Do You Need an Australian Credit Licence? A Decision Framework for Private Lenders

Published 2 October 2026

Introduction

Private lenders must determine whether their lending activities require an Australian Credit Licence from Australian Securities and Investment Commission (ASIC). The answer turns on the purpose of each loan, not on how a fund raises its capital.

This article sets out a decision framework for private lenders and credit funds, explaining when credit activities trigger licensing obligations under the National Consumer Credit Protection Act 2009 (Cth) (‘NCCP Act’).

Interactive Tool: See If Your Lending Needs an Australian Credit Licence

NCCP Act Triggers & Licensing for Private Lenders

Cross-Referencing NCCP Applicability for Your Lending Model

A private lender may need an Australian credit licence when its credit contract satisfies each element of the four-part test in Section 5 of the National Credit Code (‘the Code’), which is Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth) (‘NCCP Act’). The test applies where:

• the borrower is a natural person or strata corporation;
• a charge, such as interest or a fee, is made for the credit;
• the lender provides credit in the course of a credit business or another business; and
• the credit is wholly or predominantly for personal, domestic or household purposes, or for purchasing, renovating or improving residential property for investment.

Each element must be satisfied before the credit contract is regulated, unless an exemption applies. A lender that engages in credit activities involving regulated credit may need an Australian credit licence issued by the Australian Securities and Investments Commission (ASIC), and should consider obtaining advice from private lending and non-bank finance lawyers.

Understanding the Business Purpose Test & Avoiding Sham Declarations

Section 5(4) of the NCCP Act excludes credit provided wholly or predominantly for business purposes or for investment other than residential property investment. More than half of the credit must be intended for that non-regulated purpose. A mixed-purpose loan may still be regulated if its predominant purpose is personal, domestic or household use.

A business purpose declaration under Section 13(2) of the NCCP Act is not conclusive. It cannot be relied on if the lender knew, or had reason to believe, that the actual purpose was personal. The declaration must also substantially follow Regulation 68 of the National Consumer Credit Protection Regulations 2010 (Cth) (‘NCCP Regulations’) and include the required warning.

ASIC has named poor private credit practices as a 2026 enforcement priority, and it has taken action against lenders alleged to have used company borrowing structures to avoid the NCCP Act, such as lending to a company where the loan was really for an individual’s personal or household purpose.

Distinguishing Between Source of Funds & Use of Funds

An Australian Financial Services Licence may regulate how a private credit fund raises capital from wholesale investors, but it does not remove the need for an Australian credit licence when the fund lends that money for a regulated purpose. The source of funds concerns the investors; the use of funds concerns the borrower and the credit activity.

A fund may therefore need both an Australian Financial Services Licence and an Australian credit licence where it raises capital from wholesale investors and lends it to a natural person for a purpose covered by Section 5 of the NCCP Act. Residential investment property loans and home renovation loans are identified as regulated purposes. The investors’ wholesale status does not change the licensing position for the lender.

Credit Licence vs Authorised Representative Status

Comparing a Full Licence Against Operating as a Credit Representative

Holding an Australian Credit Licence allows a business to engage directly in credit activities. These activities include:

• providing credit under a credit contract;
• benefiting from mortgages or guarantees;
• suggesting or assisting with a credit contract; and
• acting as an intermediary between a credit provider and a consumer.

The licence is issued and assessed by the ASIC.

Operating as an authorised credit representative of an existing licensee may provide an exemption from holding an Australian Credit Licence directly. This structure can suit a private lender that wants to conduct credit activities through an established regulatory framework rather than apply for its own licence at the outset.

Scenarios Where Representative Status is Commercially Preferable for Scaling

Credit representative status may be commercially preferable when a private lender wants a faster route to market. Operating under an existing licensee can allow the lender to begin its credit activities while developing the competence and capability ASIC expects from an Australian Credit Licence applicant.

A full Australian Credit Licence may be more suitable once the lender has the resources and systems to demonstrate that it can carry out credit activities responsibly. ASIC assesses whether an individual or company is competent and capable of conducting those activities. As a result, a lender scaling towards independent operations may use the representative period to prepare for that assessment.

Ongoing Obligations for Private Lenders & Authorised Representatives

Responsible Lending Exemption Updates & AFCA Membership

Providers of regulated credit must participate in external dispute resolution administered by the Australian Financial Complaints Authority (AFCA). Responsible lending obligations and specific hardship response duties also apply to regulated credit arrangements under the NCCP Act.

A limited exemption applies to certain mixed-purpose small business loans where there is a genuine business purpose. The exemption covers businesses meeting either of the following criteria:

• fewer than 100 employees; or
• revenue of $5 million or less in the previous financial year.

The National Consumer Credit Protection Amendment (Small Business Exemption) Regulations 2026 (Cth) (‘Small Business Exemption Regulations’) commenced on 5 September 2026 and provide that the exemption period ends at the start of 3 October 2036. The exemption relates only to responsible lending obligations; other credit laws continue to apply.

Managing ASIC Supervision & Reporting Requirements

ASIC established its dedicated Private Credit Institutional Loan Market Unit in mid-2024. Its published surveillance material has identified concerns involving:

• valuation integrity for distressed or illiquid loan assets;
• conflicts of interest;
• unclear fees;
• liquidity mismatches;
• governance; and
• incomplete fund disclosures.

ASIC’s private credit fund catalogue, published on 9 December 2025, provides a reference point for legal obligations and regulatory guidance but does not cover every obligation. Private lenders and credit representatives should maintain records and reporting processes that accurately address:

• lending activity;
• loan performance;
• risks;
• fees; and
• conflicts of interest.

Proposed enhancements to reporting and disclosure described by ASIC remain regulatory focus areas rather than automatically applying as new legal requirements.

Authorisation Pathways & Application Processes for Non-Bank Financiers

Demonstrating Competence & Capability During the ASIC Process

ASIC issues Australian credit licences and assesses each application. An individual or company seeking an Australian credit licence must demonstrate that it is competent and capable of carrying out credit activities in a responsible manner.

The assessment focuses on whether the proposed lender can conduct its credit activities within the applicable regulatory framework. A private lender should also check whether ASIC relief or an exemption from holding an Australian credit licence may apply to its circumstances.

Preparing Documentation & Managing Application Timeframes

An Australian credit licence application requires supporting documentation for ASIC’s assessment. Private lenders should allow time to prepare the application material and respond to the assessment process, as the required timeframe will depend on the application and the information provided.

The authorisation process may also involve preparing the documents needed to commence lending operations. These may include:

• loan documents; and
• ancillary documents supporting the private lending business.

Case Study on ASIC Enforcement & The Oak Capital Crackdown on Private Lenders

Alleged Evasion of the National Credit Code Using Company Borrowers

On 30 October 2024, ASIC commenced proceedings against Oak Capital Mortgage Fund Ltd and Oak Capital Wholesale Fund Pty Ltd (‘Oak Capital’). ASIC alleged that Oak Capital provided up to 47 loans between about 2019 and October 2023 without holding an Australian credit licence.

Since ASIC commenced these proceedings, Oak Capital’s position has changed materially. On 22 May 2026, both Oak Capital entities were placed into liquidation. ASIC subsequently obtained the Federal Court’s leave under Section 500(2) of the Corporations Act 2001 (Cth) to continue its proceedings against the companies in liquidation, with the substantive hearing now listed for February 2027. The matter therefore remains unresolved, and the outcome will be a significant test of how the Code applies to company-borrower structures.

The loans were structured with a company named as borrower and one or more individuals named as guarantors. ASIC alleged that this structure was used even where the company had no genuine interest in the transaction, while the loan served a personal, domestic or household purpose and was secured by the individuals’ homes.

The loans were short-term, high-interest arrangements with fees of up to 50.1% of the amount advanced. ASIC alleged that these features meant the loans should have been regulated by the Code in Schedule 1 to the NCCP Act.

Unconscionable Conduct & Deprivation of Consumer Protections

ASIC alleged that the Oak Capital engaged in unconscionable conduct contrary to Section 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (‘ASIC Act’). The allegation concerned a system of making asset-based loans without properly considering whether borrowers could repay them from their income or assets.

ASIC claimed that the arrangements deprived borrowers of protections that may have applied if the loans had been treated as regulated credit, including:

• the ability to make hardship applications;
• protection from excessive fees and interest; and
• responsible lending obligations.

Several loans allegedly entered default, after which the Oak Capital repossessed homes provided as security. ASIC sought a range of relief against the Oak Capital, including:

• declarations;
• injunctions;
• orders that contractual provisions be declared void;
• pecuniary penalties;
• publicity orders; and
• other court relief.

Regulatory Triggers for Specific Private Lending Models & Syndicate Lenders

Lending to Self-Managed Super Funds & Trustee Structures

The trustee structure can determine whether a Self-Managed Super Fund loan requires an Australian credit licence. Where individual trustees borrow to purchase a residential investment property, the trustees are treated as natural persons under the NCCP Act. The loan may therefore be regulated credit, meaning the private lender may need an Australian credit licence.

By contrast, a corporate trustee may place the borrowing outside the consumer credit regime because the NCCP Act generally does not apply to companies. A private lender should assess the trustee structure, borrower and loan purpose before relying on this distinction.

Dual Licensing Requirements for Marketplace & Peer-to-Peer Platforms

Marketplace and peer-to-peer lending platforms may need both an Australian Financial Services Licence and an Australian credit licence because they perform separate activities for investors and borrowers. Pooling investor funds to lend through a Managed Investment Scheme is a financial service regulated under the Corporations Act 2001 (Cth) (‘Corporations Act’). By contrast, arranging or facilitating loans to individuals may be a credit activity under the NCCP Act.

• Australian Financial Services Licence: Relates to the investment product offered to investors.
• Australian credit licence: Relates to services provided to borrowers, including matching individuals with lenders or arranging credit contracts for personal, domestic or household purposes.

Conclusion

Whether a private lender needs an Australian credit licence depends on the credit activity, the borrower and the loan’s purpose, rather than the wholesale status of investors. A separate Australian Financial Services Licence does not remove Australian credit licensing obligations where the lender provides regulated credit, including lending to individuals for personal purposes or residential property investment.

With that framework in mind, private lenders should assess their credit activities, licensing position and compliance obligations against ASIC’s regulatory expectations. Contact GRM LAW’s private lending and non-bank finance lawyers to discuss your business model, determine whether an Australian credit licence is required, and prepare a suitable licensing and compliance approach.

Frequently Asked Questions

Disclaimer: This is general information only and is not legal advice. For advice on your circumstances, contact GRM LAW.