Archived Posts Lists

Australian Regulatory Compliance Review
Australian Technology and IP Business
Credit Union and Mutual Law
National Consumer Credit Reform
Personal Property Securities Australia
Longview Business Insights
Australian Private Health Insurers
Wills, Trusts, Super
Mutuals Resource Centre

Resources

Commonwealth legislation
Corporate Governance
Not-for-Profit links
Regulator Links

December 28, 2010

Archived Posts Sitemap: National Consumer Credit

Welcome to the Archived Posts Sitemap which lists all the posts in this part of our site. We hope that this page makes it easier to find what you are looking for. Also try the search box at the bottom of the left hand navigation bar or the Categories section on the right.

Click on Expand All to show all the posts or Collapse All to just see this month's posts.

Expand All

Print This Post Print This Post

Posted 28th December 2010 by David Jacobson in Uncategorized

December 23, 2010

Credit disclosure regulations clarified

ASIC has issued a Class Order [CO 10/1230] which clarifies National Consumer Credit Protection Legislation Amendment Regulations 2010 (No.4).

The Class Order:

  • permits pre-contractual disclosure to be made in the same manner as other disclosure documents under regulation 28L; and
  • clarifies that the commencement delay in subregulation 28N(1)-(3) is confined to credit guides.

See Explanatory Statement here.

ASIC's summary of the transitional arrangements for disclosure documents is set out in INFO 137.

UPDATE 23 December: ASIC has been requested to prepare a further class order and explanatory memorandum to confirm that Credit Proposals will also not be required until 1 April 2011 when Regulation 28N(1) applies.

UPDATE 24 December: ASIC has issued [CO 10/1269] varying ASIC Class Order [CO 10/1230] so as to produce the effect that the deferred commencement to 1 April 2011 applies to credit proposal disclosure documents and lease proposal disclosure documents, subject to certain requirements being met. Consequently, subregulations 28N(1) to (3) will apply to credit guides and proposal disclosure documents. See Explanatory Statement . INFO 137 has been amended.

Print This Post Print This Post

Posted 23rd December 2010 by David Jacobson in legislation, licensing, responsible lending

Lenders with carried over instruments – extension of deadline for audit reports

ASIC has announced that if you have notified ASIC that you are an unlicensed carried over instrument lender and you are not a member of an approved external dispute resolution (EDR) scheme, the time for lodgement of the audit report about whether you have complied with the disclosure requirements in sections 17 and 174 of the National Credit Code in relation to your carried over instruments has been extended from 31 December 2010 to 28 February 2011.

Print This Post Print This Post

Posted 23rd December 2010 by David Jacobson in legislation

December 19, 2010

When must an EDR scheme report issues to ASIC?

The Financial Ombudsman Scheme has clarified when it will pass on dispute information to ASIC.

In its latest newsletter the FOS advises that ASIC Regulatory Guide 139, obliges FOS to identify, resolve and report on systemic issues and serious misconduct.

Recent examples of such issues included an example of a number of financial services providers using incorrect break cost methodology on fixed principal and interest loans on multiple accounts and multiple disputes arising out of one financial services provider not always correctly linking its offset home loan feature to an eligible offset account.

Print This Post Print This Post

Posted 19th December 2010 by David Jacobson in licensing

December 14, 2010

Credit card reforms fast-tracked

The Government's Competitive and Sustainable Banking System Package contains a proposal to fast-track its election commitments with respect to credit cards.

In its Fairer, Simpler Banking policy the Government committed to credit card reforms which included proposals that:

  • consumers are not charged over-limit fees unless they specifically agree that their account can go over the limit,
  • credit card providers must allocate repayments to higher interest debts first and
  • interest charges are applied consistently under an industry-agreed standard, including when interest starts to accrue and on what balances.

Additionally the announced reforms will include:

  • banning unsolicited credit limit extension offers unless pre-agreed to by the consumer
  • making sure lenders give consumers more say over nominating their own credit limit
  • making it mandatory for credit card application forms to include a clear summary of key account features
  • requiring lenders to inform consumers about the implications of only paying minimum repayment amounts on their statements

These changes will be separate from the Stage 2 credit reform process discussed in the Green Paper.

It is proposed that exposure draft credit card reform legislation will be released in January 2011 with the relevant legislative amendments to be introduced in the first sitting of Parliament in 2011.

Print This Post Print This Post

Posted 14th December 2010 by David Jacobson in legislation

When do you need to start using your ACL number?

We get a lot of queries from clients about when you have to start publishing your Australian Credit Licence (ACL) number.

The requirement only commences on 1 April 2012. See section 52(1) of the National Consumer Credit Protection Act (NCCP Act), which says that this applies from the date that is 2 years after the day when section 3 of the NCCP Act commences (that was 1 April 2010).

The documents that are covered are set out in reg. 13  of the National Consumer Credit Protection Regulations:

  • a document that is required to be created or produced in accordance with Chapter 3 (Responsible lending conduct) of the NCCP Act - e.g. the credit guide, suitability assessment, and (if applicable) credit quote and credit proposal disclosure document;
  • a printed advertisement that relates to the provision of credit to which the National Credit Code (Code) would apply -  only printed advertisements are covered, and this only refers to "credit" to which the Code applies, not consumer leases;
  • a document that is required to be created, produced, given or published by a provision of the Code - this would include a credit contract, consumer lease, mortgage, guarantee, statements of account, notices, etc.; and
  • a document lodged with ASIC that relates to the provision of credit to which the Code would apply.

You have to include the ACL number and also identify in the document that the number is your ACL number (for example by the words Australian Credit Licence Number before the number).

Print This Post Print This Post

Posted 14th December 2010 by Patrick Dwyer in licensing

December 13, 2010

Mortgage Key Facts Sheet consultation

Treasury has released a consultation draft of the Mortgage Key Facts Sheet proposed in the Government's Competitive and Sustainable Banking System Package to be given by lenders to consumers for new home loans.

The document includes terms not currently used in the National Credit Act, such as product name, all-in rate, product features, total amount to be paid back, ongoing fees (per year) as well as a number of calculations, eg the effect on monthly repayments if the interest rate was to increase by one per cent and the amount a borrower will pay back for every $ borrowed.

The document is different from the simplified financial summary table researched in the Standing Committee of Officials of Consumer Affairs' report ‘Simplification of Disclosure Regulation for the Consumer Credit Code: Empirical Research and Redesign‘ released earlier this year.

Under the Government's timetable it expects exposure draft mortgage facts sheet legislation to be published in March 2011.

Print This Post Print This Post

Posted 13th December 2010 by David Jacobson in legislation, responsible lending

Record keeping under the National Credit Act

There are 3 core record keeping obligations under the National Credit Act, one of them a new licence condition:

  • Credit licensees are obliged to retain financial records for 7 years (Section 95 National Credit Act);
  • Credit Providers are obliged to provide copies of loan contracts, guarantees, mortgages, insurance contracts and notices during the life of the contract and for two years after it is ended (section 185 National Credit Code);
  • A licensee must keep a copy of all preliminary and full suitability assessments for funded loans and a record of all material that forms the basis of an assessment of whether a credit contract or consumer lease will be unsuitable for a consumer in a form that will enable the licensee to give the consumer a written copy of the assessment if a request is made under section 120, 132, 143 or 155 of the National Credit Act, Clause 17 of pro forma licence conditions.

There is no obligation on a credit provider to provide a copy of the assessment or the reasons if the credit contract is not entered into or the credit limit is not increased. A credit assistance provider is not required to give the consumer a copy of the assessment if it does not provide credit assistance to the consumer.

RG 209 discusses the assessment obligations in detail.

RG 209.51 notes that "assignees to whom the rights of a credit provider under a credit contract have been assigned have an additional eight business days to comply with a request for a copy of the assessment if it is made within two years of the credit contract commencing. If the request is made after two years, the assignee has an additional four business days to comply: see reg 27 of the National Consumer Credit Protection Regulations 2010. Assignees should ensure that the credit provider assigning its rights under the credit contract provides the assignee with the relevant records of the preliminary or final assessment to ensure that the assignee is able to comply with the obligation to provide a copy of the assessment on request by the consumer."

Print This Post Print This Post

Posted 13th December 2010 by David Jacobson in legislation, licensing, responsible lending

December 12, 2010

Credit Act deadlines approach

Credit licence applications
If you currently conduct consumer credit activity and you have registered with ASIC, in order for you to continue from 1 January 2011 the deadline for lodging fully complete and accepted applications with ASIC is 31 December 2010.

As ASIC is closed from Christmas Day to 3 January 2011 you should submit your application as soon as possible so that requisitions for further information can be answered.

At 7 December, ASIC had issued 1702 credit licences and received 4605 applications.

Responsible lending
From 1 January 2011, the responsible lending provisions of the National Credit Act apply to authorised deposit-taking institutions (ADIs), and registered finance companies.

The responsible lending provisions for other credit providers and representatives, including finance brokers, intermediaries, and smaller lenders came into effect on 1 July 2010.

Print This Post Print This Post

Posted 12th December 2010 by David Jacobson in legislation, licensing, responsible lending

December 10, 2010

New consumer credit disclosure regulations

The National Consumer Credit Protection Legislation Amendment Regulations 2010 (No.4) have been registered.

Amongst other things, the Regulations set out important practical changes relating to:

  • the form and content of responsible lending disclosure documents; and
  • the way they must be given to consumers.

The disclosure documents affected include the credit guide, credit quote and credit proposal disclosure document.

The changes:

  • provide temporary and conditional transitional relief between 1 January 2011 and 1 April 2011 in relation to disclosure of EDR scheme membership in credit guides and in relation to the provision of quotes and credit proposals by credit assistance providers;
  • exempt persons from the requirement to provide a credit guide in a number of specific situations where this results in duplication or is otherwise unnecessary (for example, because the consumer has previously been given one and the information has not changed);
  • exempt persons who provide credit assistance from having to give a quote if they will not be charging the consumer a fee;
  • permit disclosure documents to be given electronically, subject to conditions; and
  • permit two or more disclosure documents to be combined (provided that they otherwise meet the requirements of the National Credit Act).

Some existing regulations have been renumbered.

Print This Post Print This Post

Posted 10th December 2010 by David Jacobson in legislation, responsible lending
Older Posts »