this amendment, a number of businesses who needed to be licensed in WA were unable to apply for a licence as their directors or partners did not meet the criteria.
Regulation 5A which commenced on 5 May 2006 removed the requirement to be resident in WA to obtain a licence. Applicants now need only to be resident in Australia.
Once the individuals hold the necessary licences, their licences can be attached to a company or partnership.
Does your business need a licence?
The MIAA/Gadens Regulation Module has been updated to reflect this change and provides a guide for businesses to determine whether a licence is required.
to see information solely dealing with the requirement to be licensed. click here to view the whole Regulation Module and see further information about WA requirements. click here to view DOCEP's site.
The Regulation Module provides guidance on the following topics.
What kind of businesses need to be licensed? The requirement is not limited purely to loan writers.
What transactions have sufficient nexus with WA to require a licence?
Once licensed, what rules apply?
Code of Conduct
The regulation scheme is administered by the WA Department of Consumer and Employment Protection (DOCEP). DOCEP is currently finalising further regulations to replace the existing outdated Code of Conduct. The proposed regulation will deal with the requirement for disclosures to customers including commission disclosure (usually contained in a finance broking contract). These regulations (Code) are expected to be released by March 2007.
It is likely that in the future, national regulation will require finance brokers and mortgage managers to be licensed. The WA licensing regime can be seen as a precursor to a national scheme. Put simply, if you do business in WA or with WA residents and you arrange loans you need to be licensed. The penalty for acting as a finance broker without a licence is $50,000, and an order can be made to prevent you continuing to trade. By Jon Denovan, Sydney.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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