Is an Australia Credit License (ACL) required to provide or arrange premium funding?
Have you thought about establishing your own premium funding company but have been held back because you thought you might have to apply for an ACL? The answer is no, you do not need an ACL unless you provide or arrange consumer credit.
If you provide or arrange consumer credit, you need to either hold an ACL, be a credit representative of someone who holds an ACL or has an exemption in place.
What is consumer credit, and how does it relate to premium funding? Consumer credit is credit provided where:
- the debtor is a natural person or strata corporation (a consumer);
- the credit is provided ‘wholly or predominantly’ for personal, domestic or household purposes or to purchase, renovate or improve the value of a residential investment property; and
- a charge is made for the credit.
Apply this to premium funding:
A premium funding contract will only be caught by consumer credit, to the extent that it is funding for an individual or a strata corporation, and the cover provided under the funded insurance contract is for personal, domestic or household purposes.
Any other premium funding will not be consumer credit and will not be caught by the ACL regime. No licence is required to arrange or provide this type of premium funding.
Some premium funders that provide funding for insurance that is taken out for personal, domestic or household use have been granted an exemption by ASIC. If you do apply for a license, you might be entitled to an exemption. Learn more here.
If you need to discuss this further, please contact Rebecca. She can help guide you through the process to establish your own premium funding business.