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Debt management ACL regime begins

regulation rules regulation rules
Malavika Santhebennur 6 minute read

ASIC has warned debt management firms, who are now require to hold an ACL, that it is closely monitoring compliance with new laws and will take action when necessary.

From 1 July 2021, debt management service providers (including firms offering “debt negotiation” or “credit repair” services) are regulated under the National Consumer Credit Protection Act 2009 (National Credit Act).

This has formed a part of the federal government’s plans to overhaul responsible lending obligation laws, with the reforms aimed at protecting consumers from the “predatory practices of debt management firms” by requiring them to hold an Australian Credit Licence (ACL) when they are paid to represent consumers in disputes with financial institutions.

The new laws mean that certain debt management services are now a “credit activity” for the purposes of the National Credit Act.


As such, providers of these services must now:

  • 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 an ACL or variation that covers this activity (or have arrangements to act as a representative of a provider that has applied for an ACL to cover this activity), and are a member of the Australian Financial Complaints Authority (AFCA).

ASIC has warned that providers of debt management services that have not met these requirements must cease engaging in these activities.

In addition, the transitional arrangements will 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,” the corporate regulator said.

“ASIC reminds credit licensees that under section 31 of the National Credit Act, they are prohibited from conducting business with unlicensed persons.”


ASIC has published a list of persons or entities that have applied for a credit licence or variation by 30 June 2021 (seeking the “debt management services” authorisation) and were members of AFCA on that date.

The list shows licence applications that have not yet been determined by ASIC, and where the person or entity has consented to ASIC publishing details of their application.

“If you are dealing with a person or entity that provides debt management services, this list may help you to decide whether they can provide those services under the transitional arrangements,” ASIC said.

“You may also need to check on AFCA’s website to determine whether the person or entity has current AFCA membership.”

Earlier this year, ASIC released an information sheet for debt management service providers to explain the new regulatory obligations.

The information sheet provided guidance on two obligations providers must meet as ACL holders, including:

  • Providing services efficiently, honestly, fairly, transparently, and in a manner that delivers good consumer outcomes, while supporting customers, particularly those experiencing financial hardship or vulnerability; and
  • Maintaining the competence to engage in the credit activities authorised by their licences.

[Related: Treasurer stays firm on responsible lending repeal]

Debt management ACL regime begins
regulation rules
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regulation rules
Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.


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