Commonwealth Consolidated Regulations

NATIONAL CONSUMER CREDIT PROTECTION REGULATIONS 2010 - REG 12

  (1)   For paragraph   48(2)(a) of the Act, and unless the licensee is an exempt licensee, the arrangements mentioned in subsection   48(1) of the Act are subject to the requirement that the licensee hold professional indemnity insurance cover that is adequate, having regard to:

  (a)   the licensee's membership of the AFCA scheme, taking account of the maximum liability that has, realistically, some potential to arise in connection with:

  (i)   any particular claim against the licensee; and

  (ii)   all claims in respect of which the licensee could be found to have liability; and

  (b)   relevant considerations in relation to the engaging in a credit activity by the licensee, including:

  (i)   the volume of business involved in the credit activity; and

  (ii)   the number and kind of clients; and

  (iii)   the kind, or kinds, of credit activities involved; and

  (iv)   the number of representatives of the licensee.

  (2)   For paragraph   48(3)(c) of the Act, a matter to which ASIC must have regard, before approving particular arrangements under paragraph   48(2)(b) of the Act, is whether those arrangements would provide coverage that is adequate, having regard to matters of the kind mentioned in subregulation   (1).

  (3)   In this regulation:

"exempt licensee" means any of the following:

  (a)   a company or institution of any of the following kinds:

  (i)   a general insurance company authorised by APRA under section   12 of the Insurance Act 1973 , and included on the Register of General Insurers and Authorised NOHCs;

  (ii)   a life insurance company registered with APRA under section   21 of the Life Insurance Act 1995 ;

  (iii)   an authorised deposit - taking institution;

  (b)   a licensee:

  (i)   that is related (within the meaning of section   50 of the Corporations Act) to a company or institution mentioned in paragraph   (a); and

  (ii)   in respect of which the company or institution has provided a guarantee that:

  (A)   ensures payment of the obligations of the licensee to an extent that is adequate within the meaning of subregulation   (1); and

  (B)   is approved in writing by ASIC;

  (c)   a licensee whose license:

  (i)   is subject to a condition under subsection   45(6) of the Act that the licensee is only authorised to engage in credit activities mentioned in item   1, 3, 4 or 5 in the table in subsection   6(1) of the Act; and

  (ii)   is not subject to a condition that the licensee hold professional indemnity insurance;

  (d)   a licensee who:

  (i)   has a licence to provide a credit service within the meaning given by section   7 of the Act; and

  (ii)   will only provide the credit service in relation to:

  (A)   credit contracts for which the licensee is the credit provider; or

  (B)   consumer leases for which the licensee is the lessor.

Note:   For paragraph   (b), a decision to refuse to approve a guarantee is a reviewable decision under section   327 of the Act.