Finance Broking Australia-regulatory guide 218

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Regulatory Guide 218 - Licensing: Administrative action against persons engaging in credit activities CPD

This guide is for credit licensees and their representatives, as well as registered persons who engage in credit activities during the transition period (i.e. until 30 June 2011).

It describes the administrative powers available to ASIC to enforce compliance with the National Consumer Credit Protection Act 2009 (for credit licensees) and the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (for registered persons). It also indicates the matters ASIC generally takes into account when exercising these powers.

ASIC is responsible for regulating persons who engage in credit activities in Australia, including:
•   Licensing those persons;
•   Monitoring credit licensees for ongoing compliance with their licence and other legal obligations; and
•   Taking action to enforce the law when it is breached by a credit licensee (or a person who acts on the licensee’s behalf).

ASIC’s powers to take action to protect consumers may involve the use of an administrative remedy, which may be in addition to civil or criminal remedies.

ASIC will use the remedy, or combination of remedies, that best achieves their aim of promoting compliance with the law and raising ethical standards in the consumer credit industry.

During the transition period (i.e. until 30 June 2011), ASIC may also take administrative action in relation to registered persons in some cases.

ASIC’s powers to protect consumers include the power to apply a variety of administrative remedies where credit licensees (and those acting on their behalf) breach their legal obligations.

The administrative remedies that may be available to ASIC are:
•   Immediately suspending or cancelling a credit licence in certain limited circumstances;
•   Suspending or cancelling a credit licence after offering a hearing;
•   Banning a person from engaging in credit activities, either immediately, in certain limited circumstances, or after offering a hearing;
•   Varying credit licence conditions after offering a hearing;
•   Directing a credit licensee to provide us with a statement, which ASIC may require to be audited, containing specified information about the business, activities or services provided by the licensee or its representatives; and
•   Accepting an enforceable undertaking as an alternative to other remedies, where ASIC consider it appropriate to do so.

The factors ASIC will take into account when making decisions about whether to take administrative action will depend on the facts of each matter.

These factors may include whether:
•   ASIC have jurisdiction in the matter;
•   The matter involves serious corporate wrongdoing or serious risk or detriment to consumers or the market;
•   An achievable or appropriate remedy exists for ASIC to pursue; and
•   The matter satisfies ASIC’s regulatory and enforcement priorities, including deterrence and public education.

Where ASIC decide to take administrative action, the type of administrative action they take will depend on the nature and seriousness of the conduct involved.






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