Consumer Lending in Australia Jun 21, 2021

Consumer Lending

Consumer lending in Australia is regulated by the NCCP Act, which includes the National Credit Code (NCC), and the NCCP Regulations.

Under the NCCP Act, any persons that engage in a credit activity must hold an ACL. There are several exemptions from the requirements to hold an ACL including the making of business-to-business loans.

Responsible lending

Chapter 3 of the NCCP Act details the responsible lending obligations for credit licensees, which vary between different types of credit activity. Key obligations include giving a credit guide (when applicable) to collect and verify financial information about a prospective debtor and assessing the unsuitability of a credit contract for a particular consumer.

ASIC’s guidance regarding responsible lending is set out in Regulatory Guide 209: Credit licensing: Responsible lending conduct, which ASIC released in December 2019, to provide more specific guidance about responsible lending obligations.

External dispute resolution

All ACL holders and most AFSL holders must be a member of the Australian Financial Complaints Authority (AFCA) scheme, which is the mandatory external dispute resolution scheme for financial services providers.