ASIC CLASS ORDER [CO 10/249]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

National Consumer Credit Protection Act 2009

The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 10/249] for the purposes of paragraph 11(1)(a) of the National Consumer Credit Protection Act 2009 (the National Credit Act).

1. Background

Paragraph 47(1)(i) of the National Credit Act requires a person who holds an Australian credit licence to be a member of an approved external dispute resolution scheme. Paragraphs 64(5)(c) and 65(6)(c) of the National Credit Act also require a credit representative of a credit licensee to be a member of an approved external dispute resolution scheme.

Subitem 16(1) of Schedule 2 of the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 requires a registered person to be member of an approved external dispute resolution scheme.  

Subsection 11(1) of the National Credit Act states that a person is a member of an approved external dispute resolution scheme if the person is a member of one or more external dispute resolution schemes that:

(a)          is, or are, approved by ASIC; and

(b)          covers, or together cover, disputes in relation to the credit activities engaged in by the person or its representatives.

Under subregulation 10(3) of the National Consumer Credit Protection Regulations 2010, ASIC must take the following matters into account when considering whether to approve an external dispute resolution scheme:

(a) the accessibility of the dispute resolution scheme;

(b) the independence of the dispute resolution scheme;

(c) the fairness of the dispute resolution scheme;

(d) the accountability of the dispute resolution scheme;

(e) the efficiency of the dispute resolution scheme;

(f) the effectiveness of the dispute resolution scheme;

(g) any other matter ASIC considers relevant.

2. Purpose of the class order

The purpose of this class order is to approve external dispute resolution schemes for the purposes of paragraph 11(1)(a) of the National Credit Act.

3. Operation of the class order

Under the class order, ASIC approves:

(a) Financial Ombudsman Service Limited; and

(b) Credit Ombudsman Service Limited.

4. Consultation

Before making [CO 10/249], ASIC consulted with relevant industry stakeholders on ASICs approval requirements for external dispute resolution schemes. The consultation process included the publication of Consultation Paper 102 Dispute resolution – review of RG 139 and RG 165 in November 2008, which outlined ASICs proposals for our approval requirements of external dispute resolution schemes.  Consultation Paper 102 sought comments from stakeholders. 

ASIC prepared a Regulation Impact Statement for the policy changes following Consultation Paper 102, which was approved by the Office of Best Practice Regulation.

ASIC also consulted with relevant industry stakeholders on updating and refining ASIC’s approval requirements for external dispute resolution schemes for credit. The consultation process included the publication of Consultation Paper 112 Dispute resolution requirements for consumer credit and margin lending in July 2009, which outlined ASICs proposals for how we proposed to update and refine our approval requirements of external dispute resolution schemes for credit.  Consultation Paper 112 sought comments from stakeholders.