2013‑2014‑2015

The Parliament of the

Commonwealth of Australia

HOUSE OF REPRESENTATIVES

Presented and read a first time

Credit Repayment (Protecting Vulnerable Borrowers) Bill 2015

No.      , 2015

(Mr Katter)

A Bill for an Act to provide for the protection of certain borrowers who default on the repayment of credit, and for related purposes

Contents

1  Short title........................................................................................................ 1

2  Commencement.............................................................................................. 1

3  Definitions..................................................................................................... 2

4  Protecting vulnerable borrowers.................................................................... 3

5  Act not to apply to State banking, or State insurance, within that State.......... 4

A Bill for an Act to provide for the protection of certain borrowers who default on the repayment of credit, and for related purposes

The Parliament of Australia enacts:

1  Short title

                   This Act may be cited as the Credit Repayment (Protecting Vulnerable Borrowers) Act 2015.

2  Commencement

             (1)  Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Note:          This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.

             (2)  Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.

3  Definitions

                   In this Act:

agreement includes a contract, deed or understanding.

Australian land means any legal or equitable estate or interest (whether actual, contingent or prospective) in real property that is:

                     (a)  located in Australia; and

                     (b)  covered by one or more of the following:

                              (i)  the property is used for carrying on a business of primary production (within the meaning of the Income Tax Assessment Act 1936);

                             (ii)  the property is used for residential purposes;

                            (iii)  premises from which an owner/operator business is based are located on the property.

financial institution means:

                     (a)  a financial corporation within the meaning of paragraph 51(xx) of the Constitution; or

                     (b)  a body corporate that carries on as its sole or principal business the business of banking, lending or insurance.

Note:          See also section 5 (Act not to apply to State banking, or State insurance, within that State).

repayment of credit includes repayment of interest on credit.

4  Protecting vulnerable borrowers

             (1)  This section applies if:

                     (a)  a financial institution provides credit (however described) to another person (the borrower), whether before or after the commencement of this section; and

                     (b)  the borrower defaults (whether before or after that commencement) in the repayment of the credit; and

                     (c)  security has been given over Australian land for the repayment of the credit, whether by the borrower or another person.

Notification of claim of default

             (2)  The financial institution must give the borrower notification of their claim of default and must register the notification of their claim of default with an authorised Government instrumentality.

Right to possess or sell not enforceable for 2 years after default

             (3)  The financial institution cannot, during the period of 2 years after the default, enforce a right arising from the default to possess or sell the land if the value of the land equals or exceeds $150,000 at the time of the default.

             (4)  Subsection (3) ceases to apply in relation to the default if:

                     (a)  an amount of interest in relation to the credit becomes due and payable after the default; and

                     (b)  the amount is not paid to the financial institution within one month after it became due and payable; and

                     (c)  the rate of the interest is not a default or penalty rate of interest arising from the default; and

                     (d)  the financial institution must prove that they gave the borrower notification of their claim of default and that there  was in fact a default at that time.

Interest rates and charges not contemplated by credit agreement

             (5)  The financial institution cannot impose on the borrower any default or penalty rate of interest, additional charges, penalties or impositions however they may be described, that were not in place before the default arose.

Non‑disclosure clauses of settlement agreements are void

             (6)  Any clause in an agreement that prevents the borrower or another party to the agreement (other than a financial institution) from disclosing the contents of the agreement to any other person is void.

5  Act not to apply to State banking, or State insurance, within that State

                   This Act does not apply with respect to State banking, or State insurance, that does not extend beyond the limits of the State concerned.