Overview

The ASIC Class Order [CO 10/249] was enacted in 2010 to address the need for the approval of external dispute resolution schemes for credit activities under the National Consumer Credit Protection Act 2009. This legislation was enacted by the Australian Securities and Investments Commission (ASIC), which is mandated to oversee financial markets and ensure compliance with consumer credit laws. The policy objective of the class order is to facilitate the resolution of disputes between credit licensees and consumers by approving specific external dispute resolution schemes. The order was developed after extensive consultation with industry stakeholders, including the publication of consultation papers and the preparation of a Regulation Impact Statement, to ensure that the approved schemes meet the necessary criteria for accessibility, independence, fairness, accountability, efficiency, and effectiveness.

Scope and Application

ASIC CLASS ORDER [CO 10/249] pertains to the approval of external dispute resolution schemes under the National Consumer Credit Protection Act 2009. This legislation applies to Australian credit licensees and their credit representatives, who are mandated to be members of an approved external dispute resolution scheme as per the Act. The scope of the Act encompasses the whole of Australia, as it operates under the authority of the Commonwealth. The primary objective of the class order is to specify the external dispute resolution schemes approved by the Australian Securities and Investments Commission (ASIC) for credit activities. As part of this, ASIC has approved two schemes: the Financial Ombudsman Service Limited and the Credit Ombudsman Service Limited. The class order is underpinned by consultations with industry stakeholders, which included the publication of consultation papers and a Regulation Impact Statement to ensure that the requirements reflect industry needs and best practices. This class order does not explicitly state any exclusions, exemptions, or thresholds, but it does rely on subordinate instruments such as the National Consumer Credit Protection Regulations 2010 to define the criteria for approving dispute resolution schemes.

Key Provisions

The ASIC Class Order [CO 10/249], made under the National Consumer Credit Protection Act 2009 (National Credit Act), is designed to facilitate compliance with the requirement that individuals and entities holding an Australian credit licence or credit representatives must be members of an approved external dispute resolution (EDR) scheme (section 11(1)(a), National Credit Act). This class order specifically approves two schemes: Financial Ombudsman Service Limited and Credit Ombudsman Service Limited (section 3). These schemes must cover disputes related to the credit activities undertaken by the licensee or credit representative, and be approved by the Australian Securities and Investments Commission (ASIC). When approving these EDR schemes, ASIC considers several factors as outlined in subregulation 10(3) of the National Consumer Credit Protection Regulations 2010. These factors include the accessibility, independence, fairness, accountability, efficiency, and effectiveness of the dispute resolution scheme. Any other relevant matter that ASIC deems necessary is also taken into account (subregulation 10(3), National Consumer Credit Protection Regulations 2010). Compliance with the requirements of this class order involves several obligations for credit licensees and credit representatives. They must ensure that they, and any associated representatives, are members of one of the approved EDR schemes. This membership is necessary to resolve disputes that may arise from credit activities, ensuring that there is a structured and fair mechanism for addressing consumer complaints and grievances. Failure to comply with the requirements of the class order can result in significant consequences. While the class order itself does not detail specific penalties, the broader National Credit Act outlines potential penalties for non-compliance with licensing and other regulatory requirements. For example, non-compliance with licensing provisions under the National Credit Act can result in substantial fines and potential criminal charges. Additionally, credit licensees and representatives who fail to comply with EDR scheme membership requirements may face enforcement actions from ASIC, which can include fines, public reprimands, and other regulatory sanctions. In summary, ASIC Class Order [CO 10/249] mandates that credit licensees and credit representatives must be members of approved EDR schemes to ensure effective dispute resolution. The order outlines the criteria for scheme approval, specifies the approved schemes, and includes consultation processes. Compliance with these requirements is essential to avoid regulatory repercussions and ensure fair treatment of consumers in credit-related disputes.