Brokers have missed out on an exemption to the incoming national consumer credit protection regime, presenting potential compliance headaches for those involved in premium funding.

The legislation provides a national code for the provision of credit to consumers for wholly or predominantly personal, household or domestic purposes.

The regulation affects brokers who help clients apply for or secure premium funding, unless they limit their services to passing on factual information and use prepared documents or activities.

Brokers who provide credit services which are included under the Credit Act will have to register by June 30 and be licensed by December 31.

The National Insurance Brokers Association (NIBA) was unable to win an exemption for brokers from the operation of the National Consumer Credit Protection Act.

CEO Noel Pettersen says in a briefing to members that the Australian Securities and Investments Commission (ASIC) “is not prepared to specifically exempt insurance brokers”.

The decision upholds the intention of the legislation to force all providers of credit to retail clients to hold an Australian credit licence.

NIBA will now discuss a potential form of exemption or “broadening of the operation of existing exceptions (eg mere referrer)” with Federal Treasury.

By registering under the regulations as they stand, brokers are able to maintain their existing operations and continue to provide services related to consumer premium funding until December 31, at which point a licence becomes mandatory.

“Members who are considering acting as a credit representative of a registered premium funder, instead of registering themselves, need to consider the impact on the insurance broker of the anti-money laundering and counter terrorism legislation and possible conflict and disclosure issues that arise.”

Insurance Premium Financiers of Australia (IPFA) Chairman Bob Dodd says ASIC’s rejection of his association’s application for premium funding product relief is “disappointing”.

He told insuranceNEWS.com.au the IPFA’s response will depend on the written response of ASIC, which has not yet formally responded to the organisation’s submission.

The IPFA will probably address Treasury directly in a further bid to win exemptions for premium funding that is arranged via a management company acting on behalf of a body corporate or strata.

Under existing terms, such arrangements are caught by the new consumer credit regulations, but Mr Dodd says it “makes sense to classify them as commercial lending”.