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November 24, 2009

Credit Bills passed

On 23 November the House of Representatives agreed to Senate amendments to, and passed, the National Consumer Credit Protection Bill 2009 and the National Consumer Credit Protection (Transitional and Consequential Provisions) Bill 2009.

The Bills are waiting assent.

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Posted 24th November 2009 by David Jacobson in legislation

ASIC consults further on credit licensee compensation requirements

ASIC has released a second consultation paper (Consultation Paper 125 Compensation requirements for credit licensees: Further consultation (CP 125)) on its proposals for compensation and professional indemnity (PI) insurance arrangements for credit licensees.

The new consultation paper seeks further specfic feedback on:

  • the amount of PI insurance cover that licensees should hold (unless they are exempted from this requirement by the Act or Regulations made under it), and
  • the availability of ‘run-off’ cover for credit licensees.

Further consultation was required on these issues due to amendments to the compensation requirements set out in the new exposure draft version of the National Credit Protection Regulations, released for consultation on 20 November 2009. The latest version of the regulations contains a new exemption for credit licensees whose sole business is lending. ASIC has amended its proposals relating to compensation requirements based on this change as well as feedback to the previous consultation paper.

ASIC proposes that:

  • all licensees that are not exempt will need to hold PI insurance cover at a set minimum (either $2 million or another amount), depending on the nature of their business
  • this cover should include ‘run-off’ cover, which refers to cover for claims made after the insurance policy has ended that have arisen from the acts or omissions of the insured during the period of insurance cover. ASIC is seeking the industry's feedback on whether this is likely to be available to credit licensees in the current market.

Submissions close on 18 December 2009.

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Posted 24th November 2009 by David Jacobson in legislation

November 20, 2009

Draft Consumer Credit Regulations released

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has released draft Regulations and explanatory material for the National Consumer Credit Protection Package for further public consultation.

The key changes include:

  • excluding lenders from the requirement to hold professional indemnity insurance;
  • extending the streamlined licensing procedures to lenders' mortgage insurers;
  • requirements for people who audit trust accounts;
  • requiring ASIC to have regard to  wheter a licensee has failed to lodge an annual compliance certificate or that a certificate is false or misleading or could not be believed to be true in deciding whether to exercise its license suspension, cancellation or variation powers;
  • exempting securitisation vehicles from licensing requirements where the vehicle is a legal assignee;
  • changes to various licensing and registration exemptions;
  • the treatment of interest charged on credit provided to purchase or improve residential property for investment purposes;
  • exempting credit or leases provided to company directors from the Code and licensing requirements;
  • arrangements for the commencement of the registration period;
  • application of registration, licensing and responsible lending conduct obligations to persons in relation to pre-existing contracts;
  • extending the period which an unsuitability assessment can be relied upon to 120 days for credit provided for the purchase of residential properties, and secured by a mortgage over the property to be purchased;
  • replicating a Queensland transitional provision to maintain its commencement date;
  • clarifying that payment of an infringement notice does not affect the ability of a consumer to seek compensation orders for conduct which is the subject of a paid infringement notice;
  • exempting ASIC and consumers from the general rule that proceedings must be commenced in the jurisdiction in which the consumer currently resides; and
  • changes to the streamlining of Western Australian Class A and B licensed brokers into a Australian credit licence.

The key change to the fees regulations is a new method for calculating fees for lodgement of licensing applications and annual compliance certificates depending on whether a licensee is a sole trader or not and based on the sum of a business's:

  • total amount of credit advanced in the preceding financial year; and
  • total value of credit in applications submitted to credit providers in the preceding financial year; and
  • total amount of rent payable by consumers under consumer leases entered into in the preceding financial year.

The regulations are open for public comment between 20 November 2009 and 11 December 2009.

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Posted 20th November 2009 by David Jacobson in legislation

Credit Bills update

The National Consumer Credit Protection (Fees) Act 2009 received Royal Assent on 16 November 2009.

The Senate amendments to the National Consumer Credit Protection Bill 2009 and the National Consumer Credit Protection (Transitional and Consequential Provisions) Bill 2009 are expected to be considered in the House of Representatives on 23 November 2009.

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Posted 20th November 2009 by David Jacobson in legislation

November 11, 2009

Queensland consumer credit powers referral to Commonwealth introduced

The Queensland Government has introduced the Credit (Commonwealth
Powers) Bill 2009
into the Queensland Parliament in order to refer its powers to the Commonwealth to allow the National Credit legislation to take effect.

The Queensland Consumer Credit Act and Regulations will be repealed but the maximum annual percentage rate of 48% and the existing method of calculation of that rate will be retained.

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Posted 11th November 2009 by David Jacobson in legislation