Do mortgage brokers need a consumer credit license?

In Australia, mortgage brokers are defined by law as being credit service or assistance providers, meaning that they help borrowers connect with lenders. Brokers are regulated by the Australian Securities & Investment Commission (ASIC), as per the National Consumer Credit Protection (NCCP) Act.

Some mortgage brokers are “credit representatives”, or franchisees of a mortgage aggregator. These brokers operate under the aggregator’s Australian Credit License (ACL). Other mortgage brokers run their own operations and have their own ACL.

For most brokers, licence requirements will depend on how their business is structured. If, for example, a broker has a single company or partnership, they should only need one credit licence. But if they’re both a credit provider and a broker they may need authorisation to ‘engage in all credit activities’.

ASIC outlines three steps which can help businesses and individuals, such as mortgage brokers, determine whether they fit the requirements for possessing a consumer credit licence:

Step 1: Check the guidance on credit licensing

Consult the information on the credit licensing regime in ASIC’s range of regulatory guides for licensees. In particular, see Do I need a credit licence? (RG 203) and Guidance for small credit businesses (INFO 97).

Step 2: Establish if you will be engaging in credit activity 

Review the kinds of activities you will engage in through your business, and use ASIC’s legislation guidance FAQ to help you decide whether these will fall within the definition of ‘credit activity'.

Step 3: See if you qualify for any exemptions

Some individuals and certain activities may be exempt from the credit licensing requirements in the National Credit Act and the National Consumer Credit Protection Regulations. Examples include pawn brokers and debt collectors.

According to ASIC, you do not need to hold a credit licence if:

• you are a representative of another person who holds a licence and you engage in credit activities on their behalf
• you, or the type of credit activity you engage in, are exempt from the credit licensing requirements, or;
• ASIC grants you relief from the requirement to hold a credit licence.

In the case of mortgage brokers, they may not need to hold their own personal credit licence if they are an authorised credit representative (ACR) for a licence holder such as an aggregator.  

Becoming an ACR may have its own set of requirements, such as having completed the relevant mortgage broking qualifications, being a member of a mortgage brokering industry association, holding professional indemnity insurance, and more.