ASIC to consult on dispute resolution requirements for consumer credit and margin lending
July 28, 2009
ASIC has released a consultation paper seeking public comment on proposals designed to ensure that consumers have timely access to dispute resolution if they have a problem with consumer credit or margin lending.
The dispute resolution requirements are similar to those that currently apply to holders of an Australian financial services licence and their representatives, the regulator said.
The paper - 112 Dispute resolution requirements for consumer credit and margin lending - explains how ASIC proposes to apply the dispute resolution requirements for credit providers, brokers and other credit licensees and their representatives, as well as for margin lenders and those who provide advice on margin loans, once the National Consumer Credit Protection Bill and margin lending reforms come into effect.
For consumer credit, the Bill provides for a two-stage transition to full licensing. Initially, those engaged in regulated ‘credit activities’ must apply to registered with ASIC, or be a representative of an entity that is registered. Applications for registration must be made between 1 November 2009 and 31 December 2009. Registered persons must have membership of an ASIC-approved external dispute resolution (EDR) scheme.
Credit licensing commences on 1 January 2010 and applications must be made by 30 June 2010. Credit licensees will be required to have dispute resolution arrangements that include:
* an internal dispute resolution (IDR) process that meets ASIC’s approved standards and requirements; and
* membership with an ASIC-approved EDR scheme.
Those licensed to provide margin loans or advise on margin lending will be required to meet the same two requirements from the time the margin lending reforms come into effect.
Consultation process
ASIC is hoping for public input into the proposals with regard to the plan for EDR schemes to be able to hear complaints about a member during the credit registration phase without the complaint first going through IDR if the member doesn’t yet have an IDR process. The regulator is also seeking input into the plan for urgent matters involving hardship variations and postponement of enforcement proceedings to be able to by-pass IDR and go straight to EDR.
In addition, the consultation paper sets out options for avoiding confusion about which EDR scheme consumers should apply to where a licensee and its representative belong to different schemes, or where a complaint involves two licensees (eg. a credit provider and a broker) which each belong to a different scheme.
ASIC encourages all interested parties - including industry members, industry associations, consumer groups and consumers and ASIC-approved EDR schemes - to make a submission by Friday 11 September 2009.