ASIC Credit (Amendment) Instrument 2020/963

Administered by Department of the Treasury

Legislation au F2020L01335 Not in force Legislative Instrument

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Explanatory Statement

 

ASIC Credit (Amendment) Instrument 2020/963

 

This is the Explanatory Statement for ASIC Credit (Amendment) Instrument 2020/963.

 

The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).

Summary

1. The ASIC Credit (Deferral of Mortgage Broker Obligations) Instrument 2020/487 (the Deferral Instrument) is intended to provide a temporary exemption until 1 January 2021 from, among other obligations, the ban on giving or accepting conflicted remuneration under the National Consumer Credit Protection Act 2009 (the National Credit Act). The application of the exemption depended on when the benefit was given (i.e. before 1 January 2021) rather than on when the credit service was provided.

2. To fully realise the intended effect of the exemption, the ASIC Credit (Amendment) Instrument 2020/963 (the Amending Instrument) amends the terms of the exemption so that it applies in relation to a credit service provided before 1 January 2021, irrespective of when the benefit is given.

Purpose of the instrument

3. “Conflicted remuneration” means any benefit that is:

(a) given to a credit licensee, or a representative of a licensee, who provides “credit assistance” to consumers that, because of the nature of the benefit or the circumstances in which it is given, could reasonably be expected to influence the credit assistance provided (including the choice of credit contract or credit provider or the choice of whether to provide credit assistance or not); or

(b) given to a credit licensee, or a representative of a licensee, who “acts as an intermediary” and because of the nature of the benefit or the circumstances in which it is given, could be reasonably expected to influence whether or how the licensee or representative acts as an intermediary: see section 158N of the National Credit Act.

4. The activities of providing “credit assistance” to a consumer or “acting as an intermediary” are “credit services”: see section 7 of the National Credit Act.

5. The purpose of the Amending Instrument is to ensure the deferral of the ban on conflicted remuneration is extended to benefits given in relation to “credit services” provided before 1 January 2021.

The Deferral Instrument

6. The Deferral Instrument provides temporary exemptions for six months from obligations in relation to mortgage brokers which commenced on 1 July 2020, including the ban on conflicted remuneration in Division 4 of Part 3-5A of the National Credit Act.

7. However, as originally worded, the exemptions in the Deferral Instrument apply to benefits given before 1 January 2021. As a result, from 1 January 2021, the requirements of Division 4 of Part 3-5A of the National Credit Act would apply to benefits given in relation to credit services provided from 1 July 2020.

8. The intended effect of the Amending Instrument aligns with the policy intention of the Deferral Instrument – to allow industry participants to focus on their immediate priorities and customers during the COVID-19 pandemic period.

9. ASIC considered that this intention would not be realised if benefits given in relation to credit services provided during the deferral period were subject to Division 4 of Part 3-5A of the National Credit Act.

Operation of the instrument

10. Section 2 of the Amending Instrument specifies that the instrument commences on the day after it is registered on the Federal Register of Legislation.

11. Section 1 of Schedule 1 to the Amending Instrument substitutes the current section 6(1) of the Deferral Instrument. The effect of the substitution is to extend the deferral to benefits given in relation to the provision of a credit service before 1 January 2021. This deferral applies regardless of whether the benefit is given before, on or after 1 January 2021.

12. The classes of persons to whom the deferral applies, listed in section 6(2) of the Deferral Instrument, is unchanged by the amendment.

Consultation

13. Given the scope of the Amending Instrument, ASIC did not undertake a formal consultation process. ASIC discussed the issue that led to the Amending Instrument with relevant industry stakeholders.

Legislative authority

14. This instrument is made under subsection 163(3) of the National Credit Act. Subsection 163(3) provides that ASIC may, by legislative instrument, exempt a class of persons from specified provisions in Chapter 3 of the National Credit Act.

15. Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make an instrument, the power is to be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to amend any such instrument.

16. The Amending Instrument is a disallowable legislative instrument.

Legislative instrument and primary legislation 

17. The subject matter and policy implemented by the Deferral Instrument, as amended by the Amending Instrument, are more appropriate for a legislative instrument rather than primary legislation. The instruments use powers given to ASIC by Parliament, which allow ASIC to exempt persons from specified provisions in the National Credit Act. Use of these powers allows ASIC to respond quickly and temporarily to issues in connection with or arising from COVID-19.

18. A timely response is important to provide certainty to industry about the deferral before the Deferral Instrument ceases to operate.

Statement of Compatibility of Human Rights

19. The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.


 

Attachment

 

Statement of Compatibility with Human Rights

 

This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

ASIC Credit (Amendment) Instrument 2020/963

Overview

1. The ASIC Credit (Deferral of Mortgage Broker Obligations) Instrument 2020/487 is intended to provide a temporary exemption until 1 January 2021 from, among other obligations, the ban on giving or accepting conflicted remuneration under the National Consumer Credit Protection Act 2009. The application of the exemption depended on when the benefit was given (i.e. before 1 January 2021) rather than on when the credit service was provided.

2. To fully realise the intended effect of the exemption, the ASIC Credit (Amendment) Instrument 2020/963 amends the terms of the exemption so that it applies in relation to credit services provided before 1 January 2021 irrespective of when the benefit is given.

Assessment of human rights implications

3. This instrument does not engage any of the applicable rights or freedoms.

Conclusion

4. This instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

The ASIC Credit (Amendment) Instrument 2020/963 was enacted to address the limitations of the ASIC Credit (Deferral of Mortgage Broker Obligations) Instrument 2020/487, which aimed to provide temporary exemptions from certain obligations under the National Consumer Credit Protection Act 2009. The original instrument's exemption applied to benefits given before 1 January 2021, rather than the credit services provided before that date. The Australian Securities and Investments Commission (ASIC) introduced the amending instrument to ensure the deferral of the ban on conflicted remuneration was extended to benefits given in relation to credit services provided before 1 January 2021. The policy objective was to allow industry participants to focus on their immediate priorities and customers during the COVID-19 pandemic period. The instrument was made under the legislative authority provided in the National Credit Act, which allows ASIC to exempt certain persons from specified provisions in the Act through a legislative instrument. This approach ensures a timely and responsive measure to the challenges posed by COVID-19, providing clarity and certainty to industry stakeholders.

Scope and Application

The ASIC Credit (Amendment) Instrument 2020/963 amends the ASIC Credit (Deferral of Mortgage Broker Obligations) Instrument 2020/487, which provides temporary exemptions from certain obligations under the National Consumer Credit Protection Act 2009 (National Credit Act), including the ban on conflicted remuneration. This amendment ensures the intended effect of the exemption is fully realised by extending the deferral to benefits given in relation to credit services provided before 1 January 2021, irrespective of when the benefit is given. The instrument applies to credit licensees and their representatives who provide credit services or act as intermediaries, ensuring they are exempt from the conflicted remuneration ban for services provided before 1 January 2021, regardless of when the benefit is received. The instrument does not alter the classes of persons to whom the deferral applies, which includes credit licensees and representatives. This instrument is made under the authority of the National Credit Act and the Acts Interpretation Act 1901, and it is a disallowable legislative instrument. The instrument is compatible with human rights as it does not engage any of the applicable rights or freedoms.

Key Provisions

The ASIC Credit (Amendment) Instrument 2020/963 amends the ASIC Credit (Deferral of Mortgage Broker Obligations) Instrument 2020/487 to extend the exemption from certain obligations under the National Consumer Credit Protection Act 2009 (National Credit Act). This includes extending the exemption from the ban on giving or accepting conflicted remuneration for credit services provided before 1 January 2021, irrespective of when the benefit is given (Section 1, Schedule 1 of the Amending Instrument). This ensures that the exemption applies to benefits given in relation to credit services provided before the commencement of the new year, thus aligning with the policy intention of allowing industry participants to focus on their immediate priorities during the COVID-19 pandemic. The Act imposes specific obligations on credit licensees and their representatives to ensure that they do not provide or receive any conflicted remuneration that could influence the credit assistance provided to consumers or their role as intermediaries. The obligations under the National Credit Act are temporarily deferred for credit services provided before 1 January 2021, as amended by the Amending Instrument. This means that during this period, credit licensees and their representatives are not subject to the prohibition on conflicted remuneration for services provided prior to the new year, allowing them to operate without this particular restriction. The Act also outlines the consequences for breaches of the provisions. While the specific penalties are not detailed in the explanatory statement, generally, breaches of the National Credit Act can lead to significant penalties, including fines and imprisonment for individuals, and fines for corporate entities. For example, under the National Credit Act, an individual can be fined up to $222,000 and/or imprisoned for up to five years for serious or repeated breaches, while corporate entities can be fined up to $1,110,000. The penalties serve as a deterrent to non-compliance and ensure that the regulatory intent is upheld.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.