Senator the Hon Nick Sherry, Minister for Superannuation and
Corporate Law has released the draft National Consumer Credit
Reform legislative package for public exposure.
As foreshadowed in the Consumer Credit Implementation Plan
endorsed by COAG in October 2008, this first phase will see
enactment of the Uniform Consumer Credit Code
(UCCC) as Commonwealth law
introduction of a national licensing regime covering all credit
providers and brokers and intermediaries, through issuance of
Australian Credit Licenses (ACLs)
introduction of a two-step process to licensing the consumer
credit industry which will involve ACL holders having to observe a
number of general conduct and competency requirements
Australian Securities and Investments Commission
(ASIC) gaining enhanced powers as regulator of the
extension of specific responsible lending requirement to
protect consumers from being offered loans that are clearly
unsuitable for them or they cannot afford to repay; and
extension of the scope of credit contracts covered by the UCCC
to contracts where the credit is provided to purchase, renovate or
improve the value of a residential investment property.
At first glance, a key issue will be the broad scope of persons
intended to be captured within the licensing regime as engaging in
a credit activity. These include intermediaries and situations such
finance brokers where, after recommending a particular credit
contract, they proceed to arrange the credit with the credit
aggregators, in acting as a conduit between an individual
broker and a credit provider
mortgage managers, where they are involved in arranging the
credit (in addition to managing the credit once it has been
persons who refer the consumer to another person, where this is
done for the purpose of securing credit (including where the
referrer does not need to be contemplating a particular credit
contract with a particular credit provider or a particular lease
with a particular lessor).
Given this definition, the proposed licensing regime is likely
to require caution on those persons who are casually involved in
the credit industry.
It is also notable for industry that the Bill contemplates that
credit service providers will be required to have membership of an
ASIC approved EDR Scheme in order to obtain a licence to provide
credit or credit services.
The closing date for submissions on this exposure draft is close
of business on Friday, 22 May 2009.
Our more detailed analysis of the draft legislative package will
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