chris green, asic: key issues report
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Presentation to
Annual Credit Law
Conference
Chris Green
October 2013
Credit licensing
June 2011 September 2013
Australian credit
licenses
6,081 5,850
(3,941 key person
condition)
Credit
representatives
24,005 29,274
2
Geographic demographics of
licensees (Sept 2013)
3
1343
2192
1136
307
750
58 43 15 3 0
500
1000
1500
2000
2500
Geographic demographics of
credit reps (Sept 2013)
4
02000400060008000
100007252
8590
5927
1739 2622
338 304 165 2337
Credit licensing – entity type
5
4875
11
132
19
827
Company
Body Corporate
Partnership
Trustee of MultiTrusts
Natural Person
Credit licensees – industry
type
6
0
1000
2000
3000
4000
Agg
regato
r
Assig
nee o
f D
ebts
Bank
Cre
dit U
nio
n/…
Fin
an
ce
Bro
ke
r
Fin
an
cia
l…
LM
I
Lessor
Mort
gage B
roker
Mort
gage M
anager
Oth
er
Lender
Pro
p D
ev/ R
eal…
Responsib
le e
ntity
of…
Securitisation M
anager
Selle
r of good b
y…
Selle
r-re
al pro
p b
y…
Oth
er
135 60 37 104
3231
388 12 173
3673
475 680 99 46 40 112 101 334
Credit licensees – type of
credit
7
0500
10001500200025003000350040004500
Credit licensing – amount of
credit
8
0.00%20.00%40.00%60.00%80.00%
100.00%94.17%
3.17% 1.38% 0.49% 0.20% 0.07% 0.03% 0.48%
Credit licensing –
authorisations
9
724
4605
521
Provide Credit
Other thanCreditProvider/Lessor
All
Thematic Reviews
• Thematic reviews are used as part of our
risk-based surveillance approach
– enables ASIC to gain a broad
understanding of industry practices;
– opportunity to provide some guidance;
– enforcement action is more likely if
guidance is ignored.
10
Consumer Credit Insurance
• Consumer claims handling
experiences
• Key findings
• Consumers who are well informed at
purchase have a better experience in
claims handling
• Process is stressful and costly for
consumers already going through a
difficult time
• Significant room for improvement
11
Responsible lending
• Credit assistance providers,
focusing on ‘low doc’ home loans
(Report 262)
• Mortgage brokers were aware of their
obligations and taking steps to comply
• improvements needed particularly in
recording steps taken to assess
suitability
12
Responsible lending
• Aggregators - focusing on supervision of
representatives (Report 330)
• Improvements in practices have been
made
• Some concerns about how licensees with
a large number of representatives are:
• identifying instances of credit assistance
• accessing records
• reviewing compliance
13
Responsible Lending
• Debt consolidation (Report 358)
– Record keeping
– Aims and objectives of consumers
– Risks and costs of debt consolidation
• Micro – Lending (Report 264)
14
Responsible lending
• Current work
• Credit providers - responsible lending
obligations on loans that are promoted as low
doc
• Small amount credit contract providers
– presumptions of unsuitability
– bank statements
– protected income
15
Current regulatory focus
• Advertising
• Annual Compliance Certificates
• Reviews and consultation
• Fraudulent loan applications
• Avoidance
• Responsible lending
16
Advertising
• ASIC re-issued RG 234 - Advertising
financial products and advice services:
Good practice guidance
– Principles based with examples
– Will assist in steering you away from grey
areas
• Why is advertising important?
• Enhanced powers
– Infringement notices – misleading
representations, Code breaches
– Public warning notices
17
Advertising (contd)
• ASIC’s approach – Proactive
– Transparent
– Important to hold entities responsible for an advertisement to account
• General principles – No intention to mislead required
– Overall impression created when viewing the advertisement for the first time
– Qualifications must be clear and prominent assessed against the strength and prominence of the headline claim
– A misleading impression cannot be cured
18
Annual Compliance
Certificates
• Purpose of the ACC and our reviews
• Surveillance – sample across Australia,
large and small licensees
• Focus:
– Adequate resources
– Supervision of representatives
– Arrangements to comply with credit
legislation – eg responsible lending or
code requirements
19
Reviews and consultation
• Joint review with ACCC of the
Debt Collection Guidelines (RG
96)
• EDR - review of RG 139 post-
commencement access to EDR
• Hardship – Enhancement Act
20
Enforcement & compliance
outcomes
• To 1 July 2013:
– 24 administrative outcomes
(licence cancellations,
suspensions and bannings)
– 2 criminal
– 5 civil
– 5 Enforceable undertakings
21
Enforcement & compliance
outcomes
• Tyre and rim insurance
• Infringement notices
• Responsible lending
– consumer leasing
• Avoidance
• Fraudulent loan applications
22
Looking forward
• Advertising
• Motor vehicle finance
• Credit cards and responsible lending
• Licensee’s supervision of representatives
• Implementing recent regulatory reforms
• Unconscionable conduct and breaches of
responsible lending in vulnerable
communities
23
Questions
?
24
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