ASIC has released a revised version of Regulatory Guide 206 with a modified policy on representative training for credit providers that provide home loans.
The main change to RG 206 is to replace the term ‘mortgage broking services’ with the term ‘home loan credit assistance’, (which ASIC defines as credit assistance in relation to a credit product where the credit is secured by real property) and to permit a representative only providing credit assistance in relation to home loans offered by their own licensee (as opposed to representatives of intermediary mortgage brokers) to complete training in the form determined appropriate by the licensee, subject to certain qualifications.
The revised RG 206 make changes to the requirements for the qualifications of representatives, ongoing training for representatives, the type of training for representatives and the qualifications of responsible managers of credit licensees.
ASIC has not changed its policy regarding qualifications for responsible managers of independent mortgage brokers or representative training for the intermediary mortgage broking sector.
Qualifications
ASIC remains concerned to ensure that credit provider representatives providing credit assistance in relation to home loans are fully trained to perform this role (as well as any other roles they have). ASIC has therefore required that their training should allow the representative to achieve the outcomes specified in Table 2 of RG 206, as well as covering other areas appropriate to their role.
ASIC will no longer require credit provider representatives only providing credit assistance in relation to home loans offered by their licensee to complete a specific training course.
Responsible managers of credit providers providing home loans will no longer need to complete a Certificate IV in Finance and Mortgage Broking, but will instead be able to hold any relevant credit industry qualification to at least the Certificate IV level, or another general relevant higher level qualification (e.g. a diploma or university degree).
Ongoing training
In relation to ongoing training requirements for representatives who provide home loan credit assistance, while ASIC has retained its guidance that 20 hours is an appropriate suitable minimum number of hours of CPD each year, ASIC will also give these representatives the option of a regular ‘knowledge update review’—a test administered by a registered training organisation via a secure facility, assessing the representative’s knowledge of key regulatory and market developments, as relevant to their role and industry sector—as part of meeting their continuing professional development obligations: see RG 206.93.
If affected representatives choose to undertake a regular knowledge update review, ASIC will not require them to complete the minimum 20 hours of CPD each year. Nevertheless, these representatives are likely to need to undertake a reasonable amount of CPD each year in order to maintain their knowledge of key regulatory and market developments, for the purposes of completing their regular knowledge update review.
ASIC will monitor how the credit industry complies with RG 206 over the next three years, and the broader standards of training and competence within the industry and will review its policy in light of any findings arising from that monitoring process. If, at that stage, ASIC is not confident that the more flexible arrangements it has announced are effectively ensuring a high standard of organisational competence and representative training in the industry, it may investigate whether a more prescriptive approach would be appropriate.
Type of training
ASIC has explained that CPD activities undertaken to meet RG 206 should be relevant to the purpose of ensuring that representatives are adequately trained to provide credit services; however, they need not simply be directed at understanding compliance requirements. CPD may encompass a variety of relevant credit-related educational activities, including both product and industry developments related to credit. ASIC thinks internal training on systems, procedures and policies relevant to a representative’s role may also make up a proportion of ongoing training.
ASIC’s guidance is not intended to constitute an exclusive list of activities that may be counted towards CPD: see RG 206.92. ASIC has also clarified that it generally does not regard private study as adequate for the purpose of meeting the CPD requirements, unless it involves audio or visual material specifically designed for the purpose.
Qualification requirements for responsible managers of mortgage brokers, as they apply to credit provider licensees.
ASIC has recognised that responsible managers of credit providers are often responsible for diverse businesses, and has modified its policy in relation to qualifications for credit licensees’ responsible managers. RG 206 now states that responsible managers of licensees that only provide credit assistance in relation to their own home loans may hold credit industry qualifications to at least the Certificate IV level, or another general relevant higher level qualification (e.g. a diploma or university degree): see RG 206.53.
However ASIC requires Responsible Managers of credit providers who oversee representatives providing credit assistance in relation to home loans should take account of the training outcomes it proposes to apply to such representatives (see Table 2 of revised RG 206), and review their own qualifications in this light.
Updating licence conditions
Following on from its change of policy, ASIC will be updating PF 224 Australian credit licence conditions and making any other necessary changes to regulatory guides. These changes will take effect in early 2012. If you are a credit licensee that currently has a licence condition relating to mortgage broking services and you believe that you no longer require it as a result of ASIC’s change of policy, you may apply to ASIC to vary the conditions on your licence.
