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September 27, 2011

How do you display your Australian Credit Licence Number?

From 1 April 2012, section 52(2) of the National Credit Act requires a credit licensee to include its Australian credit licence number when it identifies itself in certain documents and to identify that number as being the licensee's Australian credit licence number.

How do you display your Australian Credit Licence Number? Can you use "ACL" or, when the Australian credit licence number is the same as an Australian Financial Services Licence number, say "ACL/AFSL"?

According to ASIC,

"the licensee must include its licence number in the following way: "Australian credit licence 12345"

It is not sufficient to only use an abbreviated form, such as "ACL 12345".

However, we think that if a licensee or a licence number is referred to in a document more than once, it will be sufficient for the full description of the licence to be used once, and the abbreviated form to then be used in that document.

The documents in which the Australian credit licence number must be included are prescribed in regulation 13 of the NCCP Regulations 2010, as:

  • a document that is required to be created or produced in accordance with Chapter 3 of the Act
  • a printed advertisement that relates to the provision of credit to which the Code would apply
  • a document that is required to be created, produced, given or published by a provision of the Code
  • a document lodged with ASIC that relates to the provision of credit to which the Code would apply.

The Australian credit licence number does not have to be included in other business documents, such as business cards and letterhead. However, licensees should still ensure that this documentation is not confusing or misleading to consumers."

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Posted 27th September 2011 by David Jacobson in legislation

September 22, 2011

Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011

The Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 has been introduced into the House of Representatives.

In relation to consumer credit the Bill contains provisions for:

  • "Enhancements" (particularly relating to hardship variations), which commence on 1 July 2012
  • Reverse mortgages which commence on 1 July 2012
  • Small amount credit contracts ("payday lender" or micro-loans) which commence on 1 July 2012
  • Caps on interest rates and costs for all other credit contracts which commence on 1 July 2013
  • Consumer Leases which commence on 1 July 2012

The exposure drafts were previously discussed here (small amount credit contracts), here (national interest rate cap) and here (reverse mortgages, consumer leases and enhancements).

We will discuss each of the areas affected by the Bill in detailed separate articles in coming weeks.

The Bill will be examined by the Joint Committee on Corporations and Financial Services.[UPDATE: Senate Economics Committee will also examine the Bill]

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Posted 22nd September 2011 by David Jacobson in legislation

September 19, 2011

ASIC guidance on responsible lending disclosure obligations

ASIC has published Information Sheet 146 Responsible lending disclosure obligations: Overview for credit licensees and representatives relating to the disclosure obligations commencing on 2 October 2011.

The 9 page Information Sheet covers:
• the obligations of licensees
• the different types of disclosure documents licensees may have to give to consumers
• the circumstances that trigger a requirement to give those disclosure documents
• special requirements and exemptions that apply to some entities, or licensees that engage in credit activities through those entities
• the type of information that needs to be included in the disclosure documents, and
• instances where these documents can be combined.

The following table is a useful summary provided in the Information Sheet.

Table 1: What credit disclosure documents do I need to provide?

I am a:

Credit guide

Quote

Proposal document

Written assessment

Credit provider, assignee or lessor

YES

(see s126, 127 and 149)

N/A

 

N/A

 

YES

(Final assessment: see s132 and 155)

Credit assistance provider

YES

(see s113 and 136)

YES

(see s114 and 137)

YES

(see s121 and 144)

YES

(Preliminary assessment: see s120 and 143)

Credit representative

YES (see s158)

 

N/A

 

N/A

 

N/A

 

Debt collector (if a licensee or credit representative)

YES (see s160)

 

N/A

 

N/A

 

N/A

 

Note: All references in the table are to the National Credit Act.
There are some exemptions that may apply in certain situations: see Table 2.

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Posted 19th September 2011 by David Jacobson in responsible lending

September 16, 2011

ASIC reports on credit relief decisions

ASIC's Overview of decisions on relief applications (February to May 2011) (REP 252) sets out recent decisions relating to applications for credit relief. In particular it gives guidance as to when ASIC will give "comfort" relief or issue "no-action" letters.
(more...)

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Posted 16th September 2011 by David Jacobson in legislation, licensing

September 5, 2011

Home Loan Key Facts Sheet Regulations

The National Consumer Credit Protection Amendment Regulations 2011 (No.5) were registered on 5 September 2011.

The Regulations set out the operational detail of the home loan provisions in the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011 which commences on 1 January 2012.

The Act requires lenders to provide consumers with personalised Key Facts Sheets for home loans.

What home loans require a Key Facts Sheet?
Section 133AA(1) of the Act defines a standard home loan of a licensee as a standard form of credit contract under which the licensee provides credit:
(a) to purchase residential property; or
(b) to refinance credit that has been provided wholly or predominantly to purchase residential property.

Regulation 28LA prescribes that a standard form of credit contract is a contract for a home loan that obliges the consumer to make repayments that repay principal and interest for the full term of the home loan with one of the following types of interest rates:

  1. Variable rate home loan:The interest rate on the entire loan balance may vary at the lender’s discretion
  2. Fixed rate home loan: The interest rate on the entire loan balance is fixed for the whole or part of the loan

Interest only loans and "split loans" are not covered.
(more...)

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Posted 5th September 2011 by David Jacobson in legislation, responsible lending

September 1, 2011

ASIC reviews exit fee guidance

ASIC has released a new version of Regulatory Guide 220 Early termination fees for residential loans: unconscionable fees and unfair contract terms(RG 220).

The updated guidance takes into account the effect of the National Consumer Credit Protection Regulations 2010 which regulate termination fees for loans secured by residential property.

The guidance in RG 220 is now only relevant to credit contracts secured by residential property:

  • with early termination fees, that were entered into before 1 July 2011, or
  • that contain early termination fees which are not prohibited by the regulations (e.g. break fees on fixed rate loans).

Background

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Posted 1st September 2011 by David Jacobson in licensing, responsible lending