Australia: Further Changes to NCCP (National Consumer Credit Protection) From 1 March 2013

Last Updated: 5 March 2013
Article by Richard Williams

In issuing this email alert we are reminded of the expression: "It ain't over till (or until) the fat lady sings" which is defined in Wikipedia as –

(it) is a colloquialism. It essentially means that one should not presume to know the outcome of an event which is still in progress. More specifically, the phrase is used when a situation is (or appears to be) nearing its conclusion. It cautions against assuming that the current state of an event is irreversible and clearly determines how or when the event will end. The phrase is most commonly used in association with organized competitions, particularly sports.

It strikes us that this expression could be applied to current deliberations by Treasury in relation to the form of final notices of default to be used under the National Credit Code from 1 March 2013.

It illustrates the difficulties involved where there are short timeframes available for consultation – where Treasury has to provide an outcome quickly where the agenda and timelines are dictated by Government agenda.

Federal Treasury distributed what it said were final default notices on the 13 February. Last Friday, the 22nd February, Treasury issued a further release announcing further minor changes to the forms of default notice and other deferrals.

Please see the extract from Treasury's email below and attached new notices:


I confirm that Treasury will seek regulations to allow:

Credit providers and lessors to be exempt from the requirement to give notice (oral or written) when they agree to a change, whether under the existing requirements (in current subsection 72(3)) or under the new requirements new paragraph 72(4)(a) for credit providers, and from new paragraph 177B(4)(a) for lessors.

Where the change is a simple arrangement credit providers and lessors are also exempt from the requirement to give written notice under subsection 73(1) and subsection 177C(1). A simple arrangement is defined as an agreement that defers or reduces the obligations of a consumer for a maximum period of 90 days.

These changes are intended to allow credit providers to continue to apply existing practices after 1 March 2013.

The exemption would apply until 1 March 2014, pending further consideration of the need for a more nuanced approach, with ASIC to lead consultations on this issue (as previously flagged).

Transitional Arrangements

Treasury considers that the transitional period in which credit providers can use the existing Forms 11 and 12 should now be extended until 1 December 2013.

In summary, during the period between 1 March 2013 and 1 December 2013:

Credit providers would be able to use either Form 11 or Form 11A in relation to all credit contracts (whether entered into before or on or after 1 March 2013).

Credit providers would be able to use either Form 12 or Form 12A in relation to all credit contracts (whether entered into before or on or after 1 March 2013).

Content of Forms

One change has been made to the versions of the Forms circulated previously. In Forms 11A and 18A the following sentence has been deleted: "For example, we can [insert appropriate example]".

This results in the following changes:

The second paragraph under heading 1 in Form 11A just reads:

If you do nothing before [insert default notice period end date], we can commence enforcement action against you.

Similarly, the second paragraph under heading 1 in Form 18A will read:

If you do nothing before [insert default notice period end date], we can commence enforcement action against you.

I attach word versions of the Forms to assist you.

I confirm that we will be seeking to have the regulations made as soon as possible. I will be looking to shortly circulate a version of the regulations that we intend to present to ExCo.

Other Issues

Treasury is also considering two additional issues, concerning the interaction between the new section 72 and joint debtors and guarantors, and between it and debt buyers. I anticipate circulating a separate update on these issues shortly.

Thanks for your patience on this matter.

Please feel free to circulate this to other interested parties.

Link to Form 11A

Link to Form 12A

Link to Form 18

Link to Form 18A

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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