We thought it would be helpful to summarise the position of referrers with all the amendments in place.

There are now 4 referrer exemptions, and they can be found in regulation 25 of NCCPR. Exemptions 1 and 2 are ongoing. Exemption 3 only operates until 30 September 2010, after which exemption 4 effectively replaces it.

Exemption 1 – The Original Exemption (Reg. 25(2))

Terms of the exemption

1. The referrer informs the consumer that a licensee or registered person, or a representative of the licensee or registered person (the provider) is able to provide a particular credit activity or a class of credit activities.
2. The referrer gives the consumer information about how the consumer may contact the provider.
3. At the same at the time, the referrer discloses to the consumer any benefits, including commission, that the referrer (or an associate of the referrer) may receive in respect of the activity, or that is attributable to the activity.
4. The benefits disclosure is in the same form as the information given by the referrer about the provider. For example, if the referrer gives the information about the provider in writing, the benefits disclosure will also have to be in writing.

Comments on this exemption

• If the referrer does any other type of credit activity, such as suggesting that the consumer apply for a particular credit contract with the provider, the referral would fall outside the exemption. Any type of endorsement of the provider or its products may put the referral activity at risk of being regulated. The referrer must avoid providing credit assistance or acting as an intermediary if it wants to rely on this exemption.
• This exemption does not allow the referrer to give the consumer’s contact details to the provider, or to facilitate the consumer contacting the provider (such as via a website).

Exemption 2 – The Website Exemption (Reg. 25(2A))

Terms of the exemption

1. The referrer informs a consumer that the provider is able to provide a particular credit activity or a class of credit activities.
2. The referrer gives the consumer information about how the consumer may contact the provider, and makes arrangements enabling the consumer to contact the provider by means of a link that can be accessed from a website provided by or for the referrer or an associate of the referrer.
3. At the same at the time, the referrer discloses to the consumer any benefits, including commission that the referrer (or an associate of the referrer) may receive in respect of the activity, or that is attributable to the activity.
4. The benefits disclosure is in the same form as the information given by the referrer about the provider.

Comments on this exemption

• This exemption was introduced in regulations made on 29 June 2010 and applies from 1 July 2010.
• The only difference from exemption 1 is in the second condition (see additional words in italics): the exemption allows the referrer to make arrangements for the consumer to contact the provider via a website link.
• This is not a “technology neutral” regulation – contact via a website is treated differently from other ways to facilitate contact.

Exemption 3 – Until 30 September 2010 (Reg. 25(4))

Terms of the exemption

1. The activity occurs before 1 October 2010.
2. The referrer informs the consumer that the provider is able to provide a particular credit activity or a class of credit activities.
3. The referrer gives the provider the consumer’s name and contact details.
4. The referrer gives the provider a short description of the purpose of the credit or consumer lease (if the referrer knows the purpose).
5. At the same at the time, the referrer discloses to the consumer any benefits, including commission, that the referrer (or an associate of the referrer) may receive in respect of the activity, or that is attributable to the activity.
6. The referrer is not banned from engaging in the credit activity.
7. The referrer does not require the consumer to pay a fee to anyone in relation to the referral.
8. The consumer has consented to the referrer giving the consumer’s name to the provider.
9. The referrer engages in the activity as a matter incidental to the carrying on of a business that is not principally making contact with persons to give their names or other details to another person.

Comments on this exemption

• This exemption was introduced in regulations made on 19 July 2010 and only applies from 21 July until 30 September 2010. After that, exemption 4 (see below) will apply instead, so this is a transitional regulation.
• The consent of the consumer required (condition 8) is only for the passing on of the consumer’s name. There does not seem to be a requirement that the consumer also consent to the purpose of the credit being passed on, or to the provider contacting the consumer, but referrers may want to do this in any case.
• This exemption cannot be used by a business that does referrals as its principal business – it only applies if the referral activity is incidental to another business (see condition 9). The reason for this distinction is not clear, if the activity is the same whoever does it.

Exemption 4 – From 1 October 2010 (Reg. 25(5) and reg. 9AB)

Terms of the exemption

1. The referrer engages in the credit activity on or after 1 October 2010.
2. The activity is engaged in under an agreement with the provider which specifies the conduct that the referrer can engage in (namely, conduct to which this exemption applies). The agreement can either be in writing or based on an offer made in writing by the provider and accepted by the referrer.
3. The referrer informs the consumer that the provider is able to provide a particular credit activity or a class of credit activities.
4. The referrer gives the provider the consumer’s name and contact details within 5 business days after informing the consumer.
5. The referrer gives the provider a short description of the purpose of the credit or consumer lease (if the referrer knows the purpose).
6. At the same at the time, the referrer discloses to the consumer any benefits, including commission, that the referrer (or an associate of the referrer) may receive in respect of the activity, or that is attributable to the activity.
7. The referrer is not banned from engaging in the credit activity.
8. The referrer does not require the consumer to pay a fee to anyone in relation to the referral.
9. The consumer has consented to the referrer giving the consumer’s name to the provider.
10. The referrer engages in the activity as a matter incidental to the carrying on of a business that is not principally making contact with persons to give their names or other details to another person.
11. The referrer does not conduct a business as part of which the referrer contacts persons face-to-face from “non standard business premises.”
12. A licensee who engages in a credit activity because of a referral under this exemption must comply with the following (from 1 October 2010):
    1. The licensee must keep, or have access to, a register of its referrers (the referrers register).
    2. The referrers register must include the referrer’s name and contact details, the date and means by which the referrer was advised in writing of the way in which the referrer may engage in credit activities under the agreement (a written agreement between the parties, or an offer in writing accepted by the referrer), and the day on which the referrer first engaged in the referral activity.
    3. The licensee must make the register available to ASIC on request.
    4. The licensee may only contact the consumer within 10 business days after receiving the referral.
    5. If the licensee contacts the consumer in person, the licensee must begin the discussion with the consumer (after the licensee has identified itself) by statements to the following effect:
       • ‘I am contacting you because we have been provided with your contact details by [name of referrer]. Can you confirm that you agreed with [name of referrer] to have us contact you?’
       • if a payment of commission or a financial benefit may be given to the referrer – ‘before we continue, I would like to let you know that if you take up any of our products or services, [name of referrer] may receive the following financial benefits [brief description]
       • ‘are you happy to continue this discussion?’.
    6. If the licensee contacts the consumer by letter or email, the licensee must include, at the start of the letter or email,  statements to the  effect that the licensee is contacting the consumer as a result of being provided with their contact details by the referrer (identifying the referrer by name), and that the referrer may receive a financial benefit or payment.

Comments on this exemption

• If you are a licensee or registrant using referrers, and you want to rely on this exemption, by 1 October 2010 you will need to document your relationship with your referrers by a referrer agreement or an instrument of appointment. You will also need to set up your referrers register, and make sure that your processes include contacting the consumer within the 10 day timeframe and using the appropriate wording when the initial contact is made.
• This exemption, like exemption 3, does not apply to businesses whose principal business is referrals (see condition 10). But an additional restriction in exemption 4 is that the referrer does not conduct a business where the referrer contacts persons face-to-face from “non standard business premises.” These are business premises that are “not physically separate from premises regularly used by consumers for purposes other than being contacted in relation to the supply of goods or services.” The explanatory statement for the amending regulations gives “a stall in shopping centres” as an example of non-standard business premises.