From 1 February 2010, ASIC will accept AFSL applications, or
applications to vary an existing AFSL, from margin lenders or
margin loans advisers.
Existing margin lenders and margin loans advisers must apply
for an AFSL by 30 June 2010.
From 1 January 2011, the provisions of the Corporations Act
2001 apply to margin lenders and margin loans advisers.
From 1 July 2011, entities and individuals that provide
financial product advice on margin lending facilities must comply
with the training standing standards in ASIC Regulatory Guide
National Consumer Credit
Protection Act 2009
Between 1 April and 30 June 2010, persons engaged in
"credit activities" must apply to ASIC for registration
if they wish to continue to engage in credit activities after 30
Registered persons must apply for a credit licence between 1
July and 31 December 2010.
Trade Practices Amendment (Australian
Consumer Law) Bill
The unfair contracts provisions of the
Bill are expected to commence on 1 July 2010, although the Bill is
yet to be passed by Federal Parliament.
If you haven't already done so, now is the time to consider
the impact of this legislation on your organisation. Here are some
initial steps you can take and issues you may wish to consider:
Most margin lenders and margin loans advisers supply or advise
on other financial products and as a result, will already hold an
AFSL. If this applies to you, you can apply to vary your existing
licence to include margin lending by completing and lodging ASIC
form FS03 online.
Regulatory Guide 2 AFS Licensing Kit: Part 2 - Preparing
your AFS licence application and Regulatory Guide 3 AFS Licensing
Kit: Part 3 - Preparing your additional proofs have been
updated to take into account the inclusion of margin lending
facilities as a financial product.
The first step is to determine whether or not a credit licence
is required. ASIC Regulatory Guide 203 Do I need a credit licence
explains what constitutes "credit activities".
Regulatory Guide 202 Credit registration and transition details
the registration process. RG 202 suggests that applicants take the
following steps before they begin preparing their
If you are a company or an AFS licensee, make sure your details
on ASIC's registers are correct. An online application for
registration cannot be completed until the registers are up to
Become a member of an ASIC approved external dispute resolution
(EDR) scheme. An applicant cannot complete their application until
they are a member of an EDR scheme.
In the registration application, you will need to make
statements about the past conduct of directors, company
secretaries, partners and trustees. In order for an applicant to be
able make these statements, background checks of directors, company
secretaries, partners and trustees must be conducted prior to
completing the application.
It is important to note that unless ASIC has approved your
application for registration by 30 June 2010, you will not be able
to continue to engage in credit activities after this date. ASIC
has stated that if an application for registration is lodged by 18
June, it will be able to make a decision on that application by 30
The Trade Practices Amendment (Australian Consumer Law) Bill,
which prohibits unfair contracts, is yet to pass Federal
Parliament. This means there may only be a few months between the
passing of the legislation and the provisions coming into force.
Given the difficulties this may pose, here are some suggested steps
you can take now to prepare for the new requirements:
Collate all contracts currently used in consumer transactions.
The new legislation will only apply to standard form "consumer
contracts" - that is, contracts for the supply of goods or
services or the sale or grant of an interest in land to an
individual who makes the acquisition wholly or predominantly for
personal, domestic or household use or consumption.
Identify provisions in these contracts that may require
revision, based on the requirements of the Bill.
Consider the timeframe and resources you will require to comply
with the legislation, once the Bill is passed.
More changes are on the way
In addition to those discussed above, further legislative
changes affecting financial services providers are expected in
2010. For example, this year the Federal Government is expected to
introduce legislation to implement the first stage of amendments to
the Privacy Act 1988. These amendments will include amendments
allowing for more comprehensive credit reporting.
We look forward to keeping you informed of new developments as
and when they occur.
For further information, please contact Randal Dennings or
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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