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May 26, 2010

Can you combine your credit guide and FSG?

Your credit guide and financial services guide (FSG) can be combined into a single document if you have an Australian Financial Services Licence (or you are the authorised representative of such a licensee) and you have to give a credit guide as the holder of an Australian Credit Licence (or as a credit representative of such a licensee).  Any statements or information to be included in the credit guide that are identical to statements or information in the FSG do not have to be repeated.

The regulation permitting the combination of the credit guide and FSG into one document is regulation 7.7.08B under the Corporations Act, which was introduced in the Corporations Amendment Regulations 2010 (No.4) made on 6 May 2010 . The regulation commences on 1 January 2011.

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Posted 26th May 2010 by Patrick Dwyer in legislation, licensing

Further changes to default notice content

Amendments to the National Credit Regulations which came into effect on 24 May include a revised Form 12, which sets out wording that must be included in default notices issued under section 88 of the National Credit Code.

If you have already updated your default notices for the National Credit Code, you will need to revise them again to reflect the amended Form 12.

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Posted 26th May 2010 by Patrick Dwyer in legislation

May 25, 2010

Credit registration update

ASIC has announced that since registration opened on 1 April for all those entities and individuals intending to engage in credit activities after 1 July 2010, ASIC has received over 8700 registrations (as at 19 May 2010).

ASIC has confirmed that registrations close on 30 June 2010 but says that anyone who waits until after 18 June 2010 to apply, risks not being registered by the end of the registration period.

If you are not registered with ASIC by 30 June 2010 or acting as the authorised credit representative of someone who is registered, you must stop engaging in credit activities until you either become registered or have an Australian credit licence.

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Posted 25th May 2010 by David Jacobson in licensing

May 23, 2010

National Consumer Credit registration exemptions

The National Consumer Credit Protection (Transitional and Consequential Provisions) Amendment Regulations 2010 (No. 2) commence on 24 May 2010.

The Regulations make amendments to the National Consumer Credit Protection (Transitional and Consumer Protection) Regulations 2010 (Principal Regulations), which are related to the transition from the current State-based regulatory framework for consumer credit to the new national consumer credit protection regime.

Specifically, the Regulations:
• amend the exemption from registration in the Principal Regulations for organisations that provide incidental benefits to their members (in relation to a credit contract or consumer lease) to remove the obligation to provide the licensee or registered person with information relevant to deciding whether or not to enter the credit contract or consumer lease;
• provide an exemption in the Principal Regulations from registration for persons engaging in credit services at the point of sale in relation to a continuing credit contract under which a branded or co-branded credit card and amend the existing exemption for point of sale credit services;
• amend the exemptions in the Principal Regulations from registration for tax agents and lawyers; and
• implement transitional arrangements for regulating credit providers and lessors with carried over instruments (COIs). COIs are credit contracts, consumer leases, mortgages and guarantees that are regulated by the states and territories under the Uniform Consumer Credit Code (UCCC) and that will still be in effect as at 1 July 2010. From 1 July 2010, COIs will be regulated by the National Credit Code.

UPDATE: The Regulations also include revised wording for Form 12 which is to be included in default notices.

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Posted 23rd May 2010 by David Jacobson in legislation

May 20, 2010

Consumer Credit Pre-Contractual Disclosure Research Report released

The Standing Committee of Officials of Consumer Affairs has released a report titled: 'Simplification of Disclosure
Regulation for the Consumer Credit Code: Empirical Research and Redesign

The key purpose of the research was to develop a consumer credit pre-contractual disclosure model which would provide consumers with a significantly better tool for comparing credit products and credit providers than the current method.

The report concludes that the existing model is hard to understand by consumers. The study has produced an easier to understand disclosure model.

The research is expected to be useful during the Commonwealth's second phase of its action plan for the transfer of responsibility for the regulation of credit, as well as providing relevant information to a parallel process being undertaken by the Commonwealth in relation to the disclosure provisions for other financial services.

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Posted 20th May 2010 by David Jacobson in legislation

May 16, 2010

Dispute resolution under National Consumer Credit

ASIC's updated Regulatory Guide 165 Licensing: Internal and external dispute resolution released on 7 May 2010 tells you what you need to include in your internal dispute resolution (IDR) arrangements if you're an Australian Credit Licensee or a credit representative.

Here are some of the key points:

  • Your IDR procedures have to fit with some of the definitions and principles in the Australian Standard on complaints (AS ISO 10002 -2006) - the definition of "complaint", and the guiding principles 5.1 (Commitment), 6.4 (Resources), 8.1 (Collection of information) and 8.2 (Analysis and evaluation of complaints).
  • The definition of "complaint" in the Australian Standard is: "An expression of dissatisfaction made to an organisation, related to its products or services, or the complaints handling process itself, where a response or resolution is explicitly or implicitly expected."
  • The National Consumer Credit Protection Act talks about "disputes" rather than "complaints". Where the Act refers to a dispute, ASIC considers this to have the same meaning as complaint.
  • Your IDR procedures must also have a system for informing complainants about the availability and accessibility of your external dispute resolution (EDR) scheme.
  • Where the complaint or dispute is resolved to the customer's satisfaction by the end of the next business day, you don't have to follow the full IDR process (but ASIC encourages you to do so where possible).
  • You should immediately acknowledge receipt of complaints or disputes and address them promptly.
  • The final IDR response must be provided within a maximum of 45 days.
  • This timeframe does not apply in the case of a dispute about a default notice - instead, a 21 day limit applies here.
  • While the default notice dispute is being handled at IDR, and for a reasonable time after that (at least 14 days), you must not commence or continue legal proceedings or any other enforcement action, unless the statute of limitations is about to expire.
  • You must have a dedicated telephone number and where possible fax number, postal address and email address to accept and handle hardship applications.
  • Disputes involving hardship applications or postponement of enforcement proceedings must be treated as urgent matters.
  • Under the National Credit Code a credit provider has 21 days to consider a request for hardship relief or postponement of enforcement proceedings. Once these 21 days are up, the IDR stage ends and the customer should be referred to EDR if the matter has not been resolved. Similarly, if the credit provider reaches agreement with the disputant, under the National Credit Code the credit provider is required to confirm this in writing within 30 days. There is no further time under the IDR process for a dispute about this, and the matter should be referred to EDR if it has not been resolved.
  • The right to go to EDR and the EDR's contact details must be included when the disputant is advised in writing of the outcome of the hardship or postponement request, or when the terms of approved hardship or postponement are confirmed in writing to the customer.
  • A disputant may lodge their dispute directly with the EDR where the dispute involves a default notice that has been issued after a request for hardship assistance or postponement of enforcement proceedings has been declined.
  • IDR procedures must be documented. This must cover procedures and policies, remedies available and internal structures and reporting requirements.
  • If you outsource IDR procedures, you're still responsible for them.
  • While you are registered with ASIC but waiting on your Australian Credit Licence (ACL), your existing IDR procedures will be fine if they comply with the requirements set out in the May 2009 version of RG 165.

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Posted 16th May 2010 by Patrick Dwyer in legislation, licensing