There are two licensing schemes that apply to people and organisations providing advice about financial products or credit:

1. Australian Financial Services Licence
   • Required to operate a business giving advice about financial products.
   • Imposed by the Corporations Act 2001.
2. Australian Credit Licence
   • Required to provide credit services.
   • Imposed by the National Consumer Credit Protection Act 2009.

Financial counsellors are not the same as financial planners or credit service providers, but they sometimes provide advice about financial products or credit.

However, they are exempt from licensing requirements when these activities are part of a free, confidential and independent counselling and advocacy service that helps people in financial difficulty.

It’s important to note that these exemptions are subject to strict conditions.

Regulation 7.6.01(1)(zb) of the Corporations Regulations provide that financial counselling agencies are exempt from the requirement to hold an Australian Financial Services Licence. This means that financial counsellors can give financial product advice as part of a financial counselling service without a licence, as long as the financial counselling agency:

• doesn’t charge any fees or receive any remuneration arising from the financial counselling service
• doesn’t run, and isn’t associated with, a financial services business
• ensures its staff don’t provide any financial product advice outside the terms of the exemption
• ensures its financial counsellors are a member of, or eligible for membership of, a financial counselling association; and
• ensures its financial counsellors have appropriate training to ensure they have adequate skills and knowledge.

(Please note that the AFSL exemption only applies to generalist financial counselling agencies and does not include rural financial counselling agencies.)

Financial counsellor also hold an exemption from the requirement to obtain an AFSL if they help with insurance claims. Section 71.04CAA (9) of the Corporations Regulations provides this exemption for financial counsellors that are members of a relevant State or Territory Financial Counselling Association.

Section 20(5) of  National Consumer Credit Protection Regulations 2010 provide that financial counselling agencies are exempt from the requirement to hold an Australian Credit Licence. This means that financial counsellors can provide advice about credit as part of a financial counselling service without a licence, as long as the agency:

• doesn’t charge any fees or receive any remuneration arising from the financial counselling service
• ensures that the agency and its staff don’t provide any other credit activity outside the terms of the exemption
• ensures its financial counsellors are a member of, or eligible for membership of, a financial counselling association; and
• ensures its financial counsellors have appropriate training to ensure that they have adequate skills and knowledge.

The National Consumer Credit Protection Act 2009 restricts the use of the terms, “financial counsellor” and “financial counselling” and similar terms of similar meaning. The restriction means that only financial counselling agencies that meet the exemption from an Australian Credit Licence can use the restricted terms.

Financial counsellors provide free, confidential and independent services. The purpose of the restriction is to ensure that Credit Licence holders who are not financial counsellors do not mislead people by representing their services as financial counselling (when they are not). Read more about the restrictions here.