Once a business is registered, it can start appointing credit
representatives straight away. Jon Denovan looks at some of the
Representatives of licensees
Directors and employees (but not secretaries) of licensees are
automatically representatives authorised to undertake credit
activities on behalf of the licensee. There is no need for any
further formal appointment or notification to ASIC.
For the technically minded, this derives from s29(3) NCCP
Act, which provides that employees or directors of a licensee
or a related corporation of the licensee don't need a licence
to act on behalf of the licensee.
Appointment of credit representatives
However, when a company is appointed as a credit representative,
the directors, and employees of the credit representative company
are not authorised to conduct credit activities.
Directors, employees, and any subcontractors of a credit
representative company need to be sub‑authorised by the
corporate credit representative. The corporate credit
representative requires consent from the licensee to do this. Only
natural persons can be sub-authorised. The sub‑authorised
credit representatives become credit representatives of the
licensee and not of the credit representative.
If a subcontractor loan writer of the credit representative
operates through a company, the licensee will need to appoint the
corporate subcontractor directly as credit representatives
can't sub-authorise companies.
Instead of the credit representative sub-authorising its
directors, employees, and any subcontractors, a licensee could
appoint those people directly. Licensees may prefer to keep control
over the appointment of credit representatives by not consenting to
any sub‑authorisations and appointing all credit
The licensee is responsible for notifying ASIC about
appointments and variations to credit representatives directly
appointed, but the credit representative company is responsible for
notifying ASIC of appointments and changes to
sub‑authorised credit representative.
Sub-authorised directors and employees of a credit
representative company can rely on the company's EDR
membership. However, contractors who are sub-authorised will need
their own EDR membership. This derives from section 65(6) of the
NCCP Act, which provides that a
sub‑authorisation is void unless the natural person is a
member of an EDR scheme. However, regulation 16 of the NCCP
Regulations adds the proviso that the natural person doesn't
need to be a member of an EDR scheme if the natural person is an
employee or director of the credit representative.
Although ASIC has not yet made its final decision in relation to
PI insurance, it appears that credit representatives (including
sub‑authorised credit representatives) could be covered
by the licensee's PI insurance, or a combination of the
licensee's insurance and separate insurance affected by each
What about appointment of credit representatives before a
licence is granted?
Once a business is registered, it can proceed with appointing
credit representatives (i.e. both before and after 30 June 2010).
The appointment only takes effect from 1 July 2010 when the NCCP
When the registration converts to a licence, the credit
representatives appointed while registered automatically become
credit representatives of the licensed business.
For the technically minded, the authority for the appointment of
credit representatives at any time after registration is effected
appears in section 32A and s33(1) of the NCCP (Transitional and
Consequential Provisions) Act.
Businesses should review their standard form contracts for unfair terms to ensure they do not fall foul of the new laws.
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