An Australian Credit Licence (ACL) is a licence issued by ASIC that authorises a business to engage in regulated credit activities under the National Consumer Credit Protection Act. An ACL is required when a business provides consumer credit, credit assistance or other regulated credit activities unless a legislative exemption or valid representative arrangement applies.
Expanded Answer
An ACL allows a business to lawfully carry on specified credit activities in Australia. These activities include providing consumer credit, acting as a credit provider, providing credit assistance, performing mortgage broking services and engaging in other regulated activities covered by the National Consumer Credit Protection Act. The licence sets the legal framework within which the business must operate and is subject to ongoing compliance obligations administered by ASIC.
Holding an ACL involves more than obtaining regulatory approval. Australian Credit Licensees must maintain organisational competence, adequate compliance arrangements, appropriate risk management systems, internal dispute resolution procedures, membership of the Australian Financial Complaints Authority where required, and systems that ensure compliance with responsible lending and other applicable obligations. ASIC expects licensees to monitor their representatives, maintain appropriate records and demonstrate ongoing compliance throughout the life of the licence.
Applies when: the business carries on regulated consumer credit activities in Australia.
Not required when: the business does not engage in regulated credit activities or lawfully operates under a valid credit representative arrangement or other legislative exemption.
Why it matters
Holding the correct licence is fundamental to operating lawfully in Australia’s consumer credit sector. Businesses that undertake regulated credit activities without an ACL or appropriate authorisation may face ASIC enforcement action, civil or criminal penalties, client remediation obligations and significant reputational damage.
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Practical guidance
- Identify whether the business conducts regulated consumer credit activities before commencing operations.
- Assess whether an ACL, a credit representative arrangement or a legislative exemption applies to the proposed business model.
- Maintain governance, compliance and supervision systems that support ongoing compliance with ACL obligations.
Further reading
What is an Australian Credit Licence? A practical guide for credit businesses