Australia: ASIC, the Loan Ranger of Australian credit laws

Last Updated: 17 October 2016
Article by Dorota Bryks

If you are in the business of providing credit to consumers, you may have to comply with the laws and regulations as set out in the National Consumer Credit Protection Act 2009 (Cth) (NCCPA), which include the National Credit Code (Code) (together, 'Australian credit laws').

Traditional loans, sale by instalment, or lease of goods with an option to purchase are examples of consumer credit that may be covered by the Australian credit laws.

In order to determine what Australian credit laws a lender must comply with, the lender must ask one crucial question – is the lender providing credit to consumers under a 'credit contract' as that term is defined in the Australian credit laws? If the answer is yes, then the lender must comply with a variety of obligations set out in the Australian credit laws, including the requirement to hold an Australian credit licence and engage in 'responsible lending conduct'. For an overview of applicable responsible lending conduct, see our article 'A warning to the credit industry: lend responsibly!'

When do the Australian credit laws apply?

The Australian credit laws apply to the provision of credit if when a 'credit contract' is entered into or proposed to be entered into:

  • the debtor is a natural person or a strata corporation; and
  • the credit is provided or intended to be provided wholly or predominantly:
    • for personal, domestic or household purposes; or
    • to purchase, renovate or improve residential property for investment purposes; or
    • to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes; and
  • a charge is or may be made by the lender for providing the credit; and
  • the lender provides the credit in the course of or incidental to a business of providing credit that it carries on in this jurisdiction.

Satisfying the test is simply a matter of considering the real life circumstances under which the credit is provided, the contract and the terms. If the above characteristics apply to a supply of credit, then a credit contract has been formed and consumer credit has been extended. In these cases, the lender must comply with the Australian credit laws, unless the arrangement satisfies one of the exemptions.

Obligations pursuant to Australian credit laws

Lenders of consumer credit, where the arrangement is not exempted by the Code, must comply with the obligations set out in the Australian credit laws. These obligations may include:

  • licensing requirements;
  • general conduct requirements (such as competence and training, financial requirements, dispute resolution, compensation and insurance and trust accounts);
  • responsible lending requirements; and
  • specific consumer lease and credit contract disclosure requirements.

There is continuing priority for the vulnerable and disadvantaged, particularly the elderly and those who have recently arrived in Australia.

Penalties for non-compliance

ASIC can issue infringement notices with penalties for contraventions of Australian credit laws. Unlicensed trading or failure to comply with your credit obligations could mean individual fines of up to $220,000 or $1.1 million for a business. Criminal penalties of up to two years' imprisonment may also apply.

Recent penalties

  1. Nimble Australia Pty Ltd was ordered by ASIC to refund consumers more than $1.5 million after failing to meet its responsible lending obligations, including for failing to properly assess the financial circumstances of consumers before providing them with loans.
  2. Make it Mine Finance Pty Ltd was stung with a $1.25 million fine after it failed to disclose important information to its customers, breached various responsible lending obligations and operated for a period whilst unlicensed.
  3. Capital Finance Australian Pty Ltd was hit with a fine of nearly half a million dollars' penalty for breaching the Code when it failed to provide consumers with default notices prior to commencing enforcement proceedings and failed to provide consumers with the information regarding their rights within required timeframes after repossessing their motor vehicles.
  4. BMW Australia Finance Ltd was issued with 22 infringement notices to the sum of $391,000 and a condition was placed on its Australian credit licence for breaches of responsible lending obligations, including a failure to make reasonable inquiries and verify information given as to consumer's living expenses, income, and cash savings where discrepancies existed.
  5. Fair Go Finance Pty Ltd was handed a $34,000 fine by ASIC and ordered to return $34,500 to affected customers for overcharging interest and establishment fees on payday loans.
  6. Rescue Credit Pty Ltd had to repay over $35,000 to consumers after it was found to have imposed fees and charges in excess of those allowed under Australian credit laws.

If you provide credit for home loans, personal loans, credit cards, consumer leases, lease of goods with option to purchase/sale by instalments, overdrafts, line of credit accounts or for other purposes that are captured by the Australian credit laws, it is imperative that you are not only aware of your obligations as a lender of consumer credit, but strictly comply with them.

In our experience, we have found that it is always better for individuals and businesses that are unsure of their legal obligations to err on the side of caution and seek legal advice to avoid ASIC coming after them for non-compliance.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.