The Minister for Financial Services, Superannuation and Corporate Law has announced the making of further regulations finetuning the new scheme:

• the National Consumer Credit Protection Regulations Amendment 2010 (No. 3) (Credit Amendment Regulations),
• the National Consumer Credit Protection (Transitional and Consequential Provisions) Amendment Regulations 2010 (No. 3) (Transitional Amendment Regulations), and
• the National Consumer Credit Protection (Fees) Amendment Regulations 2010 (No. 2) (Fees Amendment Regulations).

The Amendment Regulations include:

• Exemption for special purpose funding entities
• Arrangements for unlicensed lenders and lessors with carried over instruments
• form changes
• indexation for fees.

Further regulations are proposed to be issued in June and July to cover the following matters:

• an additional exemption for referrers where they pass on a consumer’s contact details directly to a licensee or registered person;
• clarification of the treatment of locums and temporary employees;
• transitional arrangements for residential investment property loans; and
• minor technical amendments.

During the ASIC credit licensing webcast on 15 June, ASIC announced that the licence exemption for “mere referrers” is currently being reviewed.

The issue is that the exemption in NCCP Regulation 25 is “upstream” in that it allows referrals (of credit) to be made to consumers but does not expressly allow “downstream” referrals of consumers’ details to brokers or credit providers.

If the exemption is not broadened, “downstream referrers” will need to be licensed or appointed as an authorised credit representative (assuming they provide a credit service).

Section 31 of the NCCP Act prohibits a licensee from dealing with an unlicensed person.

ASIC has issued 6 new and updated information sheets:
INFO 102 Getting registered for credit [Updated]
INFO 103 Getting a credit licence
INFO 104 Complying with your credit obligations
INFO 105 Dealing with consumers and credit
INFO 108 How much does a credit licence cost?
INFO 109 Credit licensee offences: Prohibited dealings and unlawful authorisations

All of the requirements under the National Credit Code (“NCC”) will apply to regulated credit contracts that are made on or after 1 July 2010.

From 1 July 2010 the NCC will also apply to existing Uniform Consumer Credit Code (“UCCC”) regulated credit contracts (called “carried over instruments”) with some modifications – see Transitional Provisions below.

Variations of UCCC loans must be made in accordance with NCC requirements.

The UCCC will not apply to any credit contract from 1 July 2010, including contracts entered into prior to that date.

The NCC will not apply to any contract made prior to 1 July 2010 that was not regulated by the UCCC (eg residential property investment loans).

All rights and liabilities regarding credit contracts, mortgages, guarantees, consumer leases and sale contracts that existed at the commencement of the NCC will be maintained. If a person had a right or liability under the UCCC, a new right or liability (referred to as a “substituted right or liability”) that is equivalent to the old right or liability is created under the NCC. Procedures, proceedings and remedies in relation to the substituted right or liability may be brought, or continued, after commencement of the NCC.

The NCC applies regardless of whether the credit provider is a registered person or credit licensee.

Transitional Provisions
The modifications to the NCC that apply for existing UCCC contracts from 1 July 2010 are as follows:

• As credit for a residential investment property is not UCCC regulated, an existing residential investment property loan will not become regulated on 1 July – it will stay unregulated.
• Existing mortgages that are permitted under the UCCC, but would not be permitted under the NCC (eg a mortgage over essential household property), will remain unregulated (and lawful).
• The existing UCCC limits in relation to hardship and postponement of enforcement applications will apply, not the new higher NCC limits.
• The new NCC provisions in relation to Business Purpose Declarations will not apply to existing UCCC contracts, so existing declarations will not become retrospectively invalid because of the NCC provisions.
• Changes which narrow the exemption for short-term credit in the NCC will not apply to existing short-term credit contracts.

Can we use old forms?
For a two-year period after the start of the NCC (ie until 30 June 2012), you can provide or use UCCC prescribed forms instead of the corresponding NCC forms . If the NCC form requires you to provide more information than required by the equivalent UCCC form, you still have to provide the additional information, but you can provide the additional information in a separate document with the equivalent UCCC form.

Suitability Assessments
Suitability assessments must be made in respect of an increase in a credit limit as well as new contracts. If you are not an authorised deposit-taking institution (“ADI”) or registered financial corporation (“RFC”) – for example, if you are a broker – this applies from 1 July 2010. For ADI’s and RFC’s, this requirement will commence on 1 January 2011.

Accordingly a variation of a pre-1 July 2010 UCCC regulated contract by increasing the credit limit will require a suitability assessment from 1 July 2010 if you are not an ADI or RFC, and from 1 January 2011 if you are an ADI or RFC.

Licensing
If you are an existing lender you should apply for registration by 18 June.

Licensing applications may be made on-line with ASIC from 1 July.

The National Consumer Credit Protection Amendment Regulations 2010 (No. 2) implement and clarify the previously announced exemptions.

The Regulations:

• amend various provisions in the National Consumer Credit Protection Regulations 2010 (the Principal Regulations) including the exemptions from licensing for providers of incidental member benefits, tax agents and lawyers, and the exemption in relation to the refinancing of loans for residential investment property;
• provide an exemption from licensing 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 will be provided and amending the exemption in the Principal Regulations for point of sale credit services; and
• implement the regime for regulating people with carried over instruments (COIs).
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Posted 1st June 2010 by David Jacobson in legislation, licensing

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.