Lenders may need to vary their licence to sell at POS

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Financiers who distribute through retailers may need to vary their licence in preparation for the end of the point-of-sale (POS) exemption. The exemption was flagged to go by the Royal Commission. The credit representative model is the most obvious one to replace it. This will place financiers in a similar position to those who distribute insurance […]

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Royal Commission response: Add-on insurance

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Sale of so-called ‘add-on insurances’ has been widely criticised in Australia for some time. Here’s why: High pressure sales methods Poor value products, poorly understood Sometime a consumer is not even able to claim on the product Very high commissions for distributors Difficulty for buyers in making a considered decision Regulatory scrutiny has been intense […]

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New credit card rules affect all lenders and brokers

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This is the first post in a two part series on the new responsible lending rules for credit cards. Tighter new rules mean that credit card providers must assess credit card applications more strictly. While not mandatory, other lenders and brokers should apply the same rules to their loan applications. What has changed? In the […]

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Do responsible managers need ASIC approval?

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There is no legal requirement for ASIC to “approve” Responsible Managers (RMs), but that’s exactly what’s happening in practice. It’s now creating problems for licensees and RMs. The letter of the law Under the law, an RM is legally appointed from the date the AFS licensee determines. This appointment then triggers a requirement for the […]

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Business lending unfair contracts

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Small business lenders are in the spotlight following ASIC’s report on unfair contract terms in small business loans. With ASIC setting clear expectations about how small business lenders will amend their contracts, it’s important to get this right. Who is protected? A small business employs less than 20 employees (excluding casual employees), meaning the first issue to […]

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Are chatbots providing financial services?

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Many financial services businesses now use technology, such as algorithms and chatbots, to help attract and service their customers. While some organisations may create their own chatbot software, most use a third party technology provider. In these cases, generally the software is licensed by the developer to the licensee organisation with or without support services. […]

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It’s time to change the definition of control

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This is the third article in The Fold’s series on the ASIC Enforcement Review Taskforce’s third Position and Consultation paper on Strengthening ASIC’s licensing powers (the Position Paper). The Position Paper contemplates several changes to the concept of control that will broaden ASIC’s powers and may create more uncertainty for businesses. The concept of group control is […]

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Accountants get the short end of the stick – again

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Ever since the accountants’ limited licence regime was introduced, limited licensees have been at a disadvantage compared to full licensees. Red tape is unnecessarily complicated The application process for limited licensees is unnecessarily onerous. Even full licensees have never had to comply with some requirements, such as the need to make multiple declarations about their […]

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When is it fit and proper for ASIC to cancel licences?

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The ASIC Enforcement Review Taskforce released its third Position and Consultation paper in June 2017 (the Position Paper). The paper explores how to strengthen ASIC’s licensing powers. Over the next five posts I’ll outline the good, the bad and the rather ugly consequences of some of the proposed changes and suggest some alternatives. Kicking off the series, […]

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Licences and responsible managers for sale

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A thriving secondary market for AFS licences, credit licences and Responsible Managers exists in Australia. Foreign exchange businesses can command ludicrously high sums for AFS licences for these rare and hard-to-get authorisations. Seven figure sums are not unheard of for a bare company with no clients and no other assets! Confronted with the fact that obtaining a […]

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