The National Consumer Credit Protection Amendment
Regulations 2010 (No. 4) were gazetted on 8 December 2010 and
released on Friday afternoon.
In response to industry concerns about the short time to be
ready for commencement on 1 January 2011, the regulations contain
an exemption until 1 April 2011 from the requirement to provide
credit guides, quotes, and credit proposal documents if:
a licensee provides the borrower details of the licensee's
external dispute resolution (EDR) scheme; and
if a credit assistance (broker) will charge for the services,
there is a written agreement specifying the amount and when the
borrower must pay.
As a result:
brokers who are using the MFAA finance broking contract (or a
document based on that document) will comply as it discloses EDR
details. However, if the broker is a credit representative,
the FBC must show the EDR details for both the licensee and the
credit representative. The MFAA Code of Conduct will continue
to require members to provide disclosures as shown in that document
until 1 April 2011.
it is likely many lenders will start using credit guides
immediately as they are very simple documents for balance sheet
lenders. They need only show the name, contact details, EDR
information, information about loan assessment, and the right to
request a copy of the assessment. Credit guides for brokers are
more complex and will generally be impractical to draft until the
further disclosure regulations are made, hopefully in January, to
allow time to prepare for 1 April 2011 start date.
The MFAA and the industry welcome the cooperation of Treasury
and Government in working towards a solution which will work well
for consumers and industry.
Dealings with previous borrowers and changes to credit
The regulations provide that if a credit guide has been provided
to a customer within the last 12 months, a second credit guide does
not have to be given to the borrower so long as the EDR details
provided in the old credit guide have not changed.
If the information in a credit guide changes, the updated
information need not be included in the credit guide provided to a
borrower so long as the updated information is less than 93 days
old and does not relate to a change of EDR scheme details.
This exemption is only relevant to licensees and credit
representatives who are giving credit guides and not relying on the
exemption from giving a credit guide.
For those who came in late – what disclosures are
In summary, unless using the exemption until 1 April 2011:
lenders and lessors give credit guides (unless exempt in which
case the servicer provides the credit guide);
brokers and mortgage managers give credit guides, quotes, and
credit proposal documents.
Copy of credit assessment
The requirement to provide a copy of the credit assessment if
requested by the borrower is not subject to the exemption and does
commence on 1 January 2011.
Each business will need to devise its own way of providing a
copy of the credit assessment to borrowers.
The MFAA provides free for members a 'Disclosure Module
– Interim' providing more details. This can be
accessed in the members section of the MFAA website. The
Disclosure Module provides an example credit guide for lenders and
provides information about how to comply with the requirement to
provide a copy of the credit assessment on request.
This part will cover the legal position in relation to promotional materials and misleading and deceptive conduct.
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