Australia: Consumer Credit Protection Reform: Amended Regulations Released For Public Comment

On 20 November 2009, the Government released draft amended Regulations and explanatory materials for the National Consumer Credit Protection Reform Package (NCCP Package) for public consultation.

The draft Regulations comprise:

  • National Consumer Credit Protection Regulations 2010
  • National Consumer Credit Protection (Transitional and Consequential Provisions) Regulations 2010
  • National Consumer Credit Protection (Transitional and Consequential Provisions) Amendment Regulations 2010
  • National Consumer Credit Protection (Fees) Regulations 2010
  • Electronic Transactions Amendment Regulations 2009.

The purpose of the further public consultation provides you with a final opportunity to comment on the draft Regulations.

The key amendments made to the previous draft are:

  • Regulations to accommodate different practices in the way interest may be calculated or charged by lenders in respect of the provision of credit for residential property
  • Extending the period for which credit assessments can be relied on to 120 days where the credit is to be provided for the purchase of a residential property and is to be secured by a mortgage over the proposed property
  • The application of licensing and the responsible lending conduct obligations to pre-existing contracts
  • A new method of calculating licensing fees and charges that is intended to address industry concerns about the employee based method of calculating fees.

Summary of amendments to the draft Regulations as set out in the Government's Media Release dated 20 November 2009:

National Consumer Credit Protection Regulations 2010 (Credit Regulations) and National Consumer Credit Protection (Transitional and Consequential Provisions) Amendment Regulations 2010

Key changes to these regulations are:

  • excluding lenders from the requirement to hold professional indemnity insurance
  • extending the streamlined licensing procedures to lenders' mortgage insurers
  • requirements for people who audit trust accounts
  • arrangements for the Australian Securities and Investments Commission (ASIC) suspension or banning powers to encourage licensees to provide correct and timely annual compliance certificates
  • exempting securitisation vehicles from licensing requirements where the vehicle is a legal assignee
  • minor changes to various licensing and registration exemptions in response to comments received from the last round of public consultation
  • the treatment of interest charged on credit provided to purchase or improve residential property for investment purposes
  • exempting credit or leases provided to company directors from the Code and licensing requirements
  • arrangements for the commencement of the registration period
  • application of registration, licensing and responsible lending conduct obligations to persons in relation to pre-existing contracts
  • extending the period which an unsuitability assessment can be relied upon to 120 days for credit provided for the purchase of residential properties, and secured by a mortgage over the property to be purchased
  • replicating a Queensland transitional provision to maintain its commencement date
  • clarifying that payment of an infringement notice does not affect the ability of a consumer to seek compensation orders for conduct which is the subject of a paid infringement notice
  • exempting ASIC and consumers from the general rule that proceedings must be commenced in the jurisdiction in which the consumer currently resides, and
  • changes to the streamlining of Western Australian Class A and B licensed brokers into an Australian credit licence.

National Consumer Credit Protection (Fees) Regulations 2010

Key changes to these regulations are:

  • a new method for calculating fees for lodgement of licensing applications and annual compliance certificates based on the sum of a business
  • total amount of credit advanced in the preceding financial year
  • total value of credit in applications submitted to credit providers in the preceding financial year
  • total amount of rent payable by consumers under consumer leases entered into in the preceding financial year
  • a single licensee, credit representative or person
  • removal of fees for inquiries relating to inspections of registers to avoid double charging when a person requests to inspect a register, and
  • an exemption from fees to allow ASIC to provide information from its credit registers on its website free of charge.

Full details of the amended draft Regulations are available from the Australian Government Treasury's website.

Submissions close on Friday 11 December 2009.

NCCP Package

The NCCP Package, comprising of the 3 Bills, the National Consumer Credit Protection Bill 2009 (NCCP Bill), the National Consumer Credit Protection (Transitional and Consequential Provision) Bill 2009 (NCCP Transitional Bill) and the National Consumer Credit Protection (Fees) Bill 2009, which were passed by the Senate on 26 October 2009 with amendments by the Senate to the NCCP Bill and the NCCP Transitional Bill. Their current status is as follows:

  • National Consumer Credit Protection (Fees) Bill 2009 received assent on 16 November 2009
  • NCCP Bill and NCCP Transitional Bill have been passed by Parliament on 23 November 2009 and is now waiting for assent.

What do you need to do?

Deacons is able to assist you in making a submission or provide advice on compliance with the National Consumer Credit Protection Reform.

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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