Finance & Credit Law

Generally, yes. Under the National Consumer Credit Protection Act 2009 (Cth), any person or business that engages in credit activities – including providing credit, arranging credit, or acting as a credit intermediary – in relation to a consumer credit contract must hold an Australian Credit Licence issued by ASIC, unless an exemption applies. Exemptions exist for some activities, including certain business lending and where credit is provided incidentally to another service. Whether a licence is required depends on the specific nature of the activity. Koffels can advise on your obligations and assist with the licence application process.

An Australian Financial Services Licence (AFSL) authorises a business to provide financial services, including advice on and dealing in financial products such as managed investments, insurance, and securities. An Australian Credit Licence (ACL) authorises a business to engage in credit activities, such as providing consumer credit or acting as a mortgage broker. Some businesses require both, depending on the range of services they provide. Both licences are issued by ASIC and carry ongoing compliance obligations. Koffels advises on both licence types, including applications, variations, and authorised representative arrangements.

The unfair contract terms regime under the Australian Consumer Law prohibits terms in standard form contracts with consumers and small businesses that create a significant imbalance in the parties’ rights and obligations, are not reasonably necessary to protect the other party’s legitimate interests, and would cause detriment if relied upon. From November 2023, businesses that include or rely on unfair terms face civil penalties. The regime applies to a wide range of standard form credit and finance contracts. If your business uses standard-form documentation, a legal review to identify potentially unfair terms is a practical risk-management step.

The options available to a lender in the event of default depend on the terms of the loan agreement, the security held, and whether the credit contract is regulated under the National Consumer Credit Protection Act 2009 (Cth). For regulated credit contracts, the Act requires lenders to serve a default notice and allow a cure period before taking enforcement action. For commercial lending, the process is governed primarily by the contract terms. Options may include demanding repayment, enforcing security (including mortgages and PPSR-registered interests), appointing a receiver, or commencing court proceedings for judgment. Koffels advises lenders on enforcement strategy and prepares default and demand notices.

Yes, in certain circumstances. A credit contract may be unenforceable or subject to variation if it contains unjust terms under the Contracts Review Act 1980 (NSW), if the lender has engaged in unconscionable conduct under the Australian Consumer Law, if the contract contains unfair terms within the meaning of the unfair contract terms regime, or if the lender failed to comply with responsible lending obligations under the National Consumer Credit Protection Act 2009 (Cth). Each basis for challenge involves different legal tests and timeframes. If you believe a credit contract you have signed is unfair or was obtained improperly, Koffels can assess your position.