Besides introducing credit licensing, the draft National Consumer Credit Protection Bill 2009 introduces a number of new concepts and procedures into the consumer credit regime including the following:

• the "capacity to pay" test for credit assessment will be expanded by a test of whether the credit contract will be unsuitable for the borrower before entering the contract or increasing a loan;
• "unsuitability" means if it will be likely, at the time the loan is made, the borrower could not comply (and repay) without hardship or the credit doesn’t meet the borrower’s objectives;
• the Bill specifies what is reasonable for a credit provider to do in making the unsuitability assessment ;
• the credit provider must give the borrower a copy of the assessment if requested within two business days if requested any time up to 12 months after the contract expires. There is no obligation to provide a copy of the assessment if the credit contract is not entered into or the credit limit is not increased;
• credit providers must give a person a credit guide , as soon as practicable after it becomes apparent that the credit provider is likely to enter a credit contract with a person who will be the borrower under the contract;
• the credit provider must give written notice of the outcome of an application for a hardship change within 21 days after receiving the application. If the application is refused, the notice must state the credit provider’s EDR and the applicant's’s rights under that scheme;
• The first time a default occurs in payment pursuant to a direct debit authority, the credit provider must give a notice in the prescribed form to the borrower and any guarantor within 10 days of the default occurring.

Langes services

Langes has set up a National Credit Code project team.

We will be developing resources to help implementation planning.

We expect that by August the legislation should be in close to its final form.

We will be holding a series of half day seminars as follows (venues to be advised):

Brisbane: Tuesday 11 August
Sydney: Wednesday 12 August (Grace Hotel)
Melbourne: Thursday 13 August
Adelaide: Friday 14 August.

The seminars will discuss:

• licensing
• training requirements
• changes to the Credit Code
•  unfair contracts
• disclosure requirements
• the effect on existing contracts
• the effect on business lending
• external dispute resolution
• compensation requirements

Contact Levina Chim on 02 8234 4777 02 8234 4777 for a registration form.