The Regulations specifying how lenders, finance brokers, and
mortgage managers will make disclosure have now been released.
The amendments are contained in the National Consumer Credit
Protection Amendment Regulations 2011 (No. 4) (Cth) which will
amend the National Consumer Credit Protection Regulations
The amendments commence on 1 October 2011 and largely reflect
discussions held with Treasury by industry and primarily the
The Regulations set out rules for giving three documents:
credit proposal disclosure document.
The MFAA will soon release a Disclosure Module which provides
detailed information about the regulations and provides example
documents. Many businesses will need to amend these example
documents to meet their own particular business models. We
invite you to contact Gadens Lawyers now to arrange for your
documents to be amended.
There are a few 'surprises' in the regulations for
mortgage managers and their funders.
Regulation 26B provides that a lender of record for mortgage
management programs must include in their credit guide an
explanation of the relationship between the lender and the mortgage
manager. This means that credit providers who run a mortgage
management program will need two credit guides - one for direct
business and one for mortgage management business. For
securitised programs, this credit guide will usually be provided by
Regulation 28H(3) provides relief for mortgage managers from
disclosing their margin if:
the mortgage manager has day to day management of the loan;
the mortgage manager told the consumer about its management
agreement and the mortgage manager is not acting for the consumer
in relation to the loan;
the maximum cost and the interest rate are published on the
Problems arise with the website requirement. If the lender
also lends direct to the market, the lender may not want to
publicise these rates in competition with their own direct rate.
The publication of two sets of rates could confuse
consumers. Alternatively, if the lender does not lend direct,
the lender may have no web site or be an exempt trustee, and so the
provision will not have its intended effect.
The MFAA is lobbying for this requirement to be changed so that
the rate is published on the manager's
On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
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