Australia: NCCP ACT amendments – hardship, leases, reverse mortgages, and small amount lending
regulation and compliance update

Key points

Amendments to the National Consumer Credit Protection Act 2009 are likely arising from the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) presented to the Commonwealth Parliament on 21 September 2011. The key changes are summarised below. The changes are intended to commence on 1 July 2012.

The key features of the legislation are:

• new hardship provisions will make it easier for borrowers to apply for hardship relief
• a prohibition on taking enforcement action for 14 days after responding to a postponement of enforcement application
• courts can make orders to address unfair or dishonest conduct by finance brokers
• restrictions on the use of 'independent', 'impartial', 'unbiased', 'financial counsellor', and 'financial counselling'
• extend the time for giving direct debit default notices from 10 business days to 14 days
• impose restrictions on reverse mortgages, most relevantly a no negative equity guarantee
• create a new regime for small amount credit contracts of $2,000 or less, and impose a maximum establishment fee and monthly charge
• specify that the maximum 'cost rate' including interest and charges and fees to third parties such as brokers is 48% per annum
• amend the NCC so that consumer leases are regulated more like regulated loans.

A more detailed summary of the key provisions can be accessed here.

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This report does not comprise legal advice and neither Gadens Lawyers nor the authors accept any responsibility for it.