In THG Developments Pty Ltd and Australian Securities and Investments Commission [2012] AATA 8 THG unsuccessfully applied to the Administrative Appeals Tribunal for the review of a decision of ASIC to refuse THG’s application for an Australian credit licence.

THG proposed in its licence application that “Credit representatives will make the loan in their own name as a representative pursuant to our licence”. ASIC decided to refuse THG’s application for a licence.

ASIC contended that if THG’s credit representatives were to act in such a way, they would be ‘credit providers’ engaging in ‘credit activity’ who, pursuant to s 29(1), would each require a credit licence and without such a licence they would be contravening the Act.

THG’s proposal apparently involved THG providing administrative services and compliance training to lenders and bringing lenders and potential borrowers together, perhaps, in the future, through an internet portal. There was no evidence of how THG would ensure compliance by the lenders. When a lender entered into a credit contract with a borrower, THG would take a percentage of the interest charged by the lender.

The Tribunal concluded:

If the interpretation for which THG contends is correct, there would be no responsible lending obligations on credit representatives when they lend to consumers (other than the limited obligations referred to above) and those consumers would have none of the protections established under Part 3-2 of the Act. That this would undermine the operation of the national consumer credit regime and supports the interpretation propounded by ASIC, namely, that any authorisation of a credit representative by THG must be as agent for THG and not as a credit provider on their own account and in their own name. In other words, for the responsible lending obligations to have full force and effect, where a credit representative is entering into a credit contract, the representative must do so as an agent of the licensee. In our view, this argument is compelling.

Section 37(1) of the Act requires that ASIC must not grant a licence if (s 37(1)(b)) it has reason to believe that an applicant is likely to contravene its obligations under s 47 of the Act if the licence is granted. Section 47 sets out the general conduct obligations of licensees, including in s 47(1)(d) that it comply with the credit legislation and in s 47(1)(e) that it take reasonable steps to ensure that its representatives comply with the credit legislation. Thus, ASIC, having formed the view that THG was likely to contravene its obligations under s 47, was required to refuse THG’s application for a licence.

The Tribunal is therefore satisfied that for the reasons stated above, ASIC’s decision to refuse THG’s application for a licence was correct and should be affirmed.