Treasury has released for public consultation the draft National
Consumer Credit Protection Amendment (Credit Reform Phase 2) Bill
2012 (draft Bill).
The draft Bill introduces proposed amendments to the
National Consumer Credit Protection Act 2009 (NCCP
Act), the National Consumer Credit Protection
Regulations 2010 (Regulations) and the
National Credit Code (NCC) - to give
effect to Part 2 of Phase 2 of the National Credit Reforms.
Set out below is a summary of the proposed changes.
Credit provided to small business
The draft Bill introduces:
specific responsible lending obligations in relation to a class
of small business credit contracts; and
regulatory requirements in relation to requirements for persons
to obtain a permit from ASIC where they engage in credit activities
in relation to small business credit contracts or a small business
Short term and indefinite term consumer leases
The amendments under the draft Bill extend the definition of
consumer leases to include short-term leases and indefinite term
leases that are currently exempt under subsection 171(1) of the
Both these classes of consumer lease will be regulated where the
following criteria are met:
at the time of entering into the lease, the lessor knew, or
could have established through reasonable inquiries, that the
consumer wanted the use of the goods for a longer or different
period of time (the anticipated period of use); and
the consumer would pay more than the cash price of the goods if
they made rental payments for the anticipated period of use (rather
than for the term of the lease).
Credit provided for investment purposes
The effect of the amendments proposed by the draft Bill is that,
subject to exceptions, credit contracts will be regulated where the
predominant use of the credit is for investment purposes.
The proposed amendments extend the definition of regulated
contracts to include respectively credit contracts and consumer
leases where the credit provider or lessor:
is a private individual who is not in the business of providing
credit or consumer leases;
where the contract is arranged by an intermediary (rather than
directly between the credit provider or lessor and the
The draft Bill introduces amendments which prohibit a person
from engaging in conduct with the aim of avoiding the application
of the NCCP, the Regulations and the NCC.
The closing date for submissions is Friday, 15 February
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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