From 1 October 2012, lenders who provide a Key Fact Sheet
(KFS) for standard home loans must comply
with the amended KFS regulations released on 18 June 2012.
KFSs are essentially a personalised comparison rate statement,
setting out the specific cost for the specific loan a borrower
requires. The intention is to allow consumers to shop between
As a result of the amendments contained in the National Consumer
Credit Protection Amendment Regulation 2012 (No.1) the changes
listed below must be made to KFSs by 1 October 2012. Until then,
existing forms or forms amended as shown below may be used.
A mark up showing these changes can be accessed [
here] and a clean version can be accessed [
There are also changes to the KFSs for credit cards which also
must be made by 1 October 2012.
List of changes to home loan KFSs
Amend the text in the 'Description of this home loan'
table to change the 'interest rate' description.
Amend the 'Estimated cost of this home loan' table by
shading the second line ('This means you will pay back') in
light blue and continuing to use black font. However, if a lender
is not able to print KFSs using a colour printer, the document can
be black and white.
Amend the text box under the above table by making a reference
to note '16A', appearing after 'valuation
Amend the text in 'What happens at the end of the fixed
rate period?' to provide two alternatives.
Alternative 1: (the existing text) is used when there is an
option to enter into a new fixed rate at the expiry of the initial
fixed rate term. If not exercised the rate converts to
Alternative 2: (new text) is used when the rate automatically
converts to a variable rate upon expiry of the initial fixed rate
Amend the note at the end of 'What happens if interest
rates includes?' from '18' to '19'.
Insert a new note at 16A. The reference to 'valuation
fees' (see change 3 above) can be removed where (1) the credit
provider charges a valuation fee in all cases and (2) the fee is
included in the amount for establishment fees listed in the
Amend the text at note number 18. Paragraph (b) of this new
text is unclear, but we think the intention of 18(b) is to allow
omission of the section if the loan is a variable rate loan for the
Who has to provide KFSs?
Under the current law, only licensees who are lenders are
obliged to provide KFSs. So, the law does not extend to servicers
of exempt lenders, mortgage managers, or brokers. However, mortgage
managers funded by a licensee (ie the lender of record is a
licensee) may be required to produce KFSs for their funder in
respect of the manager's products. The amendment does not
change who is required to provide a KFS.
If a KFS is produced when not required by law (eg because a loan
is not regulated or because the lender is not a licensee), the KFS
must be amended to omit any reference to the production of the KFS
being an Australian Government requirement.
In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
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