ASIC Credit (Notice Requirements for Unlicensed Carried Over Instrument Lenders) Instrument 2020/834

This instrument, ASIC Credit (Notice Requirements for Unlicensed Carried Over Instrument Lenders) Instrument 2020/834, inserts a new notice obligation into Part 3 of Schedule 2 to the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (the Transitional Credit Act) by adding an item headed “19A Obligation on certain persons to give notice to ASIC” (see Part 2, s 5). The instrument takes effect the day after it is registered on the Federal Register of Legislation (s 2). It is made by a delegate of the Australian Securities and Investments Commission (ASIC), Grant Moodie, under item 41 of Schedule 2 to the Transitional Credit Act (s 3).

Mechanically, the insertion makes Part 3 of Schedule 2 apply to all persons as if modified by that new item 19A (s 5(1)). Item 19A imposes a requirement on certain unlicensed holders of what the instrument refers to as “carried over instruments” to lodge with ASIC an approved-form notice containing prescribed data fields (s 5(2)). The instrument specifies the triggering test for who must lodge a notice: a person who was a credit provider or lessor in relation to a carried over instrument immediately before 1 July 2010, who continues to be a credit provider or lessor in relation to such an instrument at any time after 30 June 2010, and who is neither a licensee nor exempt under the National Credit Act (s 5(1)). The notice must be lodged on the first day the two timing conditions in paragraphs (1)(a) and (b) both apply to the lender (s 5(2) & (3)). The information required in the notice is enumerated and includes the lender’s names and addresses, directors/partners/trustees, ABN if any, counts and totals of carried over instruments, AFCA membership status, an estimate for the finalisation date of the longest running instrument, and grounds if the lender is a “prescribed unlicensed carried over instrument lender”; ASIC may request other information (s 5(2)(a)-(j)).

The instrument attaches enforcement consequences to non-compliance. The lodgement obligation in subitem (2) attracts a civil penalty of 2,000 penalty units; contravening the requirement is also criminalised in subitem (5) (25 penalty units or 6 months imprisonment, or both) and subitem (6) provides a separate strict liability offence for the same conduct with a criminal penalty of 10 penalty units (s 5(2), (5)-(7)). The instrument includes two notes that explain context: Note 1 says the declaration substantially reproduces the effect that a notionally inserted item 39A would have had but for drafting anomalies that left that item inoperative; Note 2 points to where the term “prescribed unlicensed carried over instrument lender” is notionally defined in the National Consumer Credit Protection Act 2009 as inserted by certain regulations (s 5 notes).

In short, the instrument creates a mandatory ASIC notice and information-collection regime for a defined subset of unlicensed holders of “carried over instruments”, prescribes the contents and timing of that notice, and attaches civil and criminal penalties for breach.

The instrument operates by reference to a small set of concepts and cross‑references. The definitions provided in the instrument itself are minimal. The instrument defines “Transitional Credit Act” as the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (s 4). It does not define “carried over instrument” within the instrument text; the phrase is used as a pre-existing concept that is part of the statutory framework in which the instrument inserts item 19A (s 5(1)). Readers must therefore treat “carried over instrument” as a term adopted from the Transitional Credit Act or related instruments, but no definition text is supplied in this instrument.

The core legal mechanism is declaratory: Part 3 of Schedule 2 to the Transitional Credit Act is declared to apply in relation to all persons as if that Part were modified by inserting item 19A after item 19 (s 5(1)). Item 19A, as inserted, creates the substantive obligations and penalties. The inserted item differentiates three categories relevant to coverage: (a) temporal status immediately before 1 July 2010, (b) status at any time after 30 June 2010, and (c) license/exemption status under the National Credit Act (s 5(1)). The combination of (a) and (b) forms the timing trigger; (c) excludes licensed or exempt persons.

The notice required must be in the “approved form” and lodged with ASIC (s 5(2)). The statutory list of fields is granular. It includes identification (name and principal business name), governance contacts (directors, secretary, partners, trustees), contact addresses (postal and principal business address if different), business identifiers (Australian Business Number, if any), a quantitative inventory (the number of carried over instruments and the total amount owed), membership information (whether the lender is a member of the AFCA scheme), an estimate of the date the longest running carried over instrument will be finalised under its terms, and, where applicable, grounds for being a “prescribed unlicensed carried over instrument lender”, plus any additional information ASIC requests (s 5(2)(a)-(j)).

The instrument imposes temporal and accuracy obligations: the notice must be lodged “on the first day” both timing conditions apply (s 5(2)), subject to an exception where a lender has lodged up to six weeks earlier than the required date (s 5(3)); and information in the notice must be current at the date it is lodged (s 5(4)).

Enforcement concepts are explicitly set out. Failure to comply with the lodgement obligation is a civil contravention punishable by 2,000 penalty units attached to the subitem (s 5(2)). Two separate criminal consequences are also set out for contravention: subitem (5) prescribes a criminal penalty of 25 penalty units or six months’ imprisonment or both, while subitem (6) prescribes a strict liability offence with a criminal penalty of 10 penalty units and is expressly declared to be an offence of strict liability (s 5(5)-(7)). The instrument does not include the approved form itself, the monetary value of a penalty unit, or procedural rules for lodgement; those matters remain procedural and administered by ASIC under the authority of the instrument.

The instrument defines a narrow class of persons who must act; it also imposes reporting obligations that affect corporate officers and ASIC as recipient. The primary persons affected are those described in the inserted item 19A: a person who was a credit provider or lessor in relation to a carried over instrument immediately before 1 July 2010, who is a credit provider or lessor in relation to the carried over instrument at any time after 30 June 2010, and who is neither a licensee nor a person exempt from the requirement to hold a licence under the National Credit Act (s 5(1)). The instrument therefore targets unlicensed holders of carried over instruments whose status straddled the 30 June/1 July 2010 timing boundary.

Secondary individuals affected include the governance contacts whose names the notice requires: if the lender is a body corporate, each director or secretary must be named; if a partnership or the trustees of a trust, each partner or trustee must be named (s 5(2)(b)). Those persons must be identified in the notice lodged with ASIC and may therefore expect their names to be recorded on ASIC records as a consequence of their principal’s compliance.

ASIC is the decision-maker and recipient of the information; lodgement must be made with ASIC in the approved form (s 5(2)). ASIC thereby gains a dataset on the stock of carried over instruments held by unlicensed persons, including counts, aggregate amounts, expected finalisation dates, and AFCA membership status (s 5(2)(f)-(h)).

The instrument also directly affects persons who are “prescribed unlicensed carried over instrument lenders” as they must state the grounds on which they are so prescribed in their notice (s 5(2)(i)). The instrument points to the National Consumer Credit Protection Act 2009 (as notionally amended) for the definition of that prescribed category (s 5 Note 2), so persons in that category have an additional disclosure field.

The temporal trigger means that a person who meets the pre‑2010 timing condition but ceased to be a credit provider or lessor before any time after 30 June 2010 would not fall within the class. Conversely, any person who satisfies both timing conditions at any time after 30 June 2010 must comply from the “first day” both conditions apply (s 5(1) & (2)). The instrument excludes persons who were licensed or exempt under the National Credit Act from the notice obligation (s 5(1)(b)(i)-(ii)).

Finally, there are enforcement consequences that affect the same persons and their principals: failing to lodge the notice, lodging false or out‑of‑date information, or otherwise contravening the lodgement requirement exposes the lender to a civil penalty of 2,000 penalty units and potential criminal penalties, including a strict‑liability offence (s 5(2), (5)-(7)). The consequence structure assigns compliance costs, data preparation burdens, and potential criminal exposure to the unlicensed lenders of carried over instruments and the officers named in the notices.

Key duties arise from the inserted item 19A reproduced in s 5 of this instrument. The central duty is to lodge, with ASIC and in the approved form, a notice containing specific information when a person meets the statutory trigger. The trigger is composed of three elements: the person was a credit provider or lessor in relation to a carried over instrument immediately before 1 July 2010; the person is a credit provider or lessor in relation to the carried over instrument at any time after 30 June 2010; and the person is neither a licensee nor exempt under the National Credit Act (s 5(1)). The lodgement timing is the “first day paragraphs (1)(a) and (b) both apply” to the lender (s 5(2)).

The lodgement duty specifies the fields that must be provided. Those fields are strictly enumerated and include: lender’s name and principal business name if any; the names of each director or secretary if a body corporate, or each partner or trustee if a partnership or trustee; postal address and, if different, principal business address; Australian Business Number if any; the number of carried over instruments and the total amount owed under them; whether the lender is a member of the AFCA scheme; an estimate of the date on which the longest running carried over instrument will be finalised if payments are made according to the instrument; grounds for being a prescribed unlicensed carried over instrument lender where relevant; and any other information ASIC requests (s 5(2)(a)-(j)). The notice must be current at the date of lodgement (s 5(4)). The instrument mandates that the approved form be used; the instrument does not supply the form itself (s 5(2)).

There is a limited procedural flexibility built into the duty: a lender does not have to comply with the lodgement requirement if the lender has lodged the notice with ASIC up to six weeks before the date they would otherwise be required to lodge under s 5(2) (s 5(3)). This is an exception to the strict “first day” lodgement timing.

Rights are implied by those exceptions and the design of the obligation. A person may discharge the duty early (up to six weeks prior) and thereby avoid infringement for the first-day trigger; the instrument guarantees that information must be current as of the lodgement date (s 5(4)), which establishes an objective measure of accuracy. The instrument also provides that ASIC may request “any other information” in addition to the enumerated fields (s 5(2)(j)), which gives ASIC discretion over the scope of information it can obtain, but that discretion is expressed as a power to request additional information rather than as a power to require other specific actions from the lender.

The instrument specifies an enforcement and penalty architecture attached to the new notice requirement. The lodgement obligation in subitem (2) is expressly stated to carry a civil penalty of 2,000 penalty units (s 5(2)). That civil‑penalty attachment establishes a non‑criminal compliance instrument for ASIC to pursue civil sanctions for failure to lodge or to lodge as required.

Concurrently, the instrument criminalises contravention in two separate subitems. Subitem (5) prescribes a criminal offence for a person who is subject to the requirement and who “engages in conduct” that contravenes the requirement; the criminal penalty is 25 penalty units, or 6 months imprisonment, or both (s 5(5)). Separately, subitem (6) prescribes an offence of strict liability for the same described conduct, with a criminal penalty of 10 penalty units; subitem (7) declares that subitem (6) is an offence of strict liability (s 5(6)-(7)). The instrument thus includes three separate enforceable responses to contravention of the same notice obligation: civil penalty, non‑strict criminal offence carrying a higher penalty and potential imprisonment, and a strict liability criminal offence carrying a lower penalty.

The instrument does not set out prosecutorial policy, procedural steps for ASIC enforcement, or any administrative penalty mechanisms; those enforcement mechanisms remain within ASIC’s operational discretion and criminal prosecution processes, which are not detailed in this instrument. The presence of multiple penal avenues means that a person in breach may be exposed to different types of proceedings depending on which enforcement path is pursued. The instrument does not state whether lodgement failures are to be treated primarily as civil regulatory matters or as criminal matters; it simply makes the contraventions both civilly and criminally actionable (s 5(2), (5)-(7)).

The strict liability offence is notable because it lowers the prosecution’s burden on fault in respect of the particular contravention described in subitem (6). The instrument explicitly labels subitem (6) as strict liability (s 5(7)). For that offence, the prosecution would not need to prove mens rea elements specified in general criminal law; the instrument itself supplies that characterisation. The instrument does not specify defences or procedural protections for persons charged under any of the offences.

Administrative compliance is also enforced indirectly by the content requirements: the notice must be current at the date it is lodged (s 5(4)); lodging stale or incorrect information risks contravention. ASIC also has the power to request “any other information” in the approved form notice (s 5(2)(j)), meaning that an incomplete response to an ASIC request may give rise to enforcement action under the contravention provisions.

This instrument operates by amending, for practical purposes, Part 3 of Schedule 2 to the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (the Transitional Credit Act). Section 4 defines the shorthand “Transitional Credit Act” for use in the instrument (s 4). The instrument is made under item 41 of Schedule 2 to the Transitional Credit Act (s 3), and its substantive effect is to declare that Part 3 of Schedule 2 applies to all persons “as if” modified by inserting item 19A after item 19 (s 5(1)). Consequently, the instrument is an instrument of statutory modification that sits within the transitional regulatory architecture of the National Consumer Credit Protection legislative scheme.

The inserted item 19A itself cross‑references the National Credit Act regime for licensing and exemptions: a person is excluded from the notice obligation if they are a licensee or a person exempt from the requirement to hold a licence under the National Credit Act (s 5(1)(b)(i)-(ii)). The instrument therefore interacts with the licensing and exemption rules of the National Credit Act insofar as those rules determine who is captured. The instrument does not set or define licensing or exemption criteria; it imports those concepts by reference to the wider National Credit Act framework.

Note 2 to the instrument points specifically to definitions notionally inserted into the National Consumer Credit Protection Act 2009 by particular regulations and schedules, in relation to the term “prescribed unlicensed carried over instrument lender” (s 5, Note 2). The instrument therefore depends upon cross‑referenced definitions located in the National Consumer Credit Protection Act 2009 and the National Consumer Credit Protection Regulations 2010 as notionally amended; it does not itself reproduce those definitional texts.

Note 1 explains the drafting relationship to an earlier regulatory instrument path: it states that the declaration substantially produces the effect that item 39A of Schedule 2 to the Transitional Credit Act (as notionally inserted by regulation 16E of the National Consumer Credit Protection (Transitional and Consequential Provisions) Regulations 2010 as in force on 24 May 2010) would have had, but for drafting anomalies that left that item non‑operative (s 5, Note 1). The instrument therefore functions as a corrective measure in the transitional regulatory environment, restoring or reproducing intended transitional obligations linked to earlier regulations.

Other interactions are implicit rather than explicit. For example, the notice asks whether the lender is a member of the AFCA scheme (s 5(2)(g)), which connects the instrument’s information collection to external dispute resolution membership status. The instrument does not explain the legal effects of AFCA membership or the consequences of non‑membership; it merely imports AFCA status as a data field.

The instrument text contains its own minimal amendment history and contextual notes; it does not record prior amendments to itself. The instrument was made on 28 September 2020 by Grant Moodie, delegate of ASIC, and is identified as ASIC Credit (Notice Requirements for Unlicensed Carried Over Instrument Lenders) Instrument 2020/834 (header and signature block). Section 2 provides commencement: the instrument commences on the day after it is registered on the Federal Register of Legislation (s 2). Section 3 states the legislative authority for the instrument: item 41 of Schedule 2 to the Transitional Credit Act (s 3). Section 4 supplies a single definition for “Transitional Credit Act” (s 4). Part 2, s 5 contains the operative insertion into Part 3 of Schedule 2 to the Transitional Credit Act.

Note 1 in s 5 provides a history of intent: it explains that the declaration “substantially produces the effect that item 39A of Schedule 2 to the Transitional Credit Act (as notionally inserted by regulation 16E of the National Consumer Credit Protection (Transitional and Consequential Provisions) Regulations 2010 as in force on 24 May 2010) would have had but for some drafting anomalies” and that, as a result of those anomalies, that item did not have any operation (s 5, Note 1). The note therefore documents that this instrument is intended to remedy a prior drafting outcome that prevented an intended provision from operating. Note 2 records that the term “prescribed unlicensed carried over instrument lender” is defined in a different Act and regulations as notionally inserted, namely subsection 5(1) and section 5A of the National Consumer Credit Protection Act 2009 as notionally inserted by regulation 25E and Schedule 2 to the National Consumer Credit Protection Regulations 2010 (s 5, Note 2). Those notes are the only internal references to the legal provenance of the insertion; the instrument does not itself reproduce prior drafts or amendments beyond the insertion of item 19A.

No subsequent amendments to this instrument are recorded within the text provided. The instrument does not list any repeals or modifications of other instruments beyond stating its modifying effect on Part 3 of Schedule 2 to the Transitional Credit Act (s 5(1)). Any later amendments to this instrument, or to the items and regulations it references, would be recorded in subsequent instruments or registry amendments; such records are not part of the text supplied here. For historical tracing, the instrument directs readers to the Federal Register of Legislation for access to registration and presumably for any subsequent amendments (s 2, note). The instrument therefore contains a concise internal amendment history limited to its declaratory remediation of a prior inoperative item and its own making and commencement details.

The instrument itself contains no litigation or case history. It does not cite or reproduce any judicial decisions, and there are no references to litigation or adjudication in its text. The notes identify drafting anomalies and remedial intent in relation to a notionally inserted earlier item that had no operation (s 5, Note 1), but they do not describe any court or tribunal proceedings arising from those anomalies.

Because the instrument creates civil and criminal offences and attaches penalties (s 5(2), (5)-(7)), future litigation or prosecutions could arise under the instrument; however, no such cases are referenced or included in the instrument text. The instrument does not provide procedural rules for enforcement or appeal; enforcement and any subsequent litigation would proceed under general civil and criminal process, and under the relevant statutes that govern ASIC enforcement and criminal procedure, none of which are reproduced here.

For practitioners seeking litigation history they should consult external sources, court records, or ASIC enforcement announcements; none of that material appears in this instrument. The instrument’s internal notes and provisions are silent about any administrative reviews, judicial challenges, or precedent concerning the precise operation of the new item 19A, the scope of “carried over instruments”, or the application of the various penalty provisions. The absence of litigation references in the instrument means that any legal argument or prosecutorial approach to the instrument would need to be developed from the instrument’s text and general principles of statutory interpretation, but those interpretative resources are outside the instrument itself.

The instrument contains a number of practical traps and drafting features that create compliance and interpretation risk for affected lenders. These are matters of legal and operational detail drawn from the instrument’s text.

1. Trigger timing and historical status. The capture test depends on being a credit provider or lessor “in relation to a carried over instrument immediately before 1 July 2010” and also being such a provider “at any time after 30 June 2010” (s 5(1)(a)). Those closely adjacent dates appear to target persons whose status straddled the 30 June/1 July 2010 boundary. Practically, identifying whether a person met the “immediately before 1 July 2010” condition may require searching records from 2010 and determining whether contractual relationships qualified as “carried over instruments”. The instrument does not define “carried over instrument”; absence of a definition in this instrument means affected entities must identify the relevant meaning from the Transitional Credit Act and related regulations, which the instrument references but does not reproduce (s 4; s 5, Notes).

2. Triggering the lodgement “first day” rule. The notice must be lodged “on the first day paragraphs (1)(a) and (b) both apply in relation to the lender” (s 5(2)). That phrasing creates an operational question for entities established or restructured after 2010 but whose instruments existed earlier: the “first day” when both conditions apply may not be obvious. The instrument provides a limited early‑lodgement exception , lodging up to six weeks earlier discharges the obligation , but does not clarify consequences for late or delayed determinations (s 5(3)).

3. Approved form not included. The instrument mandates an “approved form” for lodgement with ASIC (s 5(2)) but does not specify the form, its location, or electronic lodgement procedures. Affected entities must therefore identify and use the correct ASIC form; failure to use the approved form could render a lodgement non‑compliant and subject the lender to penalties.

4. Data fields require aggregation and forecasting. The notice requires the number of carried over instruments held and the total amount owing under them, and an estimate of the date the longest running instrument will be finalised if payments are made in accordance with the instrument (s 5(2)(f) and (h)). Compiling accurate counts and aggregate financial data across multiple instruments may be administratively burdensome, particularly for entities with incomplete records. The requirement to forecast the date of finalisation imposes judgment and may expose lenders to enforcement if estimates are materially inaccurate at lodgement; the instrument only requires the information to be current at lodgement (s 5(4)), but “current” does not protect against later inaccuracy.

Compliance requires three discrete workstreams: legal assessment of capture, assembly of the required information, and lodgement with ASIC in the approved form within the statutory timing rules.

1. Legal assessment of capture. Start by determining whether the entity is caught by the trigger in s 5(1). That requires confirming: (a) whether the entity was a credit provider or lessor “in relation to a carried over instrument immediately before 1 July 2010”; and (b) whether the entity is or was a credit provider or lessor in relation to that carried over instrument at any time after 30 June 2010; and (c) that the entity is neither a licensee nor a person exempt from the requirement to hold a licence under the National Credit Act (s 5(1)). Because “carried over instrument” and “prescribed unlicensed carried over instrument lender” are terms referenced from other laws, ensure you obtain and rely on the definitions in the National Consumer Credit Protection legislative materials and regulations; the instrument itself defines only “Transitional Credit Act” (s 4) and points to Note 2 for the prescribed category (s 5, Note 2).

2. Determine the lodgement date. If the entity meets the capture test, identify the “first day paragraphs (1)(a) and (b) both apply in relation to the lender” and plan to lodge on that day (s 5(2)). If practicable, use the exception in s 5(3) and lodge up to six weeks before that first day; lodging earlier within the six‑week window will discharge the obligation and reduce timing risk.

3. Assemble required contents. The notice must be in the approved form and must include the fields set out in s 5(2)(a)-(j). Practical checklist:

   • Lender’s name and principal business name, if any (s 5(2)(a)).
   • Names of each director or secretary (for a body corporate), or of each partner or trustee (for partnership/trust) (s 5(2)(b)).
   • Postal address and principal business address if different (s 5(2)(c)-(d)).
   • Australian Business Number, if the lender has one (s 5(2)(e)).
   • Number of carried over instruments held and the total amount owed to the lender under those instruments (s 5(2)(f)). Ensure aggregation methods are documented and traceable to underlying file records.
   • Whether the lender is a member of the AFCA scheme (s 5(2)(g)).
   • An estimate of the date on which the longest running carried over instrument will be finalised, on the assumption payments are made as per the instrument (s 5(2)(h)). Document the basis for the estimate.