Insurance premiums funders will petition Federal Treasury for an exemption to new credit licence regulations after the Australian Securities and Investments Commission (ASIC) rejected their submission.

Premiums funders must be registered with the new national consumer credit protection regime. Premium funders, alongside insurance brokers who help clients apply for or secure premium funding, and any other financial body providing credit, must be compliant by the end of the year.

The Insurance Premium Financiers of Australia (IPFA), representing nearly 95% of premium funding volume in Australia, received notification from ASIC last month that they would not receive an exemption under the national scheme.

IPFA unsuccessfully argued that where insurance premium funding is arranged through a management company acting on behalf of a body corporate or strata, it should be exempt from regulation.

Such arrangements are currently treated as consumer transactions, with providers covered by an Australian credit licence.

A request in June from the National Insurance Brokers Association (NIBA) for exemption for its members was also knocked back, upholding the intention of the legislation to force all providers of credit to retail clients to hold an Australian credit licence. NIBA has also said it will seek exemption to the rule through an appeal to Treasury.

IPFA Chairman Bob Dodd told insuranceNEWS.com.au that despite the current electoral gridlock delaying any ruling indefinitely, the group is preparing a case for Treasury.

“For those premium funders currently operating within consumer credit, there will be an increased burden in terms of costs and compliance,” he said.

“The other challenge we have is the pay-by-the-month facility that is currently offered by insurers that is exempt from the Act.”

IPFA represents Australia’s top-tier premium funders and accounts for more than $4 billion in premium volume.

The National Consumer Credit Protection Bill was released in May last year by Assistant Treasurer Nick Sherry as a vehicle to “modernise” Australia’s financial services sector and enforce higher standards of conduct.

ASIC is employing an extra 200 people – subsidised by a $66 million boost from the Federal Government – to administer the regime, and last week announced that it has issued the first 65 licences.