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July 20, 2012

New privacy credit reporting provisions

Schedule 2 of the Privacy Amendment (Enhancing Privacy Protection) Bill 2012 will, when passed, amend the credit reporting provisions in the Privacy Act by replacing Part IIIA with a new Part IIIA.

Commencement and disclosure of repayment history information
The credit reporting provisions have a deferred commencement of 9 months from the day after the Bill receives the Royal Assent.

But Schedule 6 will permit credit providers to disclose to credit reporting bodies repayment history information dating back to the date of Royal Assent. As the commencement period will be 9 months, this means that credit providers will be able to disclose approximately 9 months of repayment history information on commencement. The purpose of permitting this arrangement is to provide a meaningful amount of data on repayment history from the commencement of the new credit reporting system.

New kinds of personal information
The amendments permit additional kinds of credit related personal information about individuals in the credit reporting system.

The five new kinds of personal information are:

  • the date the credit account was opened
  • the type of credit account opened
  • the date the credit account was closed
  • the current limit of each open credit account; and
  • repayment performance history about the individual.

Repayment history information is only available to credit providers who are licensees under Chapter 3 of the National Consumer Credit Protection Act and subject to responsible lending obligations under that Chapter. In certain defined circumstances repayment history information is also available to mortgage insurers for mortgage insurance purposes.

Section 6V defines "repayment history information" as:
(a) whether or not the individual has met an obligation to make a monthly payment that is due and payable in relation to the consumer credit;
(b) the day on which the monthly payment is due and payable;
(c) if the individual makes the monthly payment after the day on which the payment is due and payable—the day on which the individual makes that payment.

Other provisions
Specific rules will also be introduced to deal with pre-screening of credit offers and the ban on access to an individual’s personal information in cases of suspected identity theft or fraud.

The credit reporting provisions will be supported by regulations and a registered Credit Reporting code which will provide details on the new types of information that can be collected. The Credit Reporting code will bind all credit reporting bodies.

A breach of the credit reporting requirements can result in a penalty of up to 2,000 penalty units: this amounts to a maximum of $220,000 for individuals and $1,100,000 for corporations, partnerships or multiple trustees.

A ‘penalty unit‘ has the meaning given by section 4AA of the Crimes Act 1914, currently $110 (corporations, partnerships or multiple trustees are liable for 5 times the maximum number of penalty units payable by individuals).

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Posted 20th July 2012 by David Jacobson in legislation, licensing, responsible lending

July 19, 2012

RHG refunds unconscionable discharge and early termination fees

ASIC has announced that RHG Mortgage Corporation Ltd (RHG) has agreed to refund over 6,400 consumers more than $3.3 million, following ASIC concerns about discharge and early termination fees charged on home loans terminated since 1 July 2010 (when the National Credit Code commenced).

RHG has also agreed to reduce its discharge fees on existing loans and to the progressive removal of early termination fees for customers in the future.

ASIC was concerned some of RHG’s fees were unconscionable or unjust under the National Credit Code in circumstances where:

  • early termination fees on RHG’s Interest Saver products were increased for existing clients from $1,400 in the first year (reducing to $700 in the third year), to a flat fee of $2,000 in the first three years
  • discharge fees were increased for existing clients from $590 to $990
  • early termination fees were calculated by reference to the amount borrowed (e.g. a percentage of the amount borrowed); and
  • early termination fees did not reduce over time.

ASIC took action in relation to RHG after receiving a significant level of complaint.

RHG has started notifying customers who may be entitled to a refund as well as those current customers who will have their fees waived or reduced. This will include refunds to customers of the portion of any discharge fee or early termination fee paid since 1 July 2010 above the originally contracted amount that was applicable before the fee increase. This will also include partial refunds of early termination fees paid since 1 July 2010 on a number of other loans.

RHG is in run-off mode following the sale of the RAMS brand to Westpac in November 2007. It still manages and services its loan book.

Background on early termination fees

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Posted 19th July 2012 by David Jacobson in legislation

July 13, 2012

Consolidated NCCP Regulations

For those who have been frustrated in trying to follow the changes made by the final NCCP regulations from 2011 and this year's credit card and home loan regulations, ComLaw's publication of a set of NCCP Regulations consolidated to 1 July 2012 will be pleasing.

Download the Regulations here.

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Posted 13th July 2012 by David Jacobson in legislation

July 4, 2012

Reminder: Langes Responsible Managers Seminars August 2012

Our next Responsible Manager seminars will be held in August 2012.

The seminars will specifically discuss preparing for an ASIC compliance audit, advertising issues, the proposed enhancements and the credit card changes.

Key Information
* Cost: $385 (incl GST) per person
* CPD points: 3 points
* Time: 9am – 12:30 noon (registration 8:30am)
* Location: Brisbane, Sydney, Melbourne, Adelaide
* Designed for: Responsible Managers who wish to stay up to date with all the relevant finance industry regulatory news

When and where
Brisbane: Tuesday 21 August 2012
Sydney: Wednesday 22 August 2012
Melbourne: Tuesday 28 August 2012
Adelaide: Wednesday 29 August 2012

Register online now

For more information contact David Jacobson.

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Posted 4th July 2012 by David Jacobson in seminar