On 15 December 2009, the National Consumer Credit Protection Act
2009 (Cth) received royal assent. This was a key step in the
transfer of responsibility for the regulation of consumer credit
from the States and Territories to the Commonwealth, which had been
agreed at a series of meetings of the Council of Australian
Governments in 2008.
Under the old regime, which applied since 1996, each State and
Territory enacted legislation which incorporated by reference, or
substantially reproduced, the Consumer Credit (Queensland) Act 1994
Consumer Credit Code which was the Appendix to the (Cth), and the
Consumer Credit Regulation 1995 (Qld), being regulations made under
Relevantly for insurers, the Consumer Credit Code and
Regulations regulated "credit-related insurance
contracts", including "consumer credit insurance"
(CCI), in various ways. Perhaps most significantly, commission paid
by an insurer in connection with consumer credit insurance was
capped at 20 per cent of the premium (excluding government
charges). The Code also imposed certain pre-contractual disclosure
obligations on the credit provider where the credit provider knew
that the debtor was to enter into a credit-related insurance
contract which was to be financed under the credit contract (i.e.
the premium was to be paid out of the loan).
Schedule 1 to the new Commonwealth Act is the National Credit
Code, which largely replicates the old Consumer Credit Code.
Regulations under the new Act largely replicate regulations under
the old Consumer Credit Code.
The National Credit Code commenced on 1 July 2010. It applies
"credit contracts" and "credit-related insurance
contracts" entered into on or after 1 July 2010, and
credit contracts and credit-related insurance contracts that
are "carried over instruments".
A "carried over instrument" is a contract or other
was made, and was in force, immediately before 1 July 2010,
was subject to the old Consumer Credit Code.
Thus, CCI policies that, immediately before 1 July 2010, were
regulated under the old Consumer Credit Code are, from 1 July 2010,
regulated under the National Credit Code.
ASIC has general administration of the Act (including the
National Credit Code): section 239.
Insurance regulation is just a small part of the new national
credit regime. The key components of the regime are:
national licensing of persons engaging in credit
responsible lending conduct requirements
enhanced consumer remedies and regulator powers of enforcement,
These components are modelled, to a considerable extent, on the
regulation of financial services under Chapter 7 of the
Corporations Act 2001 (Cth).
Different definitions of "consumer credit
From an insurance perspective, one unsatisfactory aspect of the
National Credit Code is that it replicates (in section 204) the
definition of "consumer credit insurance" in the old
Consumer Credit Code, which is substantially different from
– and broader than – the definitions of
"consumer credit insurance" in regulation 21 of the
Insurance Contracts Regulations 1985 (Cth) and "consumer
credit insurance product" in regulations 7.1.15 and 7.9.16 of
the Corporations Regulations 2001 (Cth). This means that a
particular kind of insurance policy might be caught as CCI by the
National Credit Code, when it is not treated as CCI under the
Insurance Contracts Act 1984 (Cth) or the Corporations Act.
Another unsatisfactory aspect is that the National Credit Code
replicates (in section 17(15)) the pre-contractual insurance
disclosures required under the Consumer Credit Code. This
represents an unnecessary "doubling up" of some of the
disclosures that are made to the client in the Product Disclosure
Statement (including the additional disclosures required for CCI
products by Corporations Regulation 7.9.16), the Financial Services
Guide and any Statement of Advice, under the Corporations Act.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Sportscraft refunds and returns policy limitations went beyond consumer's rights under the Australian Consumer Law.
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