ASIC Class Order [CO 11/926]

Overview

ASIC Class Order [CO 11/926], enacted in 2011, provides exemptions from certain credit licensing requirements under the National Consumer Credit Protection Act 2009 for non-government organisations (NGOs) that offer credit assistance to consumers. The objective of this class order is to facilitate the provision of financial assistance to consumers, particularly in rural areas, by reducing regulatory burdens on NGOs that provide such services. This legislative instrument was prepared by the Australian Securities and Investments Commission (ASIC) and came into effect on 15 December 2011, as registered under the Legislative Instruments Act 2003. The class order specifies exemptions for rural financial counselling service providers, which must meet certain conditions, such as providing services as part of a rural financial counselling service, not charging consumers, and ensuring that representatives have adequate skills and knowledge. This exemption aims to support NGOs in delivering credit assistance without the need for an Australian credit licence, thereby enabling them to focus on providing necessary financial support to consumers in rural areas.

Scope and Application

ASIC Class Order [CO 11/926], enacted under section 109(3)(a) of the National Consumer Credit Protection Act 2009, provides specific exemptions for non-government organisations (NGOs) involved in rural financial counselling. This exemption applies to entities that offer credit assistance to consumers as part of their rural financial counselling services, provided they meet certain conditions. These conditions include ensuring that no fees or charges are imposed on the consumer for the credit assistance or any other aspect of the service, and that no remuneration is received by the service provider or their associates from any person in relation to actions taken on behalf of the consumer. Additionally, the rural financial counselling service provider must not engage in credit activities requiring an Australian credit licence, except for the specific activities covered by this exemption. The provider must also ensure that all representatives who provide credit assistance have undergone appropriate training to possess adequate skills, knowledge, and experience. The exemption extends nationally and applies to entities funded by the Commonwealth or the State of Queensland to provide rural financial counselling services. This legislative instrument is subject to amendments, as indicated by the subsequent class order [CO 13/274], which was registered and commenced on 17 April 2013.

Key Provisions

The ASIC Class Order [CO 11/926], which came into effect under section 109(3)(a) of the National Consumer Credit Protection Act 2009, provides certain credit licensing exemptions for NGOs that provide credit assistance to consumers. Specifically, subsection 29(1) and (2) of the Act do not apply to rural financial counselling service providers if certain conditions are met. These conditions include that the credit assistance is provided as part of a rural financial counselling service, no fees or charges are payable by the consumer, no remuneration is payable to the provider or their associates, and that the provider does not engage in any credit activity requiring an Australian credit licence apart from the activity in question. The provider must also ensure that their representatives are appropriately trained to provide the credit assistance and any other aspects of the service. Under this Act, rural financial counselling service providers have specific obligations to comply with in order to maintain their exemption from credit licensing requirements. These obligations include ensuring that no fees or charges are payable by consumers, that no remuneration is payable to the provider or their associates, and that they do not engage in any credit activities requiring an Australian credit licence apart from the activity in question. Additionally, the provider must ensure that each representative providing credit assistance has undertaken appropriate training to ensure they have adequate skills, knowledge, and experience. Failure to comply with the conditions outlined in the ASIC Class Order [CO 11/926] may result in civil or criminal consequences, depending on the nature and severity of the breach. The maximum penalties for contraventions of the National Consumer Credit Protection Act 2009 can be substantial, including fines and imprisonment for individuals, and fines for bodies corporate. The specific penalties for breach of the Act will depend on the circumstances of each case and will be determined by a court or tribunal. It is important for rural financial counselling service providers to ensure they are fully aware of their obligations under the Act and to take all necessary steps to comply with the conditions outlined in the ASIC Class Order [CO 11/926] to avoid any potential penalties or consequences.