Amendments to the NCCP Regulations deal with reduced fees for
single person companies, rules for lenders with run off books, and
the exemption for point of sale credit.
The NCCP (Fees) Amendment Regulations 2010 specifies
that a sole trader will only pay $450 per annum for a licence fee
instead of the $1,000 previously thought to be the minimum rate for
companies. This was always the intention, but confusion arose
because there was no definition of sole trader. The fee for sole
traders has always been $450.
The amendments introduce the definition that:
Sole Trader means:
a. a natural person; or
b. a person (other than a natural person) that has only one
representative that engages in credit activities on its
Generally this will mean a company (whether it has one or more
directors) so long as there is only one operative in the
Separately, ASIC has clarified that licensees conducting
servicing and other intermediary activities which are not directly
related to lending or arranging a loan will pay the minimum fee (ie
that no higher fee will apply for volume) being $450 for a sole
trader and $1,000 for other companies.
Carried over instruments
The regulations follow the arrangements previously announced by
Under the regulations, a business lending or managing a book in
run off mode has the option of being licensed or electing for the
statutory scheme. The business must make its election known to ASIC
by 30 June 2010.
It is expected that most businesses in run off mode will elect
to take a licence, because the regulation under the statutory
scheme differs little from being licensed (except for the saving of
Residential investment loans made pursuant to a credit contract
dated before 1 July 2010 never become subject to the NCCP regime,
and so lenders and servicers of a book containing residential
investment loans do not need to adopt either alternative unless
they intend to engage in new NCC regulated lending.
A carried over instrument (COS) is a loan which
was regulated under the old UCCC made pursuant to a temp credit
contract dated before 1 July 2010. It is these lenders that can
elect between the two schemes.
In relation to both UCCC and residential investment loans,
varying a loan including increasing the principal sum will not make
the loan a new NCC loan unless the variation is documented pursuant
to a new credit contract.
What should you do now?
If you are the lender/lessor or servicer of a run off book,
decide whether you will register or opt for the statutory
We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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