Good to go operates a business of small amount lending and holds an Australian credit licence. When their key person left the business, the CEO applied to be the substitute responsible manager and ASIC refused to approve this. The business then put forward two others as responsible managers. One was rejected and further information was sought regarding the other. The business sought declarations as to ASIC’s powers in granting credit licences under the National Consumer Credit Protection Act 2009 (Cth) and in particular declarations that there is no requirement for the business to identify a responsible manager, that ASIC had no basis to refuse their nominated substitutes and the business was not acting in breach by operating without an approval.
The court considered relevant Regulatory Guides:
- Regulatory Guide 204: Applying for and varying a credit licence; and
- Regulatory Guide 206: Credit licensing − Competence and training.
RG204.220 provides as follows: You must identify at least one person as a responsible manager. We will assess the knowledge and skills of your responsible managers to determine whether you are competent to engage in the credit activities for which you have applied.
RG 206.42 provides: If we think your organisational competence is heavily dependent on one or two responsible managers, we may impose a ‘key person licence condition’ on your credit licence. The key person licence condition would name the responsible managers you are depending on and, if these people change, you would have to identify other responsible managers to replace them and demonstrate that you continue to have the organisational competence to provide your credit activities.
The court said:
The expression ‘responsible manager’ refers to a person against whom ASIC will assess whether the applicant for a licence, or a current licensee, meets certain obligations or requirements under the Act, referred to as “organisational competence” requirements.
The court noted that the business was not in breach of its licence because it lodged with ASIC an application to vary the key person condition of its licence and ASIC had not made a final decision regarding one of the three people put forward.
The court found that the declarations raised hypothetical questions or questions that may never arise. The court found that ASIC did not contend that the only course was to have a responsible manager. It was open to the business to describe how it would comply with the Act and the conditions of its licence which required a certain key person in place. Second, the court found it did not have the power to review ASIC’s rejection of the people put forward. The court also found that ASIC did not contend that the business was in breach by operating without an approved responsible manager. The court noted that ASIC had not made a decision to suspend or cancel Good to Go’s licence, or to impose additional conditions. The court said:
ASIC may not decide to do any of these things. Even if ASIC did decide to do one of these things, it may do so on a different basis.
The court dismissed the case.