(i) impose, vary or revoke a condition on the licence that, in ASIC’s opinion, has or would have the result of preventing the APRA body from being able to carry on all or any of its usual activities (being activities in relation to which APRA has regulatory or supervisory responsibilities); or
(ii) vary a condition so that it would, in ASIC’s opinion, become a condition that would have a result as described in subparagraph (i);
unless ASIC has first consulted APRA about the proposed action;
(b) if ASIC imposes, varies or revokes a condition on the licence and paragraph (a) does not apply to that action, ASIC must, within one week, inform APRA of the action that has been taken.
Special procedures for ADIs
(2) If the licensee, or a related body corporate, is an ADI, then the following provisions apply:
(a) subject to paragraphs (b) and (c), the powers that ASIC would otherwise have under section 45:
(i) to impose, vary or revoke a condition on the licence that, in ASIC’s opinion, has or would have the result of preventing the ADI from being able to carry on all or any of its banking business (within the meaning of the Banking Act 1959); or
(ii) to vary a condition so that it would, in ASIC’s opinion, become a condition that would have a result as described in subparagraph (i);
are instead powers of the Minister;
(b) the following provisions apply in relation to a power to which paragraph (a) applies:
(i) the procedures for the exercise of the power are the same as would apply if ASIC could exercise the power, except that the Minister must not exercise the power unless he or she has first considered advice from ASIC on the proposed action, being advice given after ASIC has consulted APRA about the proposed action;
(ii) ASIC (rather than the Minister) must still conduct any hearing required under paragraph 45(5)(a) and receive any submissions under paragraph 45(5)(b);
(c) if ASIC imposes, varies or revokes a condition on the licence and paragraph (a) does not apply to that action, ASIC must, within one week, inform APRA of the action that has been taken.
46A ASIC may request information etc. in relation to an application for conditions to be varied
(1) This section applies if a licensee applies under paragraph 45(2)(b) for ASIC to:
(a) impose conditions, or additional conditions, on the licence; or
(b) vary or revoke conditions imposed on the licence.
However, this section does not apply in relation to a power to which paragraph 46(2)(a) applies.
(2) ASIC must not grant the application unless the requirement in section 37A (fit and proper person test) is satisfied in relation to the applicant and the licence as proposed to be varied.
ASIC may request information etc. from applicant
(3) ASIC may give a written notice to the applicant requesting the applicant to lodge with ASIC, within the time specified in the notice, any of the following:
(a) information specified in the notice in relation to any matters that ASIC must have regard to for the purposes of deciding whether the requirement in section 37A is satisfied as mentioned in subsection (2) of this section;
(b) an audit report, prepared by a suitably qualified person specified in the notice, in relation to matters that ASIC must have regard to for the purposes of deciding whether the requirement in section 37A is satisfied as mentioned in subsection (2) of this section;
(c) if ASIC proposes to grant the application—a statement that either:
(i) informs ASIC of any material changes in any information provided to ASIC in, or in connection with, the application; or
(ii) confirms that there have been no such changes.
(4) To avoid doubt:
(a) a notice under subsection (3), and the information, audit report or statement requested in the notice, may relate to any person mentioned in section 37A in relation to the applicant and the licence as proposed to be varied; and
(b) subsection (6) applies in relation to such a request even if the applicant is unable to comply with the request.
(5) ASIC may, by written notice to the applicant within the time specified in the notice:
(a) withdraw the request; or
(b) extend the time specified in the notice.
(6) If the applicant does not lodge with ASIC the information, audit report or statement requested by ASIC in a notice under subsection (3) within the specified time, the applicant is taken to have withdrawn the application.
(7) To avoid doubt, subsection (8) does not apply to an application that is taken to have been withdrawn under subsection (6).
Applicant must be given hearing before refusal of application
(8) ASIC may only refuse to grant the application after giving the applicant an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC in relation to the matter.
Division 5—Obligations of licensees
Subdivision A—General obligations
47 General conduct obligations of licensees
General conduct obligations
(1) A licensee must:
(a) do all things necessary to ensure that the credit activities authorised by the licence are engaged in efficiently, honestly and fairly; and
(b) have in place adequate arrangements to ensure that clients of the licensee are not disadvantaged by any conflict of interest that may arise wholly or partly in relation to credit activities engaged in by the licensee or its representatives; and
(c) comply with the conditions on the licence; and
(d) comply with the credit legislation; and
(e) take reasonable steps to ensure that its representatives comply with the credit legislation; and
(ea) comply with the Reference Checking and Information Sharing Protocol; and
(f) maintain the competence to engage in the credit activities authorised by the licence; and
(g) ensure that its representatives are adequately trained, and are competent, to engage in the credit activities authorised by the licence; and
(h) have an internal dispute resolution procedure that:
(i) complies with standards and requirements made or approved by ASIC in accordance with the regulations; and
(ii) covers disputes in relation to the credit activities engaged in by the licensee or its representatives; and
(ha) give to ASIC the same information it would be required to give under subparagraph 912A(1)(g)(ii) of the Corporations Act 2001 if it were a financial services licensee; and
(i) be a member of the AFCA scheme; and
(j) have compensation arrangements in accordance with section 48; and
(k) have adequate arrangements and systems to ensure compliance with its obligations under this section, and a written plan that documents those arrangements and systems; and
(l) unless the licensee is a body regulated by APRA:
(i) have available adequate resources (including financial, technological and human resources) to engage in the credit activities authorised by the licence and to carry out supervisory arrangements; and
(ii) have adequate risk management systems; and
(m) comply with any other obligations that are prescribed by the regulations.
Assessment of whether compliance is adequate
(2) For the purposes of paragraphs (1)(b), (g), (k) and (l), in considering whether a matter is adequate, the nature, scale and complexity of the credit activities engaged in by the licensee must be taken into account.
Regulations in relation to internal dispute resolution procedures
(3) Regulations made for the purposes of paragraph (1)(h) may also deal with the variation or revocation of:
(a) standards or requirements made by ASIC; or
(b) approvals given by ASIC.
Reference Checking and Information Sharing Protocol
(3A) ASIC may, by legislative instrument, determine a protocol for sharing and requesting information about an individual in respect of whom there are reasonable grounds to suspect that:
(a) if the individual becomes a representative of a licensee (recruiting credit licensee), the individual will:
(i) provide credit assistance in relation to credit contracts secured by mortgages over residential property; and
(ii) be a mortgage broker or a director, employee or agent of a mortgage broker; or
(b) a mortgage intermediary (prospective mortgage intermediary) is acting, or will act, as an intermediary in relation to a licensee where the individual is, or is a former, current or prospective representative of, that licensee, and in that capacity the individual:
(i) provides, provided or will provide credit assistance in relation to credit contracts secured by mortgages over residential property; and
(ii) is, was or will be a mortgage broker or a director, employee or agent of a mortgage broker; or
(c) if the individual becomes a representative of a financial services licensee (recruiting financial services licensee), the individual will provide personal advice to retail clients about relevant financial products.
(3AA) The Reference Checking and Information Sharing Protocol may provide for any or all of the following to share information about the individual with the recruiting credit licensee, the prospective mortgage intermediary or the recruiting financial services licensee:
(a) if the individual is a licensee—the individual;
(b) if the individual is a former or current representative of a licensee—that licensee;
(c) if a mortgage intermediary has previously acted or is acting as an intermediary in relation to a licensee where the individual is, or is a former or current representative of, that licensee—that mortgage intermediary;
(3AB) The Reference Checking and Information Sharing Protocol may provide, in a case covered by paragraph (3A)(a) or (b), for the recruiting credit licensee or the prospective mortgage intermediary to request information about the individual from any or all of the following:
(a) if the individual is a licensee or a financial services licensee—the individual;
(b) if the individual is a former or current representative of a licensee—that licensee;
(c) if the individual is a former or current representative of a financial services licensee—that financial services licensee;
(d) if a mortgage intermediary has previously acted or is acting as an intermediary in relation to a licensee where the individual is, or is a former or current representative of, that licensee—that mortgage intermediary.
(3AC) The Reference Checking and Information Sharing Protocol may provide for keeping and retaining records of information shared, and the circumstances under which that information is shared.
(3B) The Reference Checking and Information Sharing Protocol must not:
(a) require or permit personal information (within the meaning of the Privacy Act 1988) to be shared, other than with the consent of the individual to whom the information relates; or
(b) require information to be shared in relation to conduct that occurred more than 5 years before the information is shared.
(3E) Expressions used in paragraphs (3A)(c) and (3AB)(c) that are also used in the Corporations Act 2001 (other than Reference Checking and Information Sharing Protocol) have the same meaning in that subsection as they have in that Act.
Qualified privilege
(3F) A person has qualified privilege in relation to information shared in accordance with the Reference Checking and Information Sharing Protocol.
(3G) A person who has qualified privilege under subsection (3F) in respect of conduct is also not liable for any action based on breach of confidence in relation to that conduct.
Civil penalty for non‑compliance
(4) The licensee must not contravene paragraph (1)(a), (b), (e), (ea), (f), (g), (h), (i), (j), (k), (l) or (m).
Civil penalty: 5,000 penalty units.
Note: Contravening paragraphs (1)(c) (obligation to comply with conditions on the licence) and (d) (compliance with the credit legislation) has consequences under other provisions.
48 Requirements for compensation arrangements
Requirement to have adequate compensation arrangements
(1) A licensee must have adequate arrangements for compensating persons for loss or damage suffered because of a contravention of this Act by the licensee or its representatives.
When arrangements are adequate
(2) For the purposes of subsection (1), arrangements are adequate if, and only if, they:
(a) satisfy any requirements prescribed by the regulations; or
(b) are approved in writing by ASIC.
Approval of arrangements by ASIC
(3) Before approving arrangements under paragraph (2)(b), ASIC must have regard to:
(a) the credit activities authorised by the licence; and
(b) whether the arrangements will continue to cover persons after the licensee ceases to engage in credit activities, and the length of time for which that cover will continue; and
(c) any other matters that are prescribed by the regulations.
(4) Without limiting paragraph (3)(c), the regulations may, in particular, prescribe additional details in relation to the matters to which ASIC must have regard under paragraphs (3)(a) and (b).
Subdivision B—Providing information and assistance to ASIC
49 Obligation to provide a statement or obtain an audit report if directed by ASIC
Notice to licensee to provide a statement
(1) ASIC may give a licensee a written notice directing the licensee to lodge with ASIC a written statement containing specified information about:
(a) the credit activities engaged in by the licensee or its representatives; or
(b) for the purposes of considering whether the requirement in section 37A (fit and proper person test) is satisfied in relation to the licensee and the licence—any matters mentioned in section 37B in relation to a person mentioned in a paragraph of subsection 37A(1).
(2) Notices under subsection (1):
(a) may be given at any time; and
(b) may be given to one or more particular licensees, or to each licensee in one or more classes of licensee, or to all licensees; and
(c) may require all the same information, or may contain differences as to the information they require; and
(d) may require a statement containing information to be given on a periodic basis, or each time a particular event or circumstance occurs, without ASIC having to give a further written notice.
Notice to licensee to obtain an audit report
(3) ASIC may also give a licensee a written notice directing the licensee to obtain an audit report, prepared by a suitably qualified person specified in the notice, on a statement, or on each statement in a class of statements, under subsection (1) before the statement is given to ASIC.
(4) A notice under subsection (3) is not a legislative instrument.
Notice must specify day by which licensee must comply
(5) A notice given under this section must specify the day by which the licensee must comply with the notice (which must be a reasonable period after the notice is given). ASIC may extend the day by giving a written notice to the licensee.
Requirement to comply with notice
(6) The licensee must comply with a notice given under this section within the time specified in the notice.
Civil penalty: 5,000 penalty units.
Offence
(7) A person commits an offence if:
(a) the person is subject to a requirement under subsection (6); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 6 months imprisonment.
Strict liability offence
(8) A person commits an offence if:
(a) the person is subject to a requirement under subsection (6); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 20 penalty units.
(9) Subsection (8) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
50 Obligation to give ASIC information required by the regulations
Regulations may require licensee to give information
(1) The regulations may require a licensee, or each licensee in a class of licensees, to give ASIC specified information about the credit activities engaged in by the licensee or its representatives.
Requirement to comply with regulations
(2) If regulations under subsection (1) require a licensee to give ASIC information, the licensee must give ASIC that information.
Civil penalty: 5,000 penalty units.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement to give ASIC information under subsection (2); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 6 months imprisonment.
Strict liability offence
(4) A person commits an offence if:
(a) the person is subject to a requirement to give ASIC information under subsection (2); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 20 penalty units.
(5) Subsection (4) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
50A What are reportable situations?
(1) There is a reportable situation in relation to a licensee if one of the following paragraphs is satisfied:
(a) the licensee or a representative of the licensee has breached a core obligation and the breach is significant;
(b) the licensee or a representative of the licensee is no longer able to comply with a core obligation and the breach, if it occurs, will be significant;
(c) the licensee or a representative of the licensee conducts an investigation into whether there is a reportable situation of the kind mentioned in paragraph (a) or (b) and the investigation continues for more than 30 days;
(d) an investigation described in paragraph (c) discloses that there is no reportable situation of the kind mentioned in paragraph (a) or (b).
(2) There is also a reportable situation in relation to a licensee if:
(a) in the course of engaging in a credit activity, the licensee or a representative of the licensee has engaged in conduct constituting gross negligence; or
(b) the licensee or a representative of the licensee has committed serious fraud; or