ASIC begins nationwide surveillance activities under national consumer credit regime


The Australian Securities and Investments Commission (ASIC) has begun its first nationwide surveillance activity to detect unregistered businesses and people under the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (National Credit Transitional Act).

Between now and late 2010, ASIC will be in the field, across Australia, to detect businesses or people engaging in credit activities who are not registered with ASIC.

As of 1 July this year, it has been an offence to engage in credit activities (e.g. acting as a lender, or as a credit broker) if not registered with ASIC.

More than 14,000 people or businesses registered with ASIC before 30 June 2010, as a precursor to applying for a credit licence. Licensing is now underway and will be complete by 30 June 2011 or before. As of 23 September 2010, 292 licences have been issued.

As set out in the National Credit Transitional Act, ASIC can prosecute non-compliance or seek a civil penalty from the Courts.

The maximum criminal penalties for operating without registration or a licence are $22,000 for individuals and $110,000 for corporations, or two years imprisonment, or both; or civil penalties of up to $220,000 for individuals and $1.1 million for corporations, partnerships or multiple trustees.

ASIC’s primary focus of this surveillance activity is to ensure firms and people engaging in credit activities are registered and apply for a licence to meet the requirements of the National Credit Transitional Act.

ASIC Commissioner Peter Boxall, said ASIC was most likely to pursue prosecutions where firms or people persisted in engaging in credit activities without being registered or licensed. ASIC may take action – other than prosecution – at its discretion.

‘All indications to date are that the new regime enjoys widespread support from people working in the credit industry, and that people and businesses who have registered welcome action by ASIC to deter non-registered businesses.

‘ASIC is serious about its responsibilities in enforcing the regime and our decision to undertake surveillance action – shortly after registration has closed – demonstrates our determination to ensure the effectiveness of the new national consumer credit regime in providing a better business environment for the industry and for consumers,’ Dr Boxall said.

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