Australia: National Consumer Credit Protection Bill Introduced To Parliament

Last Updated: 26 June 2009
Article by Jon Denovan

The National Consumer Credit Protection Bill introduced to the Commonwealth Parliament on 25 June 2009 differs in some material ways from the consultation draft released in April.

It is likely that it will take until September to pass through parliament. There is potential for further changes during the parliamentary process.

What is the bottom line?

In summary, all lenders and credit intermediaries who deal in UCCC regulated lending (which is extended to include loans to individuals in respect of residential properties for investment purposes) must by 31 December 2009:

  • be a member of an ASIC approved external dispute resolution scheme (EDR)
  • be registered with ASIC.

So, the key change is that consumers will generally have access to free dispute resolution through EDR. This is a positive outcome for consumers.

Key changes compared to discussion draft

  • the responsible lending provisions will not operate until 1 January 2011. This includes the proposed obligations to make sure that a loan is not "unsuitable", to provide a copy of the credit assessment on request, and to provide a Credit Guide. As a result of the Credit Guide requirements being delayed, the provisions requiring commission disclosure by intermediaries will also be delayed. However, commission disclosure by intermediaries may be required under other state or federal laws and will be required under the MFAA Code of Conduct.
  • the requirement for lenders to disclose commissions paid to employees has been removed.
  • penalties have been reduced but are still significant.
  • retail point of sale (including motor dealers) are subject to a 12 month review as to how they should be regulated.
  • debt collectors who take a full assignment will need a licence, but debt collectors who do not take a legal assignment of the debt (e.g. mortgage manager, special servicers etc) are exempt, subject to a 12 month review.
  • licensees will no longer be required to report breaches to ASIC.

What should you do now?

  • all lenders and credit intermediaries dealing with UCCC regulated loans need to act promptly and ensure they are registered by 31 December 2009 (Note that registration doesn't commence until 1 November 2009). Remember, the UCCC will be extended to include loans to individuals to purchase residential property for investment purposes. The registration process is expected to be reasonably simple and it is expected that ASIC's website will provide an easy process. The main requirement is membership of an ASIC approved external dispute resolution (EDR) scheme. Hint: Lenders and intermediaries who have a number of operating entities should act now to work out which entities need to be registered taking into account such considerations as income tax, payroll tax, GST – as well as the vicarious liability that a licensee will assume if it appoints credit representatives.. There is a drop dead date of 31 December 2009 and lenders and intermediaries who are not registered by then will be excluded from the industry until they obtain a licence. Gadens can assist you determine which entities need to register.
  • lenders and intermediaries need to decide whether they will require their associates to obtain their own registration and in due course be licensed, or whether they will appoint their associates as credit representatives of the licensee. Employees do not need to be separately registered, but contractors must either be registered or appointed as a credit representative. Hint: Irrespective of whether associates are credit representatives or registered themselves, they need their own EDR membership. It might be wise to require all associates to be registered so that the option is retained of requiring associates to hold their own licence. Lenders and intermediaries should act now to determine a policy on this issue. It is possible to have hybrid model where some associates are required to hold their own licence, and others are appointed credit representatives.
  • unfair contract terms legislation is now in force in Victoria and will come into force in due course in all jurisdictions. Credit contracts, lender agreements and broker agreements should be reviewed to ensure they do not contain any terms likely to be found unfair. Hint: As this work may have some impact on standard documents, this review should start now.
  • application forms and loan documents need amendment to adopt the new forms including:

- new business purpose declaration

- new direct debit default notice

- new default notice and information regarding debtor's rights

- amended borrower's information statement

- amended guarantor information statement.

There is some time allowed for adopting the new forms, but best practice suggests the new documents should be adopted promptly after they apply, namely 1 November 2009.

For more information, please contact:



Jon Denovan

t +61 2 9931 4927


Vicki Grey

t +61 2 9931 4753


Elise Ivory

t +61 2 9931 4810




Peter Nadalin

t +61 3 9252 2577


Danny Moore

t +61 3 9617 8596




Deborah Bean

t +61 7 3231 1567


Barry O'Callaghan

t +61 7 3114 0245




Maxine Blount

t +61 8 9323 0963


David Albrecht

t +61 8 9323 0910




Wendy Jones

t +61 8 8233 0645


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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