ASIC Introduces Licensing Regime for Debt Management Services Providers

The Australian Securities and Investments Commission (ASIC) today announced that providers of debt management services (including firms offering ‘debt negotiation’ or ‘credit repair’ services) have been regulated under the National Consumer Credit Protection Act 2009 from 1 July 2021.

That is to say, providers of these services are required to:

• hold a credit licence with an authorisation that covers those services (or act as a representative of such an authorised licensee); or

• be operating in accordance with the transitional arrangements, specifically that by 30 June 2021 they:

· applied to ASIC for a credit licence or variation that covers this activity (or have arrangements to act as a representative of a provider that has applied for a licence to cover this activity); and

· are a member of the Australian Financial Complaints Authority (AFCA).

According to the official press release, if providers of debt management services have not met these requirements, they must cease engaging in these activities.

The transitional arrangements only apply while ASIC is considering the application for a credit licence or variation. If no licence is granted the provider must cease engaging in these activities.

ASIC will be closely monitoring compliance with the new laws, including identifying unlicensed conduct and taking action where necessary.

Recently, ASIC released a new Consultation Paper, consulting on exchange-traded products (ETPs) and other investment products​ that provide retail investors with exposure to crypto-assets.

The consultation includes creating a new asset kind that can be selected when applying for a new AFS license (or a variation to an existing AFS license), to cover crypto-assets.