Licensing, lending documentation, and credit disputes for lenders, brokers, businesses, and borrowers
Finance and credit in Australia is closely regulated. Lenders, brokers, financial service providers, and businesses that sell on credit all operate within a detailed framework of licensing, conduct, and disclosure rules. Getting the legal foundation right, whether you are applying for a licence, documenting a loan, or dealing with a default, avoids far more complex problems later.
Koffels Solicitors & Barristers advises businesses and individuals on licensing, compliance, lending documentation, enforcement, and disputes.
AFSL or ACL: which licence do you need?
| Australian Financial Services Licence (AFSL) | Australian Credit Licence (ACL) | |
|---|---|---|
| Covers | Financial services, such as advice on and dealing in investments, insurance, and securities | Credit activities, such as providing consumer credit or acting as a mortgage or finance broker |
| Legislation | Corporations Act 2001 (Cth) | National Consumer Credit Protection Act 2009 (Cth) |
| Issued by | ASIC | ASIC |
| Ongoing obligations | General conduct obligations, design and distribution obligations, breach reporting, dispute resolution | Responsible lending, breach reporting, dispute resolution, hardship obligations |
Some businesses need both. Whether a licence is needed, or an exemption applies, depends on exactly what the business does.
Licensing and regulatory compliance
We advise on:
- AFSL and ACL applications, variations, and ongoing compliance
- authorised representative and credit representative arrangements
- responsible lending obligations under the National Consumer Credit Protection Act 2009 (Cth)
- design and distribution obligations for financial and credit products
- licensing for buy now, pay later providers, which have needed an Australian Credit Licence since 10 June 2025
- ASIC regulatory guidance and what it means in practice for licence holders.
Commercial lending and documentation
Sound documentation is the foundation of any lending arrangement. Poorly drafted or incomplete documents create enforcement risk and can leave a lender exposed on default.
We advise on and prepare:
- commercial loan documentation, including real estate and project finance
- credit applications and trade credit terms for businesses that sell goods and services on credit
- security documents and registrations on the Personal Property Securities Register (PPSR)
- guarantees and indemnities
- default and demand notices.
See also our corporate and commercial law and real estate and property law pages.
Credit disputes and enforcement
When a credit arrangement breaks down, the options for lenders and borrowers depend on the contract, the regulations that apply, and whether the parties are solvent. We advise creditors on recovery and debtors on their rights, including whether a contract may be unenforceable or open to challenge.
We advise on:
- enforceability of credit contracts
- unfair contract terms and unconscionable conduct
- hardship requests and responsible lending complaints
- complaints to the Australian Financial Complaints Authority (AFCA)
- debt recovery, security enforcement, and court proceedings.
Where a borrower or guarantor is insolvent, see our insolvency page. For court proceedings, see litigation and dispute resolution.
Unfair contract terms
Since 9 November 2023, it has been illegal to propose, use, or rely on an unfair term in a standard form contract with a consumer or small business, and significant penalties apply. Small businesses generally have fewer than 100 employees or annual turnover under $10 million.
For most goods and services, the Australian Consumer Law applies. For financial products and services, including credit, an equivalent regime sits in the Australian Securities and Investments Commission Act 2001 (Cth) and is enforced by ASIC. If your business uses standard form loan, credit, or finance documents, a legal review is a practical way to reduce your exposure.
Frequently asked questions
Do I need an Australian Credit Licence to lend money or offer finance?
Generally yes, if you provide or arrange consumer credit. Under the National Consumer Credit Protection Act 2009 (Cth), you need an Australian Credit Licence unless an exemption applies, if you engage in credit activities for credit used mainly for personal, domestic, or household purposes, or to buy or improve residential investment property. Lending predominantly for business purposes is generally not regulated, but other laws still apply. Whether you need a licence depends on exactly what you do.
What is the difference between an AFSL and an ACL?
An AFSL authorises financial services, such as advice on and dealing in investments, insurance, and securities, under the Corporations Act 2001. An ACL authorises credit activities, such as providing consumer credit or acting as a mortgage broker, under the National Consumer Credit Protection Act 2009. ASIC issues both, and both carry ongoing obligations; some businesses need both.
Do unfair contract terms laws apply to credit contracts?
Yes. The ASIC Act regulates unfair terms in standard form contracts for financial products and services, including credit, and mirrors the Australian Consumer Law. Since 9 November 2023, proposing, using, or relying on an unfair term in a standard form contract with a consumer or small business can attract significant penalties.
What can a lender do when a borrower defaults?
It depends on the loan terms, the security held, and whether the National Credit Code regulates the contract. For regulated consumer credit, the lender must generally give a default notice and at least 30 days to fix the default before enforcing. For commercial loans, the contract largely governs the process. Options may include demanding repayment, enforcing a mortgage or PPSR-registered security, appointing a receiver, or suing for judgment.
Can a credit contract be challenged?
Yes, in some circumstances. A court may set aside or change a contract that is unjust under the National Credit Code or the Contracts Review Act 1980 (NSW), or that involves unconscionable conduct. Unfair terms in standard form contracts can be void, and a failure to comply with responsible lending obligations can give rise to compensation and other remedies. Each basis has its own tests and time limits.
Where can borrowers complain about a lender or broker?
Licensed lenders and brokers must be members of the Australian Financial Complaints Authority (AFCA), a free, independent dispute resolution service. You usually need to raise complaints with the lender first. Legal advice can help you decide whether AFCA, a court, or negotiation is the best path.
Talk to us
For advice on licensing, lending documents, or a credit dispute, call 02 9283 5599 or use the form below.
