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February 17, 2011

IDR guidelines for customers of mortgage managers of securitisation bodies

ASIC has issued revised Regulatory Guide 165 Licensing: internal and external dispute resolution (RG 165) which sets out additional obligations which apply to bodies which make (or buy) loans or leases and repackage them as investment products to sell to investors (securitisation bodies): see RG 165.23–RG 165.30.

The guide sets out the IDR requirements for credit licensees which act as mortgage managers for securitisation bodies.

The IDR procedures of the credit licensee are required to cover:
(a) disputes that relate to the credit activities they engage in when they act on behalf of the securitisation body; and
(b) disputes about the conduct of the securitisation body (including disputes seeking to change the credit contract, for example, on hardship grounds or because the contract was unjust or ‘unsuitable’).

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Posted 17th February 2011 by David Jacobson in licensing

February 15, 2011

Exit fees banned: draft regulations

Treasury has released exposure draft regulations which set out the proposed amendment to the National Credit Code to ban exit fees on new home loans from 1 July 2011 as part of the Competitive and Sustainable Banking System Package.

The draft National Consumer Credit Protection Amendment Regulations 2011 prohibit a fee or charge payable on or in relation to the termination of a home loan provided for in a credit contract for a home loan entered into on or after 1 July 2011, except if the fee or charge is a break fee for a fixed loan or a discharge fee.

What is a home loan?
A credit contract is for a home loan if the loan is secured over residential property or is provided wholly or predominantly to either purchase, renovate or improve residential property or refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property.

What is a break fee?
Break fee means a fee or charge that relates only to the early termination of a credit contract for a fixed loan and is payable as a result of a change in the cost of funds to the credit provider.

A fixed loan means a credit contract under which, at the time of early termination of the credit contract, the annual percentage rate is fixed for the whole or part of the amount due under the credit contract.

What is a discharge fee?
Discharge fee means a fee or charge that only reimburses the credit provider for the reasonable administrative cost of terminating the credit contract.

A cost is a reasonable administrative cost only if it does not exceed a reasonable estimate of the average reasonable administrative cost to the credit provider of terminating that class of credit contract.

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Posted 15th February 2011 by David Jacobson in legislation

February 1, 2011

ASIC Information Sheet on credit licensee trust accounts

ASIC has issued Information Sheet 136 (INFO 136) explaining how holders of an Australian credit licence (credit licensees) meet their trust account obligations when they hold money received on behalf of another person in the course of providing a credit service [section 97 of the National Consumer Credit Protection Act 2009].

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Posted 1st February 2011 by David Jacobson in licensing