ASIC refuses credit licences for only four of 6,000 businesses

The Australian Securities and Investments Commission insists it is cracking down on shonky credit providers, despite refusing credit licences for only four of 6,081 businesses in the past year.

As part of the new national consumer credit laws, ASIC was given the task of making sure that those providing credit to consumers were appropriately qualified and licensed.

As of June 30, 6,081 businesses were granted licences, while only four applications were refused.

But ASIC commissioner Peter Boxall said in a statement that as the licensing regime “matures”, ASIC will take a less forgiving approach to unlicensed conduct.

“This will particularly be the case where people deliberately avoid regulation,” he said.

In the lead-up to June 30, ASIC declined around 400 applications because they were either incomplete or inadequate, while 637 applicants withdrew their applications before finalisation.

As part of the requirement for businesses to be licensed, the regulator has been assessing whether businesses have “fit and proper” employees, and meet new competency and training standards.

ASIC said it will also investigate whether some people are trading without a licence.

Since July 2010, ASIC has received almost 2,500 complaints on credit matters and has begun 105 investigations. It has already banned three individuals from engaging credit activities.

It has also cancelled or suspended five credit registrations or licenses, and issued one infringement notice. NSW and Victoria accounted for about 60% of these licensees.

Boxall says the figures should serve as a warning to small businesses.

“If you are getting credit, or getting advice or assistance on credit, make sure you deal with someone who has a credit licence or their authorised credit representative,” Boxall says.

“Consumers who want to check if a company or individual is registered or licensed can search our registers.”

Surveillance and compliance work by ASIC includes:

• A national program to identify unregistered and unlicensed credit activity.

  As part of this campaign, ASIC reviewed 5,000 advertisements in print, online, and on radio and TV to identify traders who were advertising that they provided credit but who were not registered, authorised or licensed to do so.

• Current focus on responsible lending in the home loan and payday lending markets, consumer leases for white goods and other domestic goods, and debt reduction and consolidation schemes.

A surveillance program in the coming year will identify traders who were initially registered to provide credit services but have not yet been authorised or licensed. ASIC is concerned these people may continue trading when they are not permitted to do so.