On 1 July 2010, the National Credit Code (“the Credit Code”) came into force, replacing the consumer credit codes of the States and Territories. ASIC has responsibility for the administration of the Credit Code.
Under the new regime, a person who engages in a “credit activity” is required to be registered with ASIC. It is an offence to engage in credit activities if not registered with ASIC. Credit activity is defined in the National Consumer Credit Protection Act 2009 and includes a broad range of activity relating to credit contracts, consumer leases, related mortgages and guarantees and credit services. Many people will not realise that their everyday commercial dealings may be caught by the Credit Code.
ASIC has the power to prosecute for non-compliance with the Credit Code, and can seek penalties 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. Also, civil penalties apply of up to $220,000 for individuals and $1.1 million for corporations, partnerships or multiple trustees.
ASIC is currently engaging in an Australia-wide surveillance activity to detect unregistered businesses providing credit. ASIC’s primary focus in the surveillance exercise is to ensure that firms and people engaging in credit activities are registered and apply for a licence to meet requirements of the new regime. Given the serious consequences of breaching the new laws, it is important that you are understand whether you are engaged in credit activities and, if you are, you are registered with ASIC and apply for a licence.