The National Consumer Credit Protection Amendment (Home Loan and
Credit Cards) Bill 2011 (the Bill) was passed by
the Australian Parliament on 4 July 2011 and is awaiting assent.
The Bill amends the National Consumer Credit Protection Act 2009
(NCCP Act) which changes will affect all lenders
who provide standard home loans and credit card contracts.
Credit Card contracts
Key changes provided in the Bill are:
making it mandatory for lenders to include, in credit card
application forms, a Key Facts Sheet that
contains key up-to-date information prescribed by regulations such
as information about the annual percentage rate and other terms
which apply to any resulting contact;
prohibiting lenders from making unsolicited invitations that
encourage consumers to increase their credit limits (except where
the consumer has consented to receive such offers and the consent
has not been withdrawn) – consent can be withdrawn by the
consumer at any time and records of consents and withdrawals must
be kept by the lender;
requiring lenders to notify a consumer if a credit card is used
in excess of its credit limit, and restricts the charging of fees
or higher interest (except where the consumer has consented to the
charging of such fees or higher interest and the consent has not
been withdrawn) where the credit card is used to obtain credit in
excess of the credit limit for the credit card contract –
consent can be withdrawn by the consumer at any time and records of
consents and withdrawals must be kept by the lender;
requiring lenders to allocate repayments by the borrower to
that part of the balance of their credit card on which they are
charged the highest interest rate (subject to the consumer
specifically requesting to have a different payment arrangement and
the request has not been withdrawn) – consumer may
withdraw the request at any time.
A credit card is defined as a card of a kind commonly know as a
credit card, a card of a kind that persons carrying on business
commonly issued to their customers for use in obtaining goods or
services from those persons on credit or anything else that may be
used as a card as such (this may include devices that are not like
the traditional plastic credit cards).
Transitional provisions provide that lenders can seek and obtain
consents from consumers to receive credit limit increase
invitations prior to 1 July 2012 so the lenders can rely on the
consents for the purpose of making an unsolicited credit limit
offers after 1 July 2012.
Standard Home Loans
The Bill introduces a requirement for lenders to display on
their website (if they have a website that allows the consumer to
apply for, or make an inquiry about a standard home loan), and make
available on request or in circumstances prescribed by regulations
(whether or not the lenders have a website), a Key
Facts Sheet about the standard home loan products
The lender's website must provide instructions on how to
generate a Key Facts Sheet and allow consumers to generate an
up-to-date Key Facts Sheet that can be printed. The Key Facts Sheet
sets out, in a standardised format, pricing and other information,
as prescribed by regulations, about their products to allow
consumers to readily compare different standard home loans,
especially in respect to their cost.
A standard home loan is defined as a standard form of credit
contract under which the lender provides credit either to pruchase
residential property or to refinance credit that has been provided
predominantly to purchase residential property, including for
Consequence of Breaches
Contravention of various provisions of the Bill attract civil
and criminal penalties. Some offences attract strict liability
penalties. Civil penalties may be imposed up to 2,000 penalty
units ($1.1 million for companies).
Changes provided by the Bill are to commence on 1 Jul 2012 for
credit card contracts and 1 January 2012 for standard home
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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