New rules excluding certain referrers who provide details of potential borrowers’ details to lenders or brokers from the requirement to be licensed or be appointed as credit representatives (providing certain conditions are met) commence on 1 October 2010.

A licensee will not be breaching the prohibition on dealing with unlicensed persons if the conditions set out in Regulations 25(5) and 9AB are satisfied.

Terms of the exemption

1. The referrer engages in the credit activity on or after 1 October 2010.
2. The activity is engaged in under an agreement with the provider which specifies the conduct that the referrer can engage in (namely, conduct to which this exemption applies). The agreement can either be in writing or based on an offer made in writing by the provider and accepted by the referrer.
3. The referrer informs the consumer that the provider is able to provide a particular credit activity or a class of credit activities.
4. The referrer gives the provider the consumer’s name and contact details within 5 business days after informing the consumer.
5. The referrer gives the provider a short description of the purpose of the credit or consumer lease (if the referrer knows the purpose).
6. At the same at the time, the referrer discloses to the consumer any benefits, including commission, that the referrer (or an associate of the referrer) may receive in respect of the activity, or that is attributable to the activity.
7. The referrer is not banned from engaging in the credit activity.
8. The referrer does not require the consumer to pay a fee to anyone in relation to the referral.
9. The consumer has consented to the referrer giving the consumer’s name to the provider.
10. The referrer engages in the activity as a matter incidental to the carrying on of a business that is not principally making contact with persons to give their names or other details to another person.
11. The referrer does not conduct a business as part of which the referrer contacts persons face-to-face from “non standard business premises.”
12. A licensee who engages in a credit activity because of a referral under this exemption must comply with the following (from 1 October 2010):
    1. The licensee must keep, or have access to, a register of its referrers (the referrers register).
    2. The referrers register must include the referrer’s name and contact details, the date and means by which the referrer was advised in writing of the way in which the referrer may engage in credit activities under the agreement (a written agreement between the parties, or an offer in writing accepted by the referrer), and the day on which the referrer first engaged in the referral activity.
    3. The licensee must make the register available to ASIC on request.
    4. The licensee may only contact the consumer within 10 business days after receiving the referral.
    5. If the licensee contacts the consumer in person, the licensee must begin the discussion with the consumer (after the licensee has identified itself) by statements to the following effect:
       • ‘I am contacting you because we have been provided with your contact details by [name of referrer]. Can you confirm that you agreed with [name of referrer] to have us contact you?’
       • if a payment of commission or a financial benefit may be given to the referrer – ‘before we continue, I would like to let you know that if you take up any of our products or services, [name of referrer] may receive the following financial benefits [brief description]
       • ‘are you happy to continue this discussion?’.
    6. If the licensee contacts the consumer by letter or email, the licensee must include, at the start of the letter or email, statements to the effect that the licensee is contacting the consumer as a result of being provided with their contact details by the referrer (identifying the referrer by name), and that the referrer may receive a financial benefit or payment.

Background