Australia: Credit Law Regulatory Update – The year in review and what's next?

Australia Consumer Financial Services Alert
Last Updated: 11 November 2014
Article by Andrea Beatty and Abhishek Bansal

This legal insight summarises many key points made at the 24th Annual Credit Law Conference (Conference) held on 1-3 October 2014 and attended by over 200 delegates from the financial services industry.

The Conference analysed key changes impacting the financial services industry in Australia and gave clarity around expected regulatory enforcement activities.

The following is also an overview of key commentary from the Australian Securities and Investments Commission (ASIC), the Office of Australian Information Commissioner (OAIC) and the Department of the Treasury (Treasury).

Andrea Beatty, partner in our Consumer Financial Services team, and author of the recently published Annotated National Credit Code (5th Edition) presented her annual opening regulatory update session at the Conference. The focus of her global regulatory paper this year was the increased visibility of regulators in enforcement activities. The presentation was accompanied by a written paper summarising the changes in the past year. The paper also included a table of ASIC enforcement between July 2014 and September 2014.

On 26 November 2014, K&L Gates will be hosting a Financial Services Masterclass to assist responsible managers, lawyers and compliance officers to keep up to date with developments in financial services law.

If you would like a copy of the Conference paper, or more details about the Financial Services Masterclass, please contact Andrea Beatty.

ASIC Update

At the Conference, ASIC expressly stated that it no longer has a facilitative approach towards enforcement action under the credit laws. In the past year, ASIC has issued five infringement notices, six banning orders, cancelled seven Australian credit licences (ACL) and had two fraud findings.

In addition, ASIC reported on its major wins at the Federal Court of Australia (Federal Court) level. ASIC expects to bring more civil penalties cases taking the lead of the financial regulators in the United Kingdom and United States.

ASIC's major wins in the Federal Court are set out below.

  • The Federal Court ordered a credit card provider to pay a penalty of AUD1.5 million and an additional AUD50,000 for costs for making false or misleading representations.[1] The credit card provider told its customers that in order to activate their credit card, or to apply for an increased credit limit, they also had to consent to receiving invitations to apply for credit limit increases. ASIC commented that the case is illustrative of the fact that the role of compliance and legal functions are to challenge internal business propositions to ensure that the short term profits are not put ahead of regulatory requirements. ASIC will continue to pay close attention to the role of compliance and inhouse legal which must have a strong voice in business.
  • The Federal Court found a small amount credit contract provider to have breached the responsible lending provisions and engaged in unconscionable conduct in relation to the sale of consumer credit insurance.[2] ASIC considers this case to be essential reading for all ACL holders. Focusing on the responsible lending obligations, ASIC commented that the purpose of a loan needs to be very specific, ie descriptions such as 'personal' or 'living expenses' may not be sufficient. ACL holders must ensure that verification of expenses such as rent, mortgage payments and living expenses are carried out as part of responsible lending obligations. The case is scheduled for a penalties hearing on 15 December 2014.

ASIC advised that it will continue to focus on:

  • responsible lending obligations – ASIC does not consider the compliance tips noted in Report 410: Review of 'low doc' home lending following introduction of responsible lending obligations (September 2014) as 'nice to haves'
  • add-on insurance products if consumers receive limited benefit but high commissions are payable
  • misselling of credit and other financial products especially when sold to vulnerable consumers.

OAIC Update

New Guidance

The OAIC commented that it will be releasing further guidance on the following:

  • Australian Privacy Principle (APP) 7 – direct marketing. The guidance will focus on the interaction of APP 7 with the Spam Act 2003 (Cth) and the Do Not Call Register Act 2006 (Cth).
  • Australian Privacy Principle 8 – cross border disclosure of personal information. The guidance will address cross-border disclosures, cloud storage, and when there is an 'Australian link' for the purposes of the Privacy Act 1988 (Cth).
  • Privacy Regulatory Action Policy. Earlier this year, the OAIC released its Privacy Regulatory Action Policy for public exposure. The Policy is now in the process of being finalised. It will be supported by a guide that will consist a series of chapters each addressing different privacy regulatory powers and an explanation as to how the OAIC will exercise each power. For example, there will be a chapter on the OAIC's use of enforceable undertakings and civil penalties.

Complaints and Compliance Assessments

The OAIC is receiving more privacy complaints, mostly relating to:

  • the failure of organisations to prevent internal unauthorised access to personal information
  • the quality of personal information (ie whether it is accurate, up-to-date and complete).

The OAIC is currently assessing whether organisations have taken 'reasonable steps to comply' with the APPs and the new Part IIIA provisions. 'Reasonable steps to comply' means establishing a privacy compliance trail and keeping a record of steps taken to clearly demonstrate that personal information is managed in an open and transparent way and correctly reflects the information flows in your organisation.

It is our experience that organisations can be easily caught out if their privacy policy does not reflect current law (references to the former National Privacy Principles are a giveaway). We have developed a number of privacy tools which can be used efficiently to help patch compliance gaps. Please contact us for further information.

Treasury Update

Due to the government moratorium on legislation awaiting the findings of the Financial System Inquiry, Treasury is not currently pursuing Phase 2 of the credit reforms concerning small business and investment lending. Furthermore, Treasury does not have immediate plans to review the Point of Sale exemption as it considers that a change to that exemption will impose a large regulatory burden on the industry.

Treasury is continuing its work in the unregulated consumer leases space and will release a consultation paper shortly. In its review, Treasury is focused on ensuring that exemptions such as indefinite leases or short term leases are not being used to bypass the intended consumer protections of the National Credit Code.

Treasury also commented that it considers the National Consumer Credit Protection regime to be successful in curbing practices such as 'churning' and loan documents being amended by brokers and lenders.


1[2014] FCA 701

2[2014] FCA 926

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.

K&L Gates has been awarded a 2012 EOWA Employer of Choice for Women citation acknowledging our commitment to workplace diversity.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions