Contents
Chapter 1—Introduction 1
Part 1‑1—Introduction 1
1............ Short title............................................................................................. 1
2............ Commencement................................................................................... 1
3............ The National Credit Code.................................................................... 2
Part 1‑2—Definitions 3
Division 1—Introduction 3
4............ Guide to this Part................................................................................ 3
Division 2—The Dictionary 4
5............ The Dictionary.................................................................................... 4
Division 3—Definitions relating to the meaning of credit activity 18
6............ Meaning of credit activity.................................................................. 18
7............ Meaning of credit service.................................................................. 19
8............ Meaning of credit assistance............................................................ 19
9............ Meaning of acts as an intermediary................................................. 20
10.......... Assignees of credit providers, lessors, mortgagees and beneficiaries of a guarantee 21
Division 4—Other definitions 22
11.......... Meaning of approved external dispute resolution scheme................ 22
12.......... When a business is carried on in this jurisdiction............................ 22
13.......... Meaning of misleading..................................................................... 22
14.......... Meaning of person—generally includes a partnership...................... 23
15.......... Meaning of person—generally includes multiple trustees................. 23
16.......... Qualified privilege............................................................................. 25
Part 1‑3—Application of this Act and the Transitional Act 26
Division 1—Introduction 26
17.......... Guide to this Part.............................................................................. 26
Division 2—Constitutional basis and application of this Act and the Transitional Act 27
18.......... Constitutional basis for this Act and the Transitional Act................. 27
19.......... Meaning of referring State................................................................ 28
20.......... Meaning of referred credit matter.................................................... 32
21.......... General application of this Act and the Transitional Act................... 32
22.......... When Acts bind Crown.................................................................... 34
Division 3—Interaction between the Commonwealth credit legislation and State and Territory laws 35
23.......... Concurrent operation intended.......................................................... 35
24.......... When Commonwealth credit legislation does not apply.................... 35
25.......... Avoiding direct inconsistency between Commonwealth and State and Territory laws 36
26.......... Regulations to deal with interaction between laws............................ 38
Chapter 2—Licensing of persons who engage in credit activities 40
Part 2‑1—Requirement to be licensed to engage in credit activities 40
Division 1—Introduction 40
27.......... Guide to this Part.............................................................................. 40
Division 2—Engaging in credit activities without a licence 41
28.......... Application of this Division.............................................................. 41
29.......... Prohibition on engaging in credit activities without a licence............ 41
Division 3—Other prohibitions relating to the requirement to be licensed 43
30.......... Prohibitions on holding out and advertising etc................................ 43
31.......... Prohibition on conducting business with unlicensed persons........... 44
32.......... Prohibition on charging a fee etc....................................................... 44
Part 2‑2—Australian credit licences 46
Division 1—Introduction 46
34.......... Guide to this Part.............................................................................. 46
Division 2—Australian credit licences 47
35.......... Australian credit licences................................................................... 47
Division 3—How to get an Australian credit licence 48
36.......... Applying for a licence....................................................................... 48
37.......... When a licence may be granted—applicants other than ADIs........... 48
38.......... When a licence may be granted—ADIs............................................ 50
39.......... Regulations may prescribe streamlined process for other applicants. 51
40.......... Licences must not be granted to certain applicants............................ 51
41.......... Applicant must be given hearing before refusal of licence................ 52
42.......... Notice of grant or refusal of licence and date of effect...................... 52
43.......... Australian credit licence numbers...................................................... 52
44.......... Basis on which licence is granted...................................................... 53
Division 4—Conditions on an Australian credit licence 54
45.......... The conditions on the licence............................................................ 54
46.......... Licence conditions—special procedures for APRA‑regulated bodies 55
Division 5—Obligations of licensees 57
47.......... General conduct obligations of licensees........................................... 57
48.......... Requirements for compensation arrangements.................................. 58
49.......... Obligation to provide a statement or obtain an audit report if directed by ASIC 59
50.......... Obligation to give ASIC information required by the regulations..... 61
51.......... Obligation to provide ASIC with assistance if reasonably requested 62
52.......... Obligation to cite Australian credit licence number........................... 63
53.......... Obligation to lodge annual compliance certificate.............................. 63
Division 6—When a licence can be suspended, cancelled or varied 66
Subdivision A—Suspensions and cancellations 66
54.......... Suspension or cancellation without hearing...................................... 66
55.......... Suspension or cancellation after offering a hearing........................... 67
56.......... Suspension and cancellation—special procedures for APRA‑regulated bodies 68
Subdivision B—Variations 69
57.......... Varying licences................................................................................ 69
Subdivision C—Miscellaneous rules about suspensions, cancellations and variations 70
58.......... Effect of suspension.......................................................................... 70
59.......... Revocation of suspension................................................................. 70
60.......... Date of effect, notice and publication of variation, cancellation or suspension etc. 70
61.......... Statement of reasons......................................................................... 70
62.......... ASIC may allow licence to continue in force.................................... 70
Part 2‑3—Credit representatives and other representatives of licensees 72
Division 1—Introduction 72
63.......... Guide to this Part.............................................................................. 72
Division 2—Authorisation of credit representatives 73
64.......... Licensee may authorise credit representatives................................... 73
65.......... Credit representative that is a body corporate may sub‑authorise natural persons as credit representatives 74
66.......... Credit representative of 2 or more licensees...................................... 75
67.......... A person cannot be a credit representative in relation to credit activities authorised by a person’s licence 76
68.......... Variation and revocation of authorisations and sub‑authorisations... 76
69.......... Obligation not to give authorisation that has no effect....................... 77
70.......... Obligation to vary or revoke authorisation that ceases to have effect 77
71.......... Obligation to notify ASIC etc. about credit representatives............... 78
72.......... Credit representative numbers........................................................... 80
Division 3—Information about representatives 81
73.......... ASIC may give licensee information about representatives............... 81
Division 4—Liability of licensees for representatives 84
74.......... Application of this Division.............................................................. 84
75.......... Responsibility if representative of only one licensee......................... 84
76.......... Representatives of multiple licensees................................................ 84
77.......... Responsibility extends to loss or damage suffered by client............. 85
78.......... Effect of this Division....................................................................... 85
Part 2‑4—Banning or disqualification of persons from engaging in credit activities 87
Division 1—Introduction 87
79.......... Guide to this Part.............................................................................. 87
Division 2—Banning orders 88
80.......... ASIC’s power to make a banning order............................................ 88
81.......... What is a banning order?.................................................................. 90
82.......... Effect of banning orders.................................................................... 90
83.......... Variation or cancellation of banning orders....................................... 91
84.......... Date of effect, notice and publication of banning order, variation or cancellation 91
85.......... Statement of reasons......................................................................... 92
Division 3—Disqualification by the court 93
86.......... Disqualification by the court............................................................. 93
Part 2‑5—Financial records, trust accounts and audit reports 94
Division 1—Introduction 94
87.......... Guide to this Part.............................................................................. 94
Division 2—Financial records of licensees 95
88.......... Obligation to keep financial records.................................................. 95
89.......... How financial records are to be kept................................................. 96
90.......... Language of financial records........................................................... 96
91.......... Location of financial records............................................................. 96
92.......... Information to be shown in financial records.................................... 97
93.......... Regulations may impose additional requirements.............................. 98
94.......... Financial records taken to be made with licensee’s authority............ 98
95.......... Obligation to retain financial records for 7 years............................... 98
96.......... Financial records are prima facie evidence of matters........................ 99
Division 3—Trust accounts of credit service licensees 100
97.......... Application of this Division............................................................ 100
98.......... Obligation for credit service licensees to maintain trust account...... 100
99.......... Obligations in relation to trust account money................................ 101
100........ Obligation to lodge trust account statement and trust account audit report 102
101........ Time of lodgment of trust account statement and trust account audit report 103
Division 4—Matters relating to audit reports 105
102........ Auditor’s right of access to records, information etc....................... 105
103........ Auditor’s fees and expenses........................................................... 106
104........ Auditor to report on certain matters................................................. 106
105........ Qualified privilege for auditor etc.................................................... 107
106........ Regulations in relation to audit reports etc....................................... 108
Part 2‑6—Exemptions and modifications relating to this Chapter 109
Division 1—Introduction 109
107........ Guide to this Part............................................................................ 109
Division 2—Exemptions and modifications relating to this Chapter 110
108........ Provisions to which this Part applies.............................................. 110
109........ Exemptions and modifications by ASIC......................................... 110
110........ Exemptions and modifications by the regulations........................... 112
Chapter 3—Responsible lending conduct 113
Part 3‑1—Licensees that provide credit assistance in relation to credit contracts 113
Division 1—Introduction 113
111........ Guide to this Part............................................................................ 113
112........ Application of this Part................................................................... 114
Division 2—Credit guide of credit assistance providers 115
113........ Credit guide of credit assistance providers...................................... 115
Division 3—Quote for providing credit assistance etc. in relation to credit contracts 118
114........ Quote for providing credit assistance etc......................................... 118
Division 4—Obligations of credit assistance providers before providing credit assistance for credit contracts 121
115........ Obligations of credit assistance providers before providing credit assistance for credit contracts 121
116........ Preliminary assessment of unsuitability of the credit contract......... 122
117........ Reasonable inquiries etc. about the consumer................................. 122
118........ When the credit contract must be assessed as unsuitable—entering contract or increasing the credit limit 123
119........ When the credit contract must be assessed as unsuitable—remaining in credit contract 125
120........ Providing the consumer with the preliminary assessment............... 126
Division 5—Fees, commissions etc. relating to credit contracts 128
121........ Fees, commissions etc. relating to credit contracts.......................... 128
122........ No profiting from fees etc. paid to third parties............................... 129
Division 6—Prohibition on suggesting, or assisting with, unsuitable credit contracts 131
123........ Prohibition on suggesting or assisting consumers to enter, or increase the credit limit under, unsuitable credit contracts........................................................................................................ 131
124........ Prohibition on suggesting to consumers to remain in unsuitable credit contracts 133
Division 7—Special rules for short‑term and small amount credit contracts 136
124A..... Prohibition on providing credit assistance in relation to short‑term credit contracts 136
124B..... Licensee who makes representations about credit assistance in relation to small amount credit contracts must display information etc................................................................................ 136
Part 3‑2—Licensees that are credit providers under credit contracts: general rules 138
Division 1—Introduction 138
125........ Guide to this Part............................................................................ 138
Division 2—Credit guide of credit providers 139
126........ Credit guide of credit providers....................................................... 139
127........ Credit guide of credit providers who are assignees......................... 140
Division 3—Obligation to assess unsuitability 142
128........ Obligation to assess unsuitability.................................................... 142
129........ Assessment of unsuitability of the credit contract........................... 142
130........ Reasonable inquiries etc. about the consumer................................. 143
131........ When credit contract must be assessed as unsuitable...................... 144
132........ Giving the consumer the assessment............................................... 145
Division 4—Prohibition on entering, or increasing the credit limit of, unsuitable credit contracts 148
133........ Prohibition on entering, or increasing the credit limit of, unsuitable credit contracts 148
Part 3‑2A—Licensees that are credit providers under credit contracts: additional rules relating to standard home loans 151
Division 1—Introduction 151
133A..... Guide to this Part............................................................................ 151
Division 2—Key Facts Sheets for standard home loans 152
133AA.. What is a standard home loan?....................................................... 152
133AB.. What is a Key Facts Sheet for a standard home loan?...................... 152
133AC.. Credit provider’s website to provide capacity to generate Key Facts Sheet 153
133AD.. Credit provider to provide Key Facts Sheet in other situations........ 154
133AE... What if more information is needed from the consumer?................ 155
133AF... Defences to obligation to provide a Key Facts Sheet....................... 156
Part 3‑2B—Licensees that are credit providers under credit contracts: additional rules relating to credit card contracts 158
Division 1—Introduction 158
133B..... Guide to this Part............................................................................ 158
Division 2—Credit card contracts and related concepts 159
133BA.. Meaning of credit card contract etc................................................ 159
Division 3—Key Facts Sheets for credit card contract 161
133BB... What is a Key Facts Sheet for a credit card contract?....................... 161
133BC... Application form for credit card contract to include up‑to‑date Key Facts Sheet 161
133BD.. Credit provider not to enter into credit card contract unless Key Facts Sheet has been provided etc. 162
Division 4—Offers etc. to increase credit limit of credit card contract 164
133BE... Credit provider not to offer etc. to increase credit limit of credit card contract 164
133BF... Informed consent of the consumer to the making of credit limit increase invitations 165
133BG.. Records of consents and withdrawals to be kept............................. 167
Division 5—Use of credit card in excess of credit limit 168
133BH.. Credit provider to notify consumer of use of credit card in excess of credit limit 168
133BI.... Credit provider not to impose fees etc. because credit card used in excess of credit limit 169
133BJ.... Records of consents and withdrawals to be kept............................. 170
Division 6—Order of application of payments made under credit card contracts 171
133BO.. Credit provider to apply payments in accordance with this Division 171
133BP... Agreement to apply payment against particular amount owed......... 172
133BQ.. Application of payment against last statement balance, with higher interest debts to be discharged first 173
133BR... Application of any remaining part of the relevant payment............. 173
Part 3‑2C—Licensees that are credit providers under credit contracts: additional rules relating to short‑term and small amount credit contracts 174
Division 1—Introduction 174
133C..... Guide to this Part............................................................................ 174
Division 2—Short‑term and small amount credit contracts 175
133CA.. Prohibition on entering, or increasing the credit limit of, short‑term credit contracts 175
133CB... Licensee who makes representations about small amount credit contracts must display information etc. 175
133CC... Licensee must not enter into a small amount credit contract if the repayments do not meet the prescribed requirements........................................................................................................ 176
Part 3‑2D—Licensees and reverse mortgages 178
133DA.. Guide to this Part............................................................................ 178
133DB.. Giving projections of equity before providing credit assistance or entering credit contract 178
133DC.. Making reverse mortgage information statement available on website of credit provider or credit assistance provider........................................................................................................ 180
133DD.. Making reverse mortgage information statement available in other situations 181
133DE... Representations that use the term “reverse mortgage” etc................ 182
Part 3‑3—Licensees that provide credit assistance in relation to consumer leases 184
Division 1—Introduction 184
134........ Guide to this Part............................................................................ 184
135........ Application of this Part................................................................... 185
Division 2—Credit guide of credit assistance providers 186
136........ Credit guide of credit assistance providers...................................... 186
Division 3—Quote for providing credit assistance etc. in relation to consumer leases 189
137........ Quote for providing credit assistance etc......................................... 189
Division 4—Obligations of credit assistance providers before providing credit assistance for consumer leases 191
138........ Obligations of credit assistance providers before providing credit assistance for consumer leases 191
139........ Preliminary assessment of unsuitability of the consumer lease....... 192
140........ Reasonable inquiries etc. about the consumer................................. 192
141........ When the consumer lease must be assessed as unsuitable—entering lease 193
142........ When the consumer lease must be assessed as unsuitable—remaining in lease 194
143........ Providing the consumer with the preliminary assessment............... 196
Division 5—Fees, commissions etc. relating to consumer leases 198
144........ Fees, commissions etc. relating to consumer leases........................ 198
145........ No profiting from fees etc. paid to third parties............................... 199
Division 6—Prohibition on suggesting, or assisting with, unsuitable consumer leases 200
146........ Prohibition on suggesting, or assisting with, unsuitable consumer leases 200
147........ Prohibition on suggesting to consumers to remain in unsuitable consumer leases 202
Part 3‑4—Licensees that are lessors under consumer leases 205
Division 1—Introduction 205
148........ Guide to this Part............................................................................ 205
Division 2—Credit guide of lessors 206
149........ Credit guide of lessors.................................................................... 206
150........ Credit guide of lessors who are assignees....................................... 207
Division 3—Obligation to assess unsuitability 209
151........ Obligation to assess unsuitability.................................................... 209
152........ Assessment of unsuitability of the consumer lease......................... 209
153........ Reasonable inquiries etc. about the consumer................................. 209
154........ When consumer lease must be assessed as unsuitable.................... 210
155........ Giving the consumer the assessment............................................... 211
Division 4—Prohibition on entering unsuitable consumer leases 214
156........ Prohibition on entering unsuitable consumer leases........................ 214
Part 3‑5—Credit representatives 216
Division 1—Introduction 216
157........ Guide to this Part............................................................................ 216
Division 2—Credit guide of credit representatives 217
158........ Credit guide of credit representatives.............................................. 217
Part 3‑6—Debt collectors 220
Division 1—Introduction 220
159........ Guide to this Part............................................................................ 220
Division 2—Credit guide of debt collectors 221
160........ Credit guide of debt collectors......................................................... 221
Part 3‑6A—Miscellaneous rules 223
Division 1—Introduction 223
160A..... Guide to this Part............................................................................ 223
Division 2—Representations 224
160B..... “Independent”, “impartial” or “unbiased” etc.................................. 224
160C..... “Financial counsellor” etc................................................................ 225
Division 3—Giving misleading information 227
160D..... Prohibition on giving misleading information etc............................ 227
Division 4—Giving authorisation for deductions by employer of debtor or lessee 228
160E...... Requirements for giving authorisation to employer......................... 228
Part 3‑7—Exemptions and modifications relating to this Chapter 230
Division 1—Introduction 230
161........ Guide to this Part............................................................................ 230
Division 2—Exemptions and modifications relating to this Chapter 231
162........ Provisions to which this Part applies.............................................. 231
163........ Exemptions and modifications by ASIC......................................... 231
164........ Exemptions and modifications by the regulations........................... 232
Chapter 4—Remedies 234
Part 4‑1—Civil penalty provisions 234
Division 1—Introduction 234
165........ Guide to this Part............................................................................ 234
Division 2—Declarations and pecuniary penalty orders for contraventions of civil penalty provisions 235
166........ Declaration of contravention of civil penalty provision................... 235
167........ Court may order person to pay pecuniary penalty for contravening civil penalty provision 235
Division 3—General provisions relating to civil penalty provisions 237
168........ Contravening a civil penalty provision is not an offence................. 237
169........ Involvement in contravention treated in same way as actual contravention 237
170........ Civil evidence and procedure rules for proceedings relating to civil penalty provisions 237
171........ Criminal proceedings before civil proceedings................................ 237
172........ Criminal proceedings during civil proceedings............................... 237
173........ Criminal proceedings after civil proceedings................................... 238
174........ Evidence given in proceedings for pecuniary penalty not admissible in criminal proceedings 238
175........ Civil double jeopardy...................................................................... 239
Part 4‑2—Power of the court to grant remedies 240
Division 1—Introduction 240
176........ Guide to this Part............................................................................ 240
Division 2—Power of the court to grant remedies 241
177........ Injunctions...................................................................................... 241
178........ Compensation orders...................................................................... 242
179........ Other orders to compensate loss or damage.................................... 243
180........ Orders in relation to unlawful credit activities................................. 246
180A..... Orders to remedy unfair or dishonest conduct by credit service providers 248
181........ Preference must be given to compensate consumers....................... 251
182........ Adverse publicity orders................................................................. 251
183........ Relief from liability for contravention of civil penalty provision..... 252
184........ Multiple remedies may be granted................................................... 252
Part 4‑3—Jurisdiction and procedure of courts 253
Division 1—Introduction 253
185........ Guide to this Part............................................................................ 253
Division 2—Civil proceedings 254
Subdivision A—Application of this Division 254
186........ Application of this Division............................................................ 254
Subdivision B—Conferral of civil jurisdiction 254
187........ Civil jurisdiction of courts............................................................... 254
188........ Jurisdiction—decisions to prosecute and related criminal justice process decisions made by Commonwealth officers........................................................................................................ 255
189........ Cross‑jurisdictional appeals............................................................ 257
190........ Courts to act in aid of each other..................................................... 258
Subdivision C—Transfers between courts 258
191........ Transfers—application of Subdivision............................................ 258
192........ Transfers—exercise of transfer power............................................ 259
193........ Transfers—criteria for transfer........................................................ 260
194........ Transfers—how initiated................................................................. 261
195........ Transfers—documents and procedure............................................. 261
196........ Transfers—conduct of proceedings................................................ 261
197........ Transfers—entitlement to practise as a lawyer................................ 262
198........ Transfers—limitation on appeals..................................................... 262
Subdivision D—Other matters 262
199........ Plaintiffs may choose small claims procedure................................. 262
200........ Costs only if proceedings brought vexatiously etc.......................... 268
201........ Civil proceedings not to be stayed................................................... 268
202........ Standard of proof in civil proceedings............................................ 268
Division 3—Criminal proceedings 270
Subdivision A—Application of this Division 270
203........ Application of this Division............................................................ 270
Subdivision B—Conferral of criminal jurisdiction 270
204........ Criminal jurisdiction of courts......................................................... 270
205........ Criminal proceedings—laws to be applied...................................... 273
206........ Criminal proceedings—how taken.................................................. 274
207........ Certain persons to assist in prosecutions......................................... 274
208........ Privilege against self‑incrimination not available to bodies corporate in criminal proceedings 275
Division 4—Proceedings generally 277
209........ ASIC’s power to intervene in proceedings..................................... 277
210........ Evidence of contravention............................................................... 277
211........ Power of court to punish for contempt of court.............................. 278
Chapter 5—Administration 279
Part 5‑1—Registers relating to credit activities 279
Division 1—Introduction 279
212........ Guide to this Part............................................................................ 279
Division 2—Registers relating to credit activities 280
213........ Credit registers................................................................................ 280
214........ Inspection and public availability of credit registers........................ 281
Part 5‑2—Documents lodged with ASIC or required by this Act 282
Division 1—Introduction 282
215........ Guide to this Part............................................................................ 282
Division 2—Lodgment of documents with ASIC 283
216........ When documents are lodged with ASIC......................................... 283
217........ Approved forms for documents to be lodged with ASIC............... 283
218........ ASIC may refuse to receive document etc....................................... 284
Division 3—ASIC’s register of documents 286
219........ Register of documents lodged with ASIC....................................... 286
220........ ASIC may require person to give information for document registers 286
221........ Written document setting out information from document registers is prima facie evidence of matters 287
Division 4—Other provisions relating to documents lodged with ASIC or required under this Act 289
222........ Certified copy or extract of document lodged with ASIC is admissible in evidence 289
223........ ASIC may destroy or dispose of certain documents....................... 289
224........ Court may order lodgment of document etc.................................... 289
225........ Offences relating to documents lodged with ASIC etc.................... 290
Part 5‑3—Concealment or falsification of credit books 293
Division 1—Introduction 293
226........ Guide to this Part............................................................................ 293
Division 2—Prohibitions relating to the concealment or falsification of credit books 294
227........ Concealing etc. of credit books....................................................... 294
228........ Falsification of credit books............................................................ 295
229........ Precautions against falsification of credit books.............................. 296
Part 5‑4—Fees imposed by the National Consumer Credit Protection (Fees) Act 2009 297
Division 1—Introduction 297
230........ Guide to this Part............................................................................ 297
Division 2—Fees imposed by the National Consumer Credit Protection (Fees) Act 2009 298
231........ Fees are payable to the Commonwealth.......................................... 298
232........ Lodgment of document without payment of fee.............................. 298
233........ Doing act without payment of fee................................................... 298
234........ Effect of sections 232 and 233........................................................ 298
235........ Waiver and refund of fees............................................................... 299
236........ Debts due to the Commonwealth.................................................... 299
237........ Payment of fee does not give right to inspect or search................... 299
Part 5‑5—Other administrative matters 300
Division 1—Introduction 300
238........ Guide to this Part............................................................................ 300
Division 2—Other administrative matters 301
239........ ASIC has general administration of this Act................................... 301
240........ Obstructing or hindering ASIC etc................................................. 301
241........ Approved codes of conduct............................................................ 301
242........ ASIC may arrange for use of computer programs to make decisions 302
243........ Qualified privilege for information given to ASIC.......................... 303
244........ ASIC certificate is prima facie evidence of matters......................... 303
245........ Operator of approved external dispute resolution scheme may give information to ASIC 304
Chapter 6—Compliance and enforcement 305
Part 6‑1—Investigations 305
Division 1—Introduction 305
246........ Guide to this Part............................................................................ 305
Division 2—Investigations 306
247........ General powers of investigation...................................................... 306
248........ Minister may direct investigations................................................... 306
249........ Interim report on investigation........................................................ 307
250........ Final report on investigation............................................................ 308
251........ Distribution of report...................................................................... 308
Part 6‑2—Examination of persons 310
Division 1—Introduction 310
252........ Guide to this Part............................................................................ 310
Division 2—Examination of persons 311
253........ Notice requiring appearance for examination.................................. 311
254........ Proceedings at examination............................................................. 311
255........ Requirements made of examinee..................................................... 311
256........ Examination to take place in private................................................ 312
257........ Examinee’s lawyer may attend........................................................ 313
258........ Record of examination.................................................................... 313
259........ Giving to other persons copies of record........................................ 314
260........ Copies given subject to conditions.................................................. 314
261........ Record to accompany report............................................................ 315
Part 6‑3—Inspection of books and audit information‑gathering powers 316
Division 1—Introduction 316
262........ Guide to this Part............................................................................ 316
Division 2—Inspection of books and audit information‑gathering powers 317
263........ When certain powers may be exercised........................................... 317
264........ ASIC may inspect books without charge........................................ 317
265........ Notice to auditors concerning information and books..................... 318
266........ Notice to produce books about credit activities............................... 319
267........ Notice to produce documents in person’s possession..................... 320
268........ ASIC may authorise persons to require production of books, giving of information etc. 320
269........ Application for warrant to seize books not produced...................... 321
270........ Grant of warrant.............................................................................. 322
271........ Powers if books produced or seized............................................... 323
272........ Powers if books not produced........................................................ 324
Part 6‑4—Proceedings after an investigation 325
Division 1—Introduction 325
273........ Guide to this Part............................................................................ 325
Division 2—Proceedings after an investigation 326
274........ ASIC may prosecute....................................................................... 326
275........ ASIC may bring civil proceedings.................................................. 327
Part 6‑5—Hearings 328
Division 1—Introduction 328
276........ Guide to this Part............................................................................ 328
Division 2—Hearings 329
277........ Power to hold hearings................................................................... 329
278........ General discretion to hold hearing in public or private.................... 329
279........ Request by person appearing at hearing that it take place in public. 329
280........ Certain hearings to take place in private.......................................... 330
281........ ASIC may restrict publication of certain material............................ 330
282........ Who may be present when hearing takes place in private................ 331
283........ Involvement of person entitled to appear at hearing........................ 332
284........ Power to summon witnesses and take evidence.............................. 332
285........ Proceedings at hearings................................................................... 333
286........ ASIC to take account of evidence and submissions........................ 334
287........ Reference to court of question of law arising at hearing.................. 334
288........ Protection of ASIC members etc..................................................... 335
Part 6‑6—Offences 336
Division 1—Introduction 336
289........ Guide to this Part............................................................................ 336
Division 2—Offences 337
290........ Contraventions of requirements made under this Chapter............... 337
291........ False information............................................................................ 338
292........ Obstructing person executing a warrant under this Chapter............ 338
293........ Disrupting hearings......................................................................... 339
294........ Concealing books relevant to investigation..................................... 340
295........ Self‑incrimination............................................................................ 340
296........ Legal professional privilege............................................................ 341
297........ Powers of court relating to contraventions of this Chapter.............. 342
Part 6‑7—ASIC’s powers in relation to contraventions of this Chapter 343
Division 1—Introduction 343
298........ Guide to this Part............................................................................ 343
Division 2—ASIC’s powers in relation to contraventions of this Chapter 344
299........ Application of this Part................................................................... 344
300........ Orders by ASIC relating to credit contracts, mortgages, guarantees or consumer leases 344
301........ Orders under this Part..................................................................... 345
Part 6‑8—Evidentiary use of certain material 346
Division 1—Introduction 346
302........ Guide to this Part............................................................................ 346
Division 2—Evidentiary use of certain material 347
303........ Statements made at an examination: proceedings against examinee. 347
304........ Statements made at an examination: other proceedings................... 348
305........ Weight of evidence admitted under section 304.............................. 348
306........ Objection to admission of statements made at examination............. 349
307........ Copies of, or extracts from, certain books....................................... 350
308........ Report under Part 6‑1...................................................................... 351
309........ Exceptions to admissibility of report............................................... 351
310........ Material otherwise admissible......................................................... 352
Part 6‑9—Miscellaneous provisions relating to compliance and enforcement 353
Division 1—Introduction 353
311........ Guide to this Part............................................................................ 353
Division 2—Miscellaneous provisions relating to compliance and enforcement 354
312........ Requirement made of a body corporate........................................... 354
313........ Evidence of authority...................................................................... 354
314........ Giving documents to natural persons.............................................. 354
315........ Place and time for production of books........................................... 355
316........ Application of Crimes Act and Evidence Act.................................. 355
317........ Allowances and expenses............................................................... 355
318........ Expenses of investigation under Part 6‑1........................................ 356
319........ Recovery of expenses of investigation............................................ 356
320........ Compliance with this Chapter......................................................... 357
321........ Effect of this Chapter...................................................................... 357
322........ Enforcement of undertakings.......................................................... 357
Chapter 7—Miscellaneous 359
Part 7‑1—Miscellaneous 359
Division 1—Introduction 359
323........ Guide to this Part............................................................................ 359
Division 2—Liability of persons for conduct of their agents etc. 360
324........ Liability for bodies corporate for conduct of their agents, employees etc. 360
325........ Liability of persons (other than bodies corporate) for the conduct of their agents, employees etc. 361
326........ Regulations for the purposes of this Division................................. 362
Division 3—Review of ASIC’s decisions 363
327........ Review by Administrative Appeals Tribunal of decisions by ASIC under this Act 363
328........ Notice of reviewable decision and review rights............................. 364
Division 4—Regulations 365
329........ Regulations..................................................................................... 365
330........ Regulations—where proceedings may be brought.......................... 365
331........ Regulations—infringement notices................................................. 365
Division 5—Other miscellaneous provisions 367
332........ Civil penalty provisions contravened or offences committed partly in and partly out of this jurisdiction 367
333........ Contravention of Act does not generally affect validity of transactions etc. 367
334........ Contracting out etc.......................................................................... 367
335........ Indemnities...................................................................................... 368
335A..... Review relating to small amount credit contracts............................. 369
336........ Acquisition of property................................................................... 370
337........ Minister may delegate prescribed functions and powers under this Act 370
Schedule 1—National Credit Code 371
Part 1—Preliminary 371
1............ Short title......................................................................................... 371
2............ Interpretation generally.................................................................... 371
3............ Meaning of credit and amount of credit.......................................... 371
4............ Meaning of credit contract.............................................................. 372
5............ Provision of credit to which this Code applies................................ 372
6............ Provision of credit to which this Code does not apply.................... 373
7............ Mortgages to which this Code applies............................................ 377
8............ Guarantees to which this Code applies............................................ 377
9............ Goods leases with option to purchase to be regarded as sale by instalments 378
10.......... Deciding application of Code to particular contracts for the sale of land by instalments 379
11.......... Deciding application of Code to particular contracts for the sale of goods by instalments 381
12.......... Deciding application of Code to particular contracts for the sale of goods by instalments under related contracts 382
13.......... Presumptions relating to application of Code.................................. 382
13A....... Reverse mortgages.......................................................................... 384
Part 2—Credit contracts 385
Division 1—Negotiating and making credit contracts 385
14.......... Credit contract to be in form of written contract document.............. 385
15.......... Other forms of contract................................................................... 385
16.......... Precontractual disclosure................................................................. 386
17.......... Matters that must be in contract document...................................... 387
18.......... Form and expression of contract document..................................... 393
18A....... Provisions that must not be included in credit contract for reverse mortgage 393
18B....... Disclosure if credit contract for reverse mortgage does not protect tenancy of person other than debtor 394
18C....... Independent legal advice before entry into credit contract for reverse mortgage 395
19.......... Alteration of contract document...................................................... 395
20.......... Copy of contract for debtor............................................................. 395
21.......... When debtor may terminate contract............................................... 396
22.......... Offence for noncompliance............................................................. 396
Division 2—Debtor’s monetary obligations 397
23.......... Prohibited monetary obligations—general...................................... 397
23A....... Prohibited monetary obligations—small amount credit contracts.... 397
24.......... Offences related to prohibited monetary obligations—credit providers 398
24A....... Offences related to prohibited monetary obligations—credit assistance providers 399
25.......... Loan to be in money or equivalent.................................................. 399
26.......... Early payments and crediting of payments...................................... 400
26A....... Regulations about residential investment property.......................... 401
Division 3—Interest charges 402
27.......... Definitions relating to interest......................................................... 402
27A....... Application of this Division............................................................ 402
28.......... Limit on interest charges................................................................. 402
29.......... Early debit or payment of interest charges prohibited...................... 403
30.......... Default interest................................................................................ 404
30A....... Regulations about residential investment property.......................... 404
30B....... Regulations about credit card contracts........................................... 404
Division 4—Fees and charges 406
31.......... Prohibited credit fees or charges..................................................... 406
31A....... Restrictions on fees and charges for small amount credit contracts. 406
31B....... Credit provider or prescribed person must not require or accept payment of a fee or charge in relation to a small amount credit contract etc............................................................................. 407
32.......... Fees or charges in relation to third parties....................................... 408
Division 4A—Annual cost rate of certain credit contracts 409
32A....... Prohibitions relating to credit contracts if the annual cost rate exceeds 48% 409
32AA.... Prohibition relating to the annual cost rate of credit contracts—later increases of the annual percentage rate etc. 410
32B....... Calculation of annual cost rate......................................................... 410
Division 5—Credit provider’s obligation to account 415
33.......... Statements of account...................................................................... 415
34.......... Information to be contained in statements of account...................... 416
35.......... Opening balance must not exceed closing balance of previous statement 419
36.......... Statement of amount owing and other matters................................. 419
37.......... Court may order statement to be provided....................................... 420
38.......... Disputed accounts........................................................................... 421
39.......... Dating and adjustment of debits and credits in accounts................. 422
Division 5A—Additional rules relating to small amount credit contracts 424
39A....... Limit on the application of amount of credit provided under a small amount credit contract 424
39B....... Limit on amount that may be recovered if there is default under a small amount credit contract 425
39C....... Credit provider must do prescribed things if a default in payment by direct debit occurs 425
Division 6—Certain transactions not to be treated as new contracts 426
40.......... Changes etc. under contracts........................................................... 426
Part 3—Related mortgages and guarantees 427
Division 1—Mortgages 427
41.......... Application of Division................................................................... 427
42.......... Form of mortgage........................................................................... 427
43.......... Copy of mortgage for mortgagor.................................................... 427
44.......... Mortgages over all property void.................................................... 428
45.......... Restriction on mortgage of future property..................................... 428
46.......... Mortgages and continuing credit contracts...................................... 428
47.......... All accounts mortgages................................................................... 429
48.......... Third party mortgages prohibited.................................................... 429
49.......... Maximum amount which may be secured....................................... 430
50.......... Prohibited securities........................................................................ 430
51.......... Assignment or disposal of mortgaged property by mortgagor........ 432
52.......... Conditions on consent to assignment or disposal of property subject to mortgage 432
53.......... Offence for noncompliance............................................................. 433
Division 2—Guarantees 434
54.......... Application of Division................................................................... 434
55.......... Form of guarantee........................................................................... 434
56.......... Disclosure....................................................................................... 434
57.......... Copies of documents for guarantor................................................. 434
58.......... Guarantor may withdraw before credit is provided......................... 435
59.......... Extension of guarantee.................................................................... 435
60.......... Limitation of guarantor’s liability.................................................... 436
61.......... Increase in guarantor’s liabilities..................................................... 437
62.......... Offence for noncompliance............................................................. 438
Part 4—Changes to obligations under credit contracts, mortgages and guarantees 439
Division 1—Unilateral changes by credit provider 439
63.......... Application of Division................................................................... 439
64.......... Interest rate changes........................................................................ 439
65.......... Repayment changes......................................................................... 441
66.......... Credit fees and charges changes...................................................... 442
67.......... Changes to credit limits etc. in continuing credit contracts.............. 443
67A....... Changes to tenancy protection in credit contracts for reverse mortgages 444
68.......... Other unilateral changes by credit provider..................................... 444
69.......... Particulars of matters as changed only required to be given under this Division in certain cases 445
70.......... Prohibited increases in liabilities..................................................... 445
Division 2—Changes by agreement of parties 447
71.......... Changes by agreement.................................................................... 447
Division 3—Changes on grounds of hardship and unjust transactions 448
72.......... Changes on grounds of hardship.................................................... 448
73.......... Notice of change............................................................................. 450
74.......... Changes by court............................................................................ 450
75.......... Credit provider may apply for variation of change.......................... 451
76.......... Court may reopen unjust transactions............................................. 451
77.......... Orders on reopening of transactions............................................... 454
78.......... Court may review unconscionable interest and other charges......... 455
79.......... Applications by ASIC..................................................................... 456
80.......... Time limit........................................................................................ 456
81.......... Joinder of parties............................................................................. 457
Part 5—Ending and enforcing credit contracts, mortgages and guarantees 458
Division 1—Ending of credit contract by debtor etc. 458
Subdivision A—Paying out contract etc. 458
82.......... Debtor’s or guarantor’s right to pay out contract............................ 458
83.......... Statement of pay out figure............................................................. 458
84.......... Court may determine pay out figure if credit provider does not provide a pay out figure 459
85.......... Surrender of mortgaged goods and goods subject to sale by instalments 459
86.......... Compensation to debtor or mortgagor............................................. 462
Subdivision B—Ending of reverse mortgage by credit provider receiving value of reverse mortgaged property 463
86A....... Application of this Subdivision....................................................... 463
86B....... Discharge of debtor’s obligations under credit contract and discharge of mortgage 464
86C....... Credit provider must pay debtor excess of receipt over adjusted market value for reverse mortgaged property 464
86D....... Credit provider must not demand or accept further payments......... 464
86E........ Cases in which sections 86B, 86C and 86D do not apply............... 464
86F........ Relationship between this Subdivision and other provisions.......... 465
Subdivision C—Notice of first direct debit default 465
87.......... One‑off notice to be given the first time a direct debit default occurs 465
Division 2—Enforcement of credit contracts, mortgages and guarantees 466
88.......... Requirements to be met before credit provider can enforce credit contract or mortgage against defaulting debtor or mortgagor........................................................................................ 466
89.......... Defaults may be remedied............................................................... 470
89A....... Effect of hardship notices on enforcement...................................... 470
90.......... Requirements to be met before credit provider can enforce guarantee against guarantor 472
91.......... Requirements to be met before credit provider can repossess mortgaged goods 472
93.......... Requirements to be met before credit provider can enforce an acceleration clause 473
93A....... Extra requirements for enforcing reverse mortgage if debtor’s liability exceeded value of reverse mortgaged property........................................................................................................ 474
Division 3—Postponement of enforcement proceedings 476
94.......... Postponement of exercise of rights................................................. 476
95.......... Effect of negotiated postponement.................................................. 477
96.......... Postponement by court.................................................................... 478
97.......... Credit provider may apply for variation of postponement order...... 478
Division 4—Enforcement procedures for goods mortgaged 480
98.......... Information as to location of mortgaged goods............................... 480
99.......... Entry to residential property to take possession of goods............... 480
100........ Court may order entry..................................................................... 481
101........ Order for possession....................................................................... 481
102........ Procedures to be followed by credit provider after taking possession of goods 482
103........ Mortgagor may nominate purchaser of goods taken by credit provider 483
104........ Sale of goods by credit provider..................................................... 483
105........ Matters for which account can be debited after mortgagee sale of goods 484
106........ Compensation to mortgagor............................................................ 485
Division 5—Enforcement expenses 486
107........ Recovery of enforcement expenses................................................. 486
Division 6—Mortgagor’s remedies 487
108........ Mortgagor may apply to regain possession of mortgaged goods.... 487
109........ Order for possession for mortgagor................................................ 487
110........ Ancillary or consequential orders.................................................... 488
Part 6—Penalties for defaults of credit providers 489
Division 1—Penalties for breach of key disclosure and other requirements 489
111........ Key requirements............................................................................ 489
112........ Application for order relating to key requirements.......................... 490
113........ Penalty may be imposed for contravention of key requirement....... 490
114........ Penalty if application made by debtor or guarantor......................... 492
115........ Payment of penalty to debtor or guarantor...................................... 493
116........ Penalty if application made by a credit provider or ASIC............... 494
117........ Payment of penalty.......................................................................... 494
118........ Compensation for debtor or guarantor............................................ 494
119........ General provisions relating to applications by credit providers or ASIC 495
120........ ASIC may represent interests of debtors......................................... 495
121........ Directions pending court’s decision................................................ 495
122........ Offences.......................................................................................... 496
123........ Time limit for application for orders under this Division................ 496
Division 2—Other penalties 497
124........ Civil effect of contraventions.......................................................... 497
Part 7—Related sale contracts 498
Division 1—Interpretation and application 498
125........ Meaning of sale contract................................................................ 498
126........ Sale contracts to which this Part applies.......................................... 498
127........ Linked credit providers and tied credit contracts............................. 498
Division 2—Liability of credit providers for suppliers’ misrepresentations 500
128........ Credit provider liable with respect to supplier’s misrepresentations etc. about tied credit contract 500
Division 3—Liability of credit providers in relation to goods 501
129........ Right to damages under sale contract against both supplier and linked credit provider 501
130........ Limits on debtor’s right of action against linked credit provider..... 503
131........ Liability of supplier to linked credit provider.................................. 505
132........ Interest may be awarded.................................................................. 505
133........ Subrogation of credit provider........................................................ 506
Division 4—Termination of related transactions 507
134........ Termination of sale contract which is conditional on obtaining credit 507
135........ Termination of (or recredit under) tied credit contract if sale contract terminated 508
136........ Termination of linked maintenance services contract if credit contract terminated 509
137........ Termination of contract under this Part to be in writing.................. 510
138........ Powers of court with respect to termination of contract under this Part 510
139........ Part 5 not to apply to termination of contract under this Part........... 510
Division 5—Other provisions 511
140........ Requirement as to source of credit for goods or services................ 511
141........ Prohibition on payment for goods or services by postdated bills of exchange or notes which exceed cash price of goods or services....................................................................................... 511
Part 8—Related insurance contracts 512
142........ Interpretation and application.......................................................... 512
143........ Requirement to take out insurance or to insure with particular insurer or on particular terms 512
144........ Financing of insurance premiums over mortgaged property........... 513
145........ Commission for consumer credit insurance.................................... 514
146........ Supply of copy of credit‑related insurance contract by insurer........ 515
147........ Rejection of debtor’s proposal for insurance................................... 515
148........ Termination of consumer credit insurance contract if credit contract terminated 516
149........ Termination of insurance contract over mortgaged property if credit contract terminated 517
Part 9—Advertising and related conduct 518
150........ Advertising..................................................................................... 518
151........ Persons liable for advertisements.................................................... 519
152........ Defence........................................................................................... 519
153........ Interest rates which may be disclosed............................................. 519
154........ False or misleading representations................................................. 520
155........ Harassment..................................................................................... 520
156........ Canvassing of credit at home.......................................................... 521
Part 10—Comparison rates 522
Division 1—Preliminary 522
157........ Object of Part.................................................................................. 522
158........ Part not to apply to continuing credit contracts................................ 522
159........ Definitions...................................................................................... 522
Division 2—Comparison rate in credit advertising 524
160........ Comparison rate mandatory in advertisements containing annual percentage rate 524
161........ The relevant comparison rate........................................................... 524
162........ Information about comparison rate.................................................. 524
163........ Warning about comparison rate....................................................... 525
164........ Other requirements for comparison rate.......................................... 525
Division 3—Comparison rate in other documents 527
165........ Comparison rates in documents other than credit advertising.......... 527
Division 4—Miscellaneous 528
166........ Calculation of comparison rates...................................................... 528
167........ Compliance grace period following changes in interest or fees....... 528
168........ Regulations—exemptions and other matters................................... 528
Part 11—Consumer leases 529
Division 1—Interpretation and application 529
169........ Meaning of consumer lease............................................................ 529
170........ Consumer leases to which this Part applies..................................... 529
171........ Consumer leases to which this Part does not apply......................... 530
172........ Presumptions relating to application of this Part............................. 531
Division 2—Form of and information to be included in consumer leases 533
173........ Form of consumer lease.................................................................. 533
173A..... Other forms of consumer lease....................................................... 533
174........ Disclosures in consumer leases....................................................... 534
174A..... Alteration of consumer lease document........................................... 535
175........ Copy of lease etc. for lessee............................................................ 535
Division 4—Fees and charges 536
175A..... Prohibited consumer lease fees or charges...................................... 536
175B..... Fees or charges in relation to third parties....................................... 536
Division 5—Lessor’s obligation to account 538
Subdivision A—Ongoing statements of account 538
175C..... Statements of account...................................................................... 538
175D..... Information to be contained in statements of account...................... 538
175E...... Statement of amount owing and other matters................................. 538
175F...... Court may order statement of account to be provided..................... 539
175G..... Disputed accounts........................................................................... 539
Subdivision B—End of lease statements 541
175H..... End of lease statement..................................................................... 541
Division 6—Certain transactions not to be treated as new consumer leases 542
175J...... Changes etc. under consumer leases............................................... 542
Division 7—Changes to obligations under consumer leases 543
Subdivision A—Changes by agreement of parties 543
177A..... Changes by agreement.................................................................... 543
Subdivision B—Changes on grounds of hardship and unjust transactions 544
177B..... Changes on grounds of hardship.................................................... 544
177C..... Notice of change............................................................................. 546
177D..... Changes by court............................................................................ 546
177E...... Lessor may apply for variation of change....................................... 547
177F...... Court may reopen unjust transactions............................................. 547
177G..... Orders on reopening of transactions............................................... 549
177H..... Applications by ASIC..................................................................... 550
177J...... Time limit........................................................................................ 550
177K..... Joinder of parties............................................................................. 551
Division 8—Repossession, termination and enforcement of consumer leases 552
Subdivision A—Repossession of goods under consumer lease 552
178........ Notice of repossession.................................................................... 552
Subdivision B—Termination of consumer lease by lessee 552
178A..... Termination before goods have been provided................................ 552
179........ Termination after goods have been provided................................... 553
179A..... Statement of amount payable on termination................................... 553
179B..... Court may determine amount payable on termination if lessor does not 554
179C..... One‑off notice to be given the first time a direct debit default occurs 554
Subdivision C—Enforcement of consumer leases 555
179D..... Requirements to be met before lessor can enforce consumer lease against defaulting lessee 555
179E...... Defaults may be remedied............................................................... 557
179F...... Effect of hardship notices on enforcement...................................... 558
179G..... Requirements to be met before lessor can enforce an acceleration clause 559
Subdivision D—Postponement of enforcement proceedings 560
179H..... Postponement of exercise of rights................................................. 560
179J...... Effect of negotiated postponement.................................................. 561
179K..... Postponement by court.................................................................... 562
179L...... Lessor may apply for variation of postponement order................... 562
Subdivision E—Enforcement procedures for goods hired under a consumer lease 563
179M.... Information as to location of goods hired under a consumer lease.. 563
179N..... Entry to residential property to take possession of goods............... 563
179P...... Court may order entry..................................................................... 564
179Q..... Order for possession....................................................................... 564
Subdivision F—Enforcement expenses 564
179R..... Recovery of enforcement expenses................................................. 564
Division 9—Linked lessors and tied consumer leases 566
Subdivision A—Interpretation and application 566
179S...... Linked lessors and tied consumer leases......................................... 566
Subdivision B—Liability of lessors for suppliers’ misrepresentations 567
179T...... Lessor liable for supplier’s misrepresentations about hired goods.. 567
Division 10—Conduct relating to consumer leases 568
179U..... False or misleading representations................................................. 568
179V..... Harassment..................................................................................... 568
Division 11—Other Code provisions applicable to consumer leases 569
179W.... Application of certain Code provisions to consumer leases............ 569
Part 12—Miscellaneous 570
Division 1—Tolerances and assumptions 570
180........ Tolerances and assumptions relating to information........................ 570
181........ Tolerances relating to contracts and other documents...................... 571
182........ Regulations..................................................................................... 572
Division 2—Documentary provisions 573
183........ Form of notices............................................................................... 573
184........ Legibility and language................................................................... 573
185........ Copies of contracts and other documents........................................ 574
185A..... Records of nominations of persons to occupy reverse mortgaged properties 575
186........ Signing of documents..................................................................... 575
187........ Electronic transactions and documents............................................ 575
Division 3—General provisions 577
188........ Assignment by credit provider........................................................ 577
189........ Assignment by debtor, mortgagor or guarantor.............................. 577
190........ Appropriation of payments............................................................. 577
191........ Contracting out................................................................................ 578
192........ Indemnities...................................................................................... 579
193........ Effect of noncompliance.................................................................. 579
194........ Giving notice or other document..................................................... 579
195........ Manner of giving notice or other document.................................... 581
196........ Date of notice or other document.................................................... 582
197........ Extensions of time........................................................................... 583
198........ Orders of court................................................................................ 583
199........ Conduct of agents and related matters............................................. 583
Division 4—Provisions relating to offences 585
200........ Offences by officers, agents or employees...................................... 585
201........ Offences by corporations................................................................ 585
202........ Limitations...................................................................................... 585
203........ Application of section 4K of the Crimes Act 1914.......................... 586
Division 5—Exemptions from this Code 587
203A..... Exemptions by ASIC...................................................................... 587
203B..... Exemptions by the regulations........................................................ 587
Part 13—Principal definitions 588
204........ Principal definitions........................................................................ 588
Part 14—Miscellaneous provisions relating to interpretation 602
Division 1—Preliminary 602
205........ Displacement of Part by contrary intention..................................... 602
Division 2—General 603
207........ References to particular Acts and to enactments.............................. 603
208........ Compliance with forms................................................................... 603
Division 3—Terms and references 604
209........ Provisions relating to defined terms and gender and number.......... 604
210........ Meaning of may and must etc......................................................... 604
211........ Effect of express references to bodies corporate and individuals.... 604
212........ Reference to certain provisions of Code.......................................... 605
213........ Reference to provisions of this Code or an Act is inclusive............ 605
Division 4—Functions and powers 607
214........ Power to make instrument or decision includes power to amend or repeal 607
215........ Matters for which statutory instruments may make provision......... 607
216........ Presumption of validity and power to make.................................... 608
217........ Exercise of powers between enactment and commencement........... 609
Division 5—Distance, time and age 612
218........ Matters relating to distance, time and age........................................ 612
Endnotes 613
Endnote 1—About the endnotes 613
Endnote 2—Abbreviation key 615
Endnote 3—Legislation history 616
Endnote 4—Amendment history 619
An Act relating to credit, and for related purposes
Chapter 1—Introduction
Part 1‑1—Introduction
1 Short title
This Act may be cited as the National Consumer Credit Protection Act 2009.
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.
| Commencement information |
| Column 1 | Column 2 | Column 3 |
| Provision(s) | Commencement | Date/Details |
| 1. Sections 1 and 2 and anything in this Act not elsewhere covered by this table | The day on which this Act receives the Royal Assent. | 15 December 2009 |
| 2. Sections 3 to 337 and Schedule 1 | A single day to be fixed by Proclamation. However, if any of the provision(s) do not commence within the period of 6 months beginning on the day on which this Act receives the Royal Assent, they commence on the first day after the end of that period. | 1 April 2010 (see F2010L00301) |
Note: This table relates only to the provisions of this Act as originally passed by both Houses of the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent.
(2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act.
3 The National Credit Code
Schedule 1 (which is the National Credit Code) has effect as a law of the Commonwealth.
Part 1‑2—Definitions
Division 1—Introduction
4 Guide to this Part
This Part is about the terms that are defined in this Act (other than the National Credit Code). (For the terms that are defined in the National Credit Code, see section 204 of that Code.)
Division 2 has the Dictionary (see section 5). The Dictionary is a list of every term that is defined in this Act (other than the National Credit Code). A term will either be defined in the Dictionary itself, or in another provision of this Act. If another provision defines the term, the Dictionary will have a signpost to that definition.
Division 3 has definitions relating to the meaning of credit activity.
Division 4 has some other definitions that apply across this Act (other than the National Credit Code).
Division 2—The Dictionary
5 The Dictionary
(1) In this Act (other than the National Credit Code):
acts as an intermediary: see section 9.
ADI has the same meaning as in subsection 5(1) of the Banking Act 1959.
adverse publicity order: see section 182.
affairs, in relation to a person that is a body corporate, has the same meaning as in Part 3 of the ASIC Act.
affidavit includes affirmation.
ancillary offence, in relation to another offence, means:
(a) an offence against section 6 of the Crimes Act 1914; or
(b) an ancillary offence within the meaning of the Criminal Code;
that relates to the other offence.
annual percentage rate has the same meaning as in section 27 of the National Credit Code.
appeal includes:
(a) an application for a new trial; and
(b) proceedings to review or call in question the proceedings, decision or jurisdiction of a court or judge.
approved external dispute resolution scheme: see section 11.
APRA means the Australian Prudential Regulation Authority.
ASIC means the Australian Securities and Investments Commission.
ASIC Act means the Australian Securities and Investments Commission Act 2001, and includes instruments made under that Act.
ASIC member means a member of ASIC within the meaning of the ASIC Act.
ASIC staff member means a staff member within the meaning of subsection 5(1) of the ASIC Act.
Australia, when used in a geographical sense, does not include an external Territory.
Note: Section 2B of the Acts Interpretation Act 1901 would otherwise provide that Australia included the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands.
Australian credit licence: see subsection 35(1).
Australian credit licence number means the number given to a licence under section 43.
Australian financial services licence has the same meaning as in section 761A of the Corporations Act 2001.
authorised, in relation to a credit activity: see subsection 35(2).
banker has the same meaning as in section 9 of the Corporations Act 2001.
banned from engaging in a credit activity under a law of a State or Territory: a person is banned from engaging in a credit activity under a law of a State or Territory if:
(a) the person holds a State or Territory credit licence that is suspended (otherwise than by request of the person); or
(b) the person has held a State or Territory credit licence that has been cancelled within the last 7 years (otherwise than by the person’s request); or
(c) an order of a court made under a law of a State or Territory prohibits the person from engaging in a credit activity; or
(d) the person is otherwise prohibited under a law of a State or Territory from engaging in a credit activity.
banning order: see subsection 81(1).
beneficiary of a guarantee means a person who is a party to a guarantee and who has the benefit of the guarantee, and includes a person who is a beneficiary of a guarantee because of section 10.
body regulated by APRA has the same meaning as in subsection 3(2) of the Australian Prudential Regulation Authority Act 1998.
book includes:
(a) a register; and
(b) any other record of information; and
(c) financial reports or financial records, however compiled, recorded or stored; and
(d) a document.
business day has the same meaning as in section 204 of the National Credit Code.
carried on in this jurisdiction has a meaning affected by section 12.
civil penalty provision: a subsection of this Act (or a section of this Act that is not divided into subsections) is a civil penalty provision if:
(a) the words “civil penalty” and one or more amounts in penalty units are set out at the foot of the subsection (or section); or
(b) another provision of this Act specifies that the subsection (or section) is a civil penalty provision.
coastal sea:
(a) in relation to Australia—means:
(i) the territorial sea of Australia; and
(ii) the sea on the landward side of the territorial sea of Australia and not within the limits of a State or internal Territory;
and includes the airspace over, and the sea‑bed and subsoil beneath, any such sea; and
(b) in relation to a State or Territory—means so much of the coastal sea of Australia as is within the area described in Schedule 1 to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 under the heading that refers to that State or Territory.
commission includes any financial or other benefit in the nature of a commission.
Commonwealth credit legislation means this Act and the Transitional Act.
consumer means a natural person or a strata corporation.
consumer lease means a consumer lease to which Part 11 of the National Credit Code applies.
continuing credit contract has the same meaning as in section 204 of the National Credit Code.
contravention, in relation to a Commonwealth law, includes an ancillary offence relating to an offence against that law.
credit has the same meaning as in subsection 3(1) of the National Credit Code.
credit activity: see section 6.
credit assistance: see section 8.
credit book: see subsection 227(4).
credit card: see subsection 133BA(2).
credit card contract: see subsection 133BA(1).
credit contract has the same meaning as in section 4 of the National Credit Code.
credit legislation means:
(a) this Act; and
(b) the Transitional Act; and
(c) Division 2 of Part 2 of the ASIC Act and regulations made for the purpose of that Division; and
(d) any other Commonwealth, State or Territory legislation that covers conduct relating to credit activities (whether or not it also covers other conduct), but only in so far as it covers conduct relating to credit activities.
credit limit of a credit contract means the maximum amount of credit that may be provided under the contract.
credit limit increase invitation, in relation to a credit card contract: see subsection 133BE(5).
credit provider has the same meaning as in section 204 of the National Credit Code, and includes a person who is a credit provider because of section 10.
credit registers: see section 213.
credit representative: see subsections 64(2) and 65(2).
credit representative number means the number given to a credit representative under section 72.
credit service: see section 7.
criminal procedure: see section 205.
debtor has the same meaning as in section 204 of the National Credit Code.
director has the same meaning as in section 9 of the Corporations Act 2001.
disqualification order means an order of the court under section 86.
document registers: see section 219.
engage in conduct means:
(a) do an act; or
(b) omit to perform an act.
examination, when used in Chapter 6 (which deals with compliance and enforcement), means an examination of a person pursuant to a requirement made under section 253.
expenses, in relation to an investigation under Part 6‑1, includes costs and expenses incurred by ASIC in relation to proceedings brought under section 275 as a result of the investigation.
Federal Circuit Court means the Federal Circuit Court of Australia.
Federal Court means the Federal Court of Australia.
financial records: see subsection 88(2).
financial year: see subsection 100(6).
function includes a duty.
give:
(a) when used in Chapter 6 (which deals with compliance and enforcement) in relation to a document—has a meaning affected by section 314; and
(b) when used in relation to information, includes:
(i) explaining or stating a matter; and
(ii) identifying a person, matter or thing; and
(iii) disclosing information; and
(iv) answering a question.
guarantee means a guarantee to which the National Credit Code applies.
hearing, when used in Chapter 6 (which deals with compliance and enforcement), means a hearing before ASIC and, in sections 278, 280, 281 and 282 (which are in that Chapter), includes part of such a hearing.
initial National Credit Code: see subsection 20(2).
insolvent means:
(a) in the case of a natural person—a person who is an insolvent under administration; or
(b) in the case of a body corporate—a body corporate that is a Chapter 5 body corporate (within the meaning of the Corporations Act 2001); or
(c) in the case of a partnership—a partnership against which a creditor’s petition or a debtor’s petition is presented under Division 2 or 3 of Part IV of the Bankruptcy Act 1966.
investigate, in relation to ASIC, means investigate in the course of performing any of ASIC’s functions or exercising any of ASIC’s powers.
involved in: a person is involved in a contravention of a provision of legislation if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
judgment means a judgment, decree or order, whether final or interlocutory.
Key Facts Sheet:
(a) for a credit card contract—see section 133BB; and
(b) for a standard home loan—see section 133AB.
law of a referring State or a Territory means a law of, or in force in, a referring State or a Territory but does not include a law of the Commonwealth in force in the referring State or the Territory.
law of a State or Territory means a law of, or in force in, a State or Territory but does not include a law of the Commonwealth in force in the State or Territory.
lawyer means a person who is admitted to the legal profession by a federal court or a Supreme Court of a State or Territory.
lessee means the lessee under a consumer lease.
lessor has the same meaning as in section 204 of the National Credit Code, and includes a person who is a lessor because of section 10.
licence means an Australian credit licence.
licensee means a person who holds a licence.
licensing anniversary: see subsection 53(7).
linked: for when a credit card is linked to a credit card contract, see subsection 133BA(3).
lodge with ASIC: see section 216.
lower court means:
(a) the Federal Circuit Court; or
(b) a court of a State or Territory that is not a superior court.
malice: see subsection 16(2).
matter includes an act, an omission, a body, a person or a thing.
misleading: see section 13.
mortgage means a mortgage to which the National Credit Code applies.
mortgagee means the mortgagee under a mortgage, and includes a person who is a mortgagee because of section 10.
mortgagor means the mortgagor under a mortgage.
National Credit Code means Schedule 1 to this Act, and includes:
(a) regulations made under section 329 for the purposes of that Schedule; and
(b) instruments made under that Schedule.
officer of the Commonwealth has the same meaning as in paragraph 75(v) of the Constitution.
penalty unit has the same meaning as in section 4AA of the Crimes Act 1914.
person has a meaning affected by section 14 (which deals with partnerships) and section 15 (which deals with multiple trustees).
power includes an authority.
premises includes:
(a) a structure, building, aircraft, vehicle or vessel; and
(b) any land or place (whether enclosed or built in or not); and
(c) a part of a structure, building, aircraft, vehicle, vessel or of such a place.
prescribed State or Territory order means an order under a law of a State or Territory, being an order of a kind prescribed by the regulations.
proceedings:
(a) when used in Chapter 6 (which deals with compliance and enforcement)—has the same meaning as the definition of proceeding in subsection 5(1) of the ASIC Act; and
(b) otherwise—means proceedings, whether criminal or civil, before a court.
qualified privilege has a meaning affected by section 16.
receiving court: see section 191.
record, when used in Chapter 6 (which deals with compliance and enforcement) in relation to an examination, means the whole or part of a record made under section 258 of statements made at the examination.
referred credit matter: see subsection 20(1).
referring State: see section 19.
registered company auditor has the same meaning as in section 9 of the Corporations Act 2001.
related body corporate has the same meaning as in section 9 of the Corporations Act 2001.
related criminal justice process decision: see section 188.
relevant criminal law: see subsection 204(5).
relevant superior court, in relation to a lower court, means:
(a) if the lower court is the Federal Circuit Court—the Federal Court; or
(b) if the lower court is a court of a State or Territory—the Supreme Court of the State or Territory.
representative of a person means:
(a) if the person is a licensee:
(i) an employee or director of the licensee; or
(ii) an employee or director of a related body corporate of the licensee; or
(iii) a credit representative of the licensee; or
(iv) any other person acting on behalf of the licensee; or
(b) otherwise:
(i) an employee or director of the person; or
(ii) an employee or director of a related body corporate of the person; or
(iii) any other person acting on behalf of the person.
residential property has the same meaning as in section 204 of the National Credit Code.
reverse mortgage has the same meaning as in section 13A of the National Credit Code.
reverse mortgage information statement means a document relating to reverse mortgages that complies with the regulations.
senior manager has the same meaning as in section 9 of the Corporations Act 2001.
serious fraud means an offence involving fraud or dishonesty, being an offence:
(a) against a law of the Commonwealth, or of a State or Territory, or any other law; and
(b) punishable by imprisonment for life or for a period, or maximum period, of at least 3 months.
short‑term credit contract: a credit contract is a short‑term credit contract if:
(a) the contract is not a continuing credit contract; and
(b) the credit provider under the contract is not an ADI; and
(c) the credit limit of the contract is $2,000 (or such other amount as is prescribed by the regulations) or less; and
(d) the term of the contract is 15 days or less; and
(e) the contract meets any other requirements prescribed by the regulations.
small amount credit contract: a credit contract is a small amount credit contract if:
(a) the contract is not a continuing credit contract; and
(b) the credit provider under the contract is not an ADI; and
(c) the credit limit of the contract is $2,000 (or such other amount as is prescribed by the regulations) or less; and
(d) the term of the contract is at least 16 days but not longer than 1 year (or such other number of years as is prescribed by the regulations); and
(e) the debtor’s obligations under the contract are not, and will not be, secured; and
(f) the contract meets any other requirements prescribed by the regulations.
standard home loan: see subsection 133AA(1).
State, when used in a geographical sense, includes the coastal sea of the State.
statement, when used in Chapter 6 (which deals with compliance and enforcement) in relation to an examination, includes a question asked, an answer given, and any other comment or remark made, at the examination.
state of mind: the state of mind of a person includes:
(a) the knowledge, intention, opinion, belief or purpose of the person; and
(b) the person’s reasons for the intention, opinion, belief or purpose.
State or Territory credit licence means a licence or registration that:
(a) is granted under a law of a State or Territory; and
(b) authorises the licensee or registered person to engage in a credit activity.
strata corporation has the same meaning as in section 204 of the National Credit Code.
superior court means any of the following courts:
(a) the Federal Court;
(b) the Supreme Court of a State or Territory.
Territory means:
(a) the Australian Capital Territory; or
(b) the Northern Territory; or
(c) the Jervis Bay Territory;
and, when used in a geographical sense, includes the coastal sea of the Territory.
this Act includes instruments made under this Act.
this jurisdiction: see subsections 21(2) and (3).
transfer matter: see section 191.
transferring court: see section 191.
Transitional Act means the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009, and includes instruments made under that Act.
tribunal means:
(a) a tribunal in Australia; or
(b) any other body, authority or person in Australia having power, by law or by consent of parties, to hear, receive or examine evidence.
use of a credit card: see subsection 133BA(4).
value of a credit contract, mortgage, guarantee or consumer lease: see section 199.
within the authority: a representative’s conduct is within the authority of a person if:
(a) for a representative who is an employee of the person or of a related body corporate of the person—the conduct is within the scope of the employee’s employment; or
(b) for a representative who is a director of the person or of a related body corporate of the person—the conduct is within the scope of the director’s duties as director; or
(c) for a representative who is a credit representative of the person—the conduct is within the scope of the authorisation of the credit representative under subsection 64(1) or 65(1); or
(d) otherwise—the conduct is within the scope of the authority given by the person.
witness, in relation to a hearing before ASIC, means a person appearing at the hearing to give evidence.
written record, when used in Chapter 6 (which deals with compliance and enforcement) in relation to an examination, means:
(a) a record of the examination:
(i) that is made in writing; or
(ii) as reduced to writing; or
(b) a part of such a record.
(2) In this Act (other than the National Credit Code), a reference to a provision is a reference to a provision of this Act, unless the contrary intention appears.
Division 3—Definitions relating to the meaning of credit activity
6 Meaning of credit activity
(1) The following table sets out when a person engages in a credit activity.
| Meaning of credit activity |
| Item | Topic | A person engages in a credit activity if: |
| 1 | credit contracts | (a) the person is a credit provider under a credit contract; or (b) the person carries on a business of providing credit, being credit the provision of which the National Credit Code applies to; or (c) the person performs the obligations, or exercises the rights, of a credit provider in relation to a credit contract or proposed credit contract (whether the person does so as the credit provider or on behalf of the credit provider); or |
| 2 | credit service | the person provides a credit service; or |
| 3 | consumer leases | (a) the person is a lessor under a consumer lease; or (b) the person carries on a business of providing consumer leases; or (c) the person performs the obligations, or exercises the rights, of a lessor in relation to a consumer lease or proposed consumer lease (whether the person does so as the lessor or on behalf of the lessor); or |
| 4 | mortgages | (a) the person is a mortgagee under a mortgage; or (b) the person performs the obligations, or exercises the rights, of a mortgagee in relation to a mortgage or proposed mortgage (whether the person does so as the mortgagee or on behalf of the mortgagee); or |
| 5 | guarantees | (a) the person is the beneficiary of a guarantee; or (b) the person performs the obligations, or exercises the rights, of another person who is a beneficiary of a guarantee or proposed guarantee, in relation to the guarantee or proposed guarantee (whether the person does so on the person’s own behalf or on behalf of the other person); or |
| 6 | prescribed activities | the person engages in an activity prescribed by the regulations in relation to credit, being credit the provision of which the National Credit Code applies to, or would apply to if the credit were provided. |
(2) A subclass of any of the conduct referred to in the table in subsection (1) is also a credit activity.
Note: For example, ASIC could impose a condition on a licence under subsection 45(6) that provides that a person is authorised to be a credit provider only under particular types of credit contracts (such as credit card contracts).
7 Meaning of credit service
A person provides a credit service if the person:
(a) provides credit assistance to a consumer; or
(b) acts as an intermediary.
8 Meaning of credit assistance
A person provides credit assistance to a consumer if, by dealing directly with the consumer or the consumer’s agent in the course of, as part of, or incidentally to, a business carried on in this jurisdiction by the person or another person, the person:
(a) suggests that the consumer apply for a particular credit contract with a particular credit provider; or
(b) suggests that the consumer apply for an increase to the credit limit of a particular credit contract with a particular credit provider; or
(c) suggests that the consumer remain in a particular credit contract with a particular credit provider; or
(d) assists the consumer to apply for a particular credit contract with a particular credit provider; or
(e) assists the consumer to apply for an increase to the credit limit of a particular credit contract with a particular credit provider; or
(f) suggests that the consumer apply for a particular consumer lease with a particular lessor; or
(g) suggests that the consumer remain in a particular consumer lease with a particular lessor; or
(h) assists the consumer to apply for a particular consumer lease with a particular lessor.
It does not matter whether the person does so on the person’s own behalf or on behalf of another person.
9 Meaning of acts as an intermediary
A person acts as an intermediary if, in the course of, as part of, or incidentally to, a business carried on in this jurisdiction by the person or another person, the person:
(a) acts as an intermediary (whether directly or indirectly) between a credit provider and a consumer wholly or partly for the purposes of securing a provision of credit for the consumer under a credit contract for the consumer with the credit provider; or
(b) acts as an intermediary (whether directly or indirectly) between a lessor and a consumer wholly or partly for the purposes of securing a consumer lease for the consumer with the lessor.
It does not matter whether the person does so on the person’s own behalf or on behalf of another person.
10 Assignees of credit providers, lessors, mortgagees and beneficiaries of a guarantee
(1) For the purposes of this Act (other than the National Credit Code), a person is a credit provider, lessor, mortgagee or beneficiary of a guarantee whether the person is:
(a) the original credit provider, lessor, mortgagee or beneficiary of a guarantee under a credit contract, consumer lease, mortgage or guarantee; or
(b) a person to whom the rights of a credit provider, lessor, mortgagee or beneficiary of a guarantee under a credit contract, consumer lease, mortgage or guarantee have been assigned or passed by law.
Note: For example, a person who is assigned the rights of a credit provider under a credit contract would engage in a credit activity within the meaning of paragraph (a) of item 1 of the table in subsection 6(1).
(2) For the purposes of paragraph (1)(b), it does not matter whether an assignment or passing by law of rights is the first or a subsequent assignment or passing by law of those rights.
Division 4—Other definitions
11 Meaning of approved external dispute resolution scheme
(1) A person is a member of an approved external dispute resolution scheme if the person is a member of one or more external dispute resolution schemes that:
(a) is, or are, approved by ASIC in accordance with the regulations; and
(b) covers, or together cover, disputes in relation to the credit activities engaged in by the person or its representatives.
(2) Regulations made for the purpose of paragraph (1)(a) may also deal with the variation or revocation of approvals given by ASIC.
12 When a business is carried on in this jurisdiction
(1) Division 3 of Part 1.2 of the Corporations Act 2001 applies for the purposes of working out whether a business is carried on in this jurisdiction.
(2) Without limiting subsection (1), a business is taken to be carried on in this jurisdiction by a person if, in the course of carrying on the business, the person engages in conduct that is:
(a) intended to induce people in this jurisdiction to use the goods or services the person provides; or
(b) is likely to have that effect;
whether or not the conduct is intended, or likely, to have that effect in other places as well.
13 Meaning of misleading
(1) A representation made by a person is misleading if:
(a) the representation relates to a future matter (including the doing of, or refusing to do, any act); and
(b) the person does not have reasonable grounds for making the representation.
(2) Subsection (1) does not limit the circumstances in which a representation may be misleading.
14 Meaning of person—generally includes a partnership
(1) This Act (other than the National Credit Code) applies to a partnership as if the partnership were a person, but it applies with the following changes:
(a) obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners;
(b) any contravention of this Act (other than the National Credit Code) that would otherwise be a contravention by the partnership is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each partner who:
(i) aided, abetted, counselled or procured the relevant act or omission; or
(ii) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the partner).
Note: For the purposes of paragraph (b), to determine whether the partnership has contravened this Act, see section 325.
(2) For the purposes of this Act (other than the National Credit Code), a change in the composition of a partnership does not affect the continuity of the partnership.
(3) Subsections (1) and (2) have effect subject to:
(a) an express or implied contrary intention in a provision of this Act (other than the National Credit Code); and
(b) the regulations, which may exclude or modify the effect of those subsections in relation to specified provisions.
15 Meaning of person—generally includes multiple trustees
(1) This section applies in relation to a trust during a period while the trust continues to have:
(a) 2 or more trustees; or
(b) a single trustee who was a trustee of the trust at a time when it had 2 or more trustees.
(2) Subject to subsections (3) and (4), during the period this Act (other than the National Credit Code) applies to the trust as if the trustee or trustees of the trust from time to time during the period were a single person (the notional person) that remained the same for the duration of that period.
Note: So, for example, a licence granted under this Act during the period to the trustees of the trust will continue in force, despite a change in the persons who are the trustees.
(3) If, during the period or any part of the period, the trust has 2 or more trustees, this Act (other than the National Credit Code) applies to the trustees as referred to in subsection (2), but it applies with the following changes:
(a) obligations that would be imposed on the notional person are imposed instead on each trustee, but may be discharged by any of the trustees;
(b) any contravention of this Act (other than the National Credit Code) that would otherwise be a contravention by the notional person is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each trustee who:
(i) aided, abetted, counselled or procured the relevant act or omission; or
(ii) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the trustee).
Note: For the purposes of paragraph (b), to determine whether the notional person has contravened this Act, see section 325.
(4) If, during the period or any part of the period, the trust has only one trustee, this Act (other than the National Credit Code) applies to the trustee as referred to in subsection (2), but it applies with the following changes:
(a) obligations that would be imposed on the notional person are imposed instead on that single trustee;
(b) any contravention of this Act (other than the National Credit Code) that would otherwise be a contravention by the notional person is taken (whether for the purposes of criminal or civil liability) to have been a contravention by that single trustee.
(5) Subsections (2), (3) and (4) have effect subject to:
(a) an express or implied contrary intention in a provision of this Act (other than the National Credit Code); and
(b) the regulations, which may exclude or modify the effect of those subsections in relation to specified provisions.
16 Qualified privilege
(1) If this Act provides that a person has qualified privilege in relation to an act, matter or thing, then the person:
(a) has qualified privilege in proceedings for defamation; or
(b) is not, in the absence of malice on the person’s part, liable to an action for defamation at the suit of a person;
in relation to that act, matter or thing.
(2) Malice includes ill will to the person concerned or any other improper motive.
(3) Neither this section nor a provision of this Act that provides as referred to in subsection (1) limits or affects any right, privilege or immunity that a person has, apart from this section or such a provision, as defendant in proceedings, or an action, for defamation.
Part 1‑3—Application of this Act and the Transitional Act
Division 1—Introduction
17 Guide to this Part
This Part deals with the application of this Act and the Transitional Act.
Division 2 is about the constitutional basis and geographical application of those Acts. It also deals with the application of those Acts to the Crown.
Division 3 deals with the interaction between those Acts and laws of the States and Territories.
Division 2—Constitutional basis and application of this Act and the Transitional Act
18 Constitutional basis for this Act and the Transitional Act
Application in a referring State
(1) The application of this Act and the Transitional Act in the referring States is based on:
(a) the legislative powers that the Commonwealth Parliament has under section 51 of the Constitution (other than paragraph 51(xxxvii)); and
(b) the legislative powers that the Commonwealth Parliament has because of a reference or an adoption by the Parliaments of the referring States under paragraph 51(xxxvii) of the Constitution.
Application in a Territory
(2) The application of this Act and the Transitional Act in a Territory is based on:
(a) the legislative powers that the Commonwealth Parliament has under section 122 of the Constitution to make laws for the government of a Territory; and
(b) the legislative powers that the Commonwealth Parliament has under section 51 of the Constitution.
Despite section 2H of the Acts Interpretation Act 1901, this Act and the Transitional Act as applying in the Territory are laws of the Commonwealth.
Application outside Australia
(3) The operation of this Act and the Transitional Act outside Australia is based on:
(a) the legislative power the Commonwealth Parliament has under paragraph 51(xxix) of the Constitution; and
(b) the other legislative powers that the Commonwealth Parliament has under section 51 of the Constitution; and
(c) the legislative powers that the Commonwealth Parliament has under section 122 of the Constitution to make laws for the government of a Territory.
Application in a non‑referring State
(4) The application of this Act and the Transitional Act in a State that is not a referring State is based on:
(a) the legislative powers that the Commonwealth Parliament has under section 51 (other than paragraph 51(xxxvii)) and section 122 of the Constitution; and
(b) the legislative powers that the Commonwealth Parliament has because of a reference or an adoption by the Parliaments of the referring States under paragraph 51(xxxvii) of the Constitution.
19 Meaning of referring State
Meaning of referring State
(1) A State is a referring State if, for the purposes of paragraph 51(xxxvii) of the Constitution, the Parliament of the State:
(a) has referred the matters covered by subsections (3) and (4) to the Commonwealth Parliament; or
(b) has:
(i) adopted the relevant version of this Act and the relevant version of the Transitional Act; and
(ii) referred the matter covered by subsection (4) to the Commonwealth Parliament.
(2) A State is a referring State even if the State’s referral law provides that:
(a) the reference to the Commonwealth Parliament of a matter covered by subsection (3) or (4) is to terminate in particular circumstances; or
(b) the adoption of the relevant version of this Act or the relevant version of the Transitional Act is to terminate in particular circumstances; or
(c) the reference to the Commonwealth Parliament of the matter covered by subsection (4) does not include:
(i) the matter of making provision with respect to the imposition or payment of State taxes, duties, charges or other imposts, however described; or
(ii) the matter of making provision with respect to the general system for the recording of estates or interests in land and related information; or
(iii) the matter of providing for the priority of interests in real property; or
(iv) the matter of making a law that excludes or limits the operation of a State law, to the extent that the State law makes provision with respect to the creation, holding, transfer, assignment, disposal or forfeiture of a State statutory right; or
(d) the reference to the Commonwealth Parliament of a matter covered by subsection (3) or (4) has effect only:
(i) if and to the extent that the matter is not included in the legislative powers of the Commonwealth Parliament (otherwise than by a reference under section 51(xxxvii) of the Constitution); or
(ii) if and to the extent that the matter is included in the legislative powers of the Parliament of the State.
Reference covering the relevant versions of this Act and the Transitional Act
(3) This subsection covers the matters to which the referred provisions relate to the extent of the making of laws with respect to those matters by including the referred provisions in the relevant version of this Act and the relevant version of the Transitional Act.
Reference covering amendments of this Act or the Transitional Act
(4) This subsection covers a referred credit matter (see section 20) to the extent of the making of laws with respect to that matter by making express amendments of this Act or the Transitional Act.
Effect of terminating reference or adoption of relevant versions
(5) A State ceases to be a referring State if:
(a) in the case where the Parliament of the State has referred to the Commonwealth Parliament the matters covered by subsection (3)—that reference terminates; or
(b) in the case where the Parliament of the State has adopted the relevant version of this Act and the relevant version of the Transitional Act—the adoption of the relevant version of this Act or the relevant version of the Transitional Act terminates.
Effect of terminating amendment reference
(6) A State ceases to be a referring State if:
(a) the State’s amendment reference terminates; and
(b) subsection (7) does not apply to the termination.
(7) A State does not cease to be a referring State because of the termination of its amendment reference if:
(a) the termination is effected by the Governor of that State fixing a day by Proclamation as the day on which the reference terminates; and
(b) the day fixed is no earlier than the first day after the end of the period of 6 months beginning on the day on which the Proclamation is published; and
(c) that State’s amendment reference, and the amendment reference of every other State, terminates on the same day.
Definitions
(8) In this section:
amendment reference of a State means the reference by the Parliament of the State to the Parliament of the Commonwealth of the matter covered by subsection (4).
express amendment of this Act or the Transitional Act means the direct amendment of the text of this Act or the Transitional Act (whether by the insertion, omission, repeal, substitution or relocation of words or matter) by another Commonwealth Act or by an instrument under a Commonwealth Act, but does not include the enactment by a Commonwealth Act of a provision that has, or will have, substantive effect otherwise than as part of the text of this Act or the Transitional Act.
forfeiture means confiscation, seizure, extinguishment, cancellation, suspension or any other forfeiture.
referral law, of a State, means the Act of the State that refers the matter covered by subsection (4) to the Commonwealth Parliament.
referred provisions means:
(a) the relevant version of this Act; and
(b) the relevant version of the Transitional Act;
to the extent to which they deal with matters that are included in the legislative powers of the Parliaments of the States.
relevant version of the Transitional Act means the Transitional Act as originally enacted.
relevant version of this Act means:
(a) if, at the time the State’s referral law was enacted, this Act had not been enacted—this Act as originally enacted; or
(b) otherwise—this Act as originally enacted, and as later amended by the National Consumer Credit Protection Amendment Act 2010.
State law means:
(a) any Act of the State or any instrument made under such an Act, whenever enacted or made and as in force from time to time; or
(b) the general law, being the principles and rules of common law and equity to the extent that they have effect in the State from time to time.
State statutory right means a right, entitlement or authority that is granted by or under any Act of the State or any instrument made under such an Act, whenever enacted or made and as in force from time to time, other than a right, entitlement or authority that relates to:
(a) credit covered by paragraph (a) of the definition of referred credit matter; or
(b) a consumer lease covered by paragraph (b) of that definition.
20 Meaning of referred credit matter
(1) Referred credit matter means a matter relating to either of the following:
(a) credit, being credit the provision of which would be covered by the expression “provision of credit to which this Code applies” in the initial National Credit Code;
(b) consumer leases, being consumer leases each of which would be covered by the expression “consumer lease to which Part 11 applies” in the initial National Credit Code.
(2) Initial National Credit Code means Schedule 1 to the relevant version of this Act (within the meaning of subsection 19(8)).
21 General application of this Act and the Transitional Act
Application in this jurisdiction
(1) Each provision of this Act and the Transitional Act applies in this jurisdiction.
Geographical coverage of “this jurisdiction”
(2) This jurisdiction means the geographical area that consists of:
(a) each referring State (including its coastal sea); and
(b) each Territory (including its coastal sea).
(3) Throughout this Act and the Transitional Act, this jurisdiction therefore consists of either:
(a) if all of the States are referring States—the whole of Australia; or
(b) if one or more States are not referring States—Australia (other than any State that is not a referring State).
Application outside this jurisdiction
(4) Subject to subsection (5), each provision of this Act and the Transitional Act also applies, according to its tenor, in relation to acts and omissions outside this jurisdiction.
Application in non‑referring States
(5) This Act does not apply to an act or omission in a State that is not a referring State to the extent to which that application would be beyond the legislative powers of the Parliament (including powers it has under paragraphs 51(xxxvii) and (xxxix) of the Constitution).
Residence, place of formation etc.
(6) Each provision of this Act and the Transitional Act applies, according to its tenor, to:
(a) natural persons whether:
(i) resident in this jurisdiction or not; and
(ii) resident in Australia or not; and
(iii) Australian citizens or not; and
(b) all bodies corporate and unincorporated bodies whether:
(i) formed or carrying on a business in this jurisdiction or not; and
(ii) formed or carrying on a business in Australia or not.
22 When Acts bind Crown
(1) This Act (other than the National Credit Code) and the Transitional Act do not bind the Crown in any of its capacities.
(2) Despite subsection (1), the regulations may provide that this Act (other than the National Credit Code) and the Transitional Act, or specified provisions of this Act (other than the National Credit Code) or the Transitional Act, bind either or both of the following in circumstances (if any) prescribed by the regulations:
(a) the Crown in right of the Commonwealth;
(b) the Crown in all of its other capacities.
(3) The National Credit Code binds the Crown in each of its capacities.
(4) This Act and the Transitional Act do not make the Crown liable to be prosecuted for an offence or to any pecuniary penalty.
Division 3—Interaction between the Commonwealth credit legislation and State and Territory laws
23 Concurrent operation intended
(1) This Act and the Transitional Act (the Commonwealth credit legislation) are not intended to exclude or limit the concurrent operation of any law of a State or Territory.
(2) If:
(a) an act or omission of a person is both an offence against the Commonwealth credit legislation and an offence against the law of a State or Territory; and
(b) the person is convicted of either of those offences;
the person is not liable to be convicted of the other of those offences.
(3) This section does not apply to a law of a State or Territory if there is a direct inconsistency between that law and the Commonwealth credit legislation.
Note: Section 25 avoids direct inconsistency arising in some cases by limiting the operation of the Commonwealth credit legislation.
24 When Commonwealth credit legislation does not apply
(1) Subsection (2) applies if a provision of a law of a referring State or a Territory declares a matter to be an excluded matter for the purposes of this section in relation to:
(a) the whole of the Commonwealth credit legislation; or
(b) a specified provision of the Commonwealth credit legislation; or
(c) the Commonwealth credit legislation other than a specified provision; or
(d) the Commonwealth credit legislation otherwise than to a specified extent.
(2) By force of this subsection:
(a) none of the provisions of the Commonwealth credit legislation (other than this section) applies in or in relation to the State or Territory with respect to the matter if the declaration is one to which paragraph (1)(a) applies; and
(b) the specified provision of the Commonwealth credit legislation does not apply in or in relation to the State or Territory with respect to the matter if the declaration is one to which paragraph (1)(b) applies; and
(c) the provisions of the Commonwealth credit legislation (other than this section and the specified provisions) do not apply in or in relation to the State or Territory with respect to the matter if the declaration is one to which paragraph (1)(c) applies; and
(d) the provisions of the Commonwealth credit legislation (other than this section and otherwise than to the specified extent) do not apply in or in relation to the State or Territory with respect to the matter if the declaration is one to which paragraph (1)(d) applies.
(3) Subsection (2) does not apply to the declaration to the extent to which the regulations provide that that subsection does not apply to that declaration.
25 Avoiding direct inconsistency between Commonwealth and State and Territory laws
This section overrides other Commonwealth credit legislation
(1) This section has effect despite anything else in the Commonwealth credit legislation.
When this section does not apply to a State or Territory law
(2) This section does not apply to a provision of a law of a referring State or a Territory that is capable of concurrent operation with the Commonwealth credit legislation.
Note: This kind of provision is dealt with by section 23.
When this section applies to a State or Territory law
(3) This section applies to the interaction between a provision (the displacement provision) of a law of a referring State or a Territory and a provision (the Commonwealth provision) of the Commonwealth credit legislation only if the displacement provision is declared by a law of the State or Territory to be a Commonwealth credit legislation displacement provision for the purposes of this section (either generally or specifically in relation to the Commonwealth provision).
Effect of displacement provision
(4) The Commonwealth provision does not:
(a) prohibit the doing of an act; or
(b) impose a liability (whether civil or criminal) for doing an act;
if the displacement provision specifically permits, authorises or requires the doing of that act.
(5) The Commonwealth provision does not operate in or in relation to the State or Territory to the extent necessary to ensure that no inconsistency arises between:
(a) the Commonwealth provision; and
(b) the displacement provision to the extent to which the displacement provision would, apart from this subsection, be inconsistent with the Commonwealth provision.
Note 1: The displacement provision is not covered by this subsection if subsection (4) applies to the displacement provision: if that subsection applies there would be no potential inconsistency to be dealt with by this subsection.
Note 2: The operation of the displacement provision will be supported by section 23 to the extent to which it can operate concurrently with the Commonwealth provision.
(6) Subsections (4) and (5) do not apply in relation to the displacement provision to the extent to which the regulations provide that those subsections do not apply in relation to the displacement provision.
26 Regulations to deal with interaction between laws
(1) The regulations may modify the operation of the Commonwealth credit legislation so that:
(a) provisions of the Commonwealth credit legislation do not apply to a matter that is dealt with by a law of a referring State or a Territory specified in the regulations; or
(b) no inconsistency arises between the operation of a provision of the Commonwealth credit legislation and the operation of a provision of a law of a referring State or a Territory specified in the regulations.
(2) Without limiting subsection (1), regulations made for the purposes of that subsection may provide that a provision of the Commonwealth credit legislation:
(a) does not apply to:
(i) a person specified in the regulations; or
(ii) a body specified in the regulations; or
(iii) circumstances specified in the regulations; or
(iv) a person or body specified in the regulations in the circumstances specified in the regulations; or
(b) does not prohibit an act to the extent to which the prohibition would otherwise give rise to an inconsistency with a law of a referring State or a Territory; or
(c) does not require a person to do an act to the extent to which the requirement would otherwise give rise to an inconsistency with a law of a referring State or a Territory; or
(d) does not authorise a person to do an act to the extent to which the conferral of that authority on the person would otherwise give rise to an inconsistency with a law of a referring State or a Territory; or
(e) does not impose an obligation on a person to the extent to which complying with that obligation would require the person not to comply with an obligation imposed on the person under a law of a referring State or a Territory; or
(f) authorises a person to do something for the purposes of the Commonwealth credit legislation that the person:
(i) is authorised to do under a law of a referring State or a Territory; and
(ii) would not otherwise be authorised to do under the Commonwealth credit legislation; or
(g) will be taken to be satisfied if a law of a referring State or a Territory is satisfied.
Chapter 2—Licensing of persons who engage in credit activities
Part 2‑1—Requirement to be licensed to engage in credit activities
Division 1—Introduction
27 Guide to this Part
This Part is about the licensing of persons to engage in credit activities. In general, a person cannot engage in a credit activity if the person does not hold an Australian credit licence.
Division 2 prohibits a person from engaging in credit activities without an Australian credit licence. However, the prohibition does not apply to employees and directors of licensees or related bodies corporate of licensees, or to credit representatives of licensees.
Division 3 deals with other prohibitions relating to the requirement to be licensed and to credit activities. These prohibitions relate to holding out and advertising, conducting business with unlicensed persons, and charging fees for unlicensed conduct.
Division 2—Engaging in credit activities without a licence
28 Application of this Division
This Division applies on or after 1 July 2011, or a later day prescribed by the regulations.
29 Prohibition on engaging in credit activities without a licence
Prohibition on engaging in credit activities without a licence
(1) A person must not engage in a credit activity if the person does not hold a licence authorising the person to engage in the credit activity.
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 200 penalty units, or 2 years imprisonment, or both.
Defences
(3) For the purposes of subsections (1) and (2), it is a defence if:
(a) the person engages in the credit activity on behalf of another person (the principal); and
(b) the person is:
(i) an employee or director of the principal or of a related body corporate of the principal; or
(ii) a credit representative of the principal; and
(c) the person’s conduct in engaging in the credit activity is within the authority of the principal; and
(d) the principal holds a licence authorising the principal to engage in the credit activity.
Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (3) (see subsection 13.3(3) of the Criminal Code).
(4) For the purposes of subsections (1) and (2), it is a defence if:
(a) the person engages in the credit activity on behalf of another person (the principal); and
(b) the person is a representative of the principal; and
(c) the person’s conduct in engaging in the credit activity is within the authority of the principal; and
(d) the principal is exempted from subsections (1) and (2) under paragraph 109(1)(a), 109(3)(a) or 110(a).
Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code).
Division 3—Other prohibitions relating to the requirement to be licensed
30 Prohibitions on holding out and advertising etc.
Prohibitions on holding out and advertising etc.
(1) A person must not hold out:
(a) that the person holds a licence; or
(b) that the person holds a licence authorising the person to engage in a particular credit activity; or
(c) that a credit activity engaged in by the person or by someone else is exempt from a requirement to hold a licence; or
(d) that, in engaging in a credit activity, the person acts on behalf of another person; or
(e) that conduct, or proposed conduct, of the person is within the authority of a licensee;
if that is not the case.
Civil penalty: 2,000 penalty units.
(2) A person must not hold out or advertise that the person engages or is able to engage in a credit activity if the person would, if the person engaged in the credit activity, contravene section 29 (which deals with the requirement to be licensed).
Civil penalty: 2,000 penalty units.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1) or (2); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units, or 1 year imprisonment, or both.
31 Prohibition on conducting business with unlicensed persons
Prohibition on conducting business with unlicensed persons
(1) A licensee must not:
(a) engage in a credit activity; and
(b) in the course of engaging in that credit activity, conduct business with another person who is engaging in a credit activity;
if, by engaging in the credit activity, the other person contravenes section 29 (which deals with the requirement to be licensed).
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 200 penalty units, or 2 years imprisonment, or both.
32 Prohibition on charging a fee etc.
Prohibition on charging a fee etc.
(1) A person must not demand, receive or accept any fee, charge or other amount from a consumer for engaging in a credit activity if, by engaging in that credit activity, the person contravenes, or would contravene, section 29 (which deals with the requirement to be licensed).
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units, or 1 year imprisonment, or both.
Part 2‑2—Australian credit licences
Division 1—Introduction
34 Guide to this Part
This Part is about Australian credit licences.
Division 2 explains what an Australian credit licence is and the credit activities that are authorised by it.
Division 3 is about how to get an Australian credit licence, including how to apply for it and when ASIC may grant or refuse to grant it.
Division 4 is about the conditions that may be imposed on an Australian credit licence.
Division 5 is about conduct obligations of licensees.
Division 6 is about the suspension, cancellation or variation of an Australian credit licence.
Division 2—Australian credit licences
35 Australian credit licences
(1) An Australian credit licence is a licence that authorises the licensee to engage in particular credit activities.
(2) The credit activities that the licensee is authorised to engage in are those credit activities specified in a condition of the licence as the credit activities that the licensee is authorised to engage in.
Division 3—How to get an Australian credit licence
36 Applying for a licence
(1) A person may apply for a licence by lodging an application with ASIC on or after 1 July 2010, or a later day prescribed by the regulations.
(2) The application must be in the approved form.
37 When a licence may be granted—applicants other than ADIs
When ASIC must grant a licence
(1) ASIC must grant a person (other than an ADI) a licence if (and must not grant the person a licence unless):
(a) the person has applied for the licence in accordance with section 36; and
(b) ASIC has no reason to believe that the person is likely to contravene the obligations that will apply under section 47 if the licence is granted; and
(c) ASIC has no reason to believe that the person is not a fit and proper person to engage in credit activities; and
(d) the person has given ASIC any additional information or audit report requested by ASIC under subsection (4); and
(e) the person meets any other requirements prescribed by the regulations.
Note: ASIC must not grant a licence to a person contrary to a banning order or disqualification order, or if a prescribed State or Territory order is in force against the person or certain representatives of the person (see section 40).
Matters ASIC must have regard to
(2) For the purposes of paragraphs (1)(b) and (c), ASIC must (subject to Part VIIC of the Crimes Act 1914) have regard to the following:
(a) whether a registration under the Transitional Act, a licence or an Australian financial services licence of the person has ever been suspended or cancelled;
(b) whether a banning order or disqualification order under Part 2‑4 has ever been made against the person;
(c) whether a banning order or disqualification order under Division 8 of Part 7.6 of the Corporations Act 2001 has ever been made against the person;
(d) whether the person has ever been banned from engaging in a credit activity under a law of a State or Territory;
(e) any relevant information given to ASIC by a State or Territory, or an authority of a State or Territory, in relation to the person;
(f) if the person is not the trustees of a trust—whether the person has ever been insolvent;
(g) if the person is a single natural person:
(i) whether the person has ever been disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001; and
(ii) any criminal conviction of the person, within 10 years before the application was made;
(h) if the person is not a single natural person, whether ASIC has reason to believe that any of the following persons is not a fit and proper person to engage in credit activities:
(i) if the person is a body corporate—each director, secretary or senior manager of the body corporate who would perform duties in relation to the credit activities to be authorised by the licence;
(ii) if the person is a partnership or the trustees of a trust—each partner or trustee who would perform duties in relation to the credit activities to be authorised by the licence;
(i) any other matter ASIC considers relevant;
(j) any other matter prescribed by the regulations.
Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
(3) ASIC must (subject to Part VIIC of the Crimes Act 1914), in considering whether it has reason to believe that a person referred to in paragraph (2)(h) is not a fit and proper person to engage in credit activities, have regard to:
(a) the matters set out in paragraphs (2)(a) to (g); and
(b) any other matter ASIC considers relevant; and
(c) any other matter prescribed by the regulations;
in relation to that person.
ASIC may request information or audit report from applicant
(4) ASIC may give a written notice to a person who has applied for a licence requesting the person to lodge with ASIC, within the time specified in the notice, either or both of the following:
(a) additional information specified in the notice in relation to any matters that ASIC may have regard to in deciding whether to grant the licence;
(b) an audit report, prepared by a suitably qualified person specified in the notice, in relation to matters that ASIC may have regard to in deciding whether to grant the licence.
(5) If the person does not lodge with ASIC the additional information or audit report requested by ASIC under subsection (4) within the time specified in the notice, the person is taken to have withdrawn the application. ASIC may extend the time by giving a written notice to the person.
38 When a licence may be granted—ADIs
If:
(a) an ADI applies under section 36 for a licence; and
(b) the application includes a statement (in accordance with the requirements of the approved form) to the effect that the ADI will, if granted the licence, comply with its obligations as a licensee;
then ASIC must grant the ADI a licence authorising the ADI to engage in credit activities that equate (as closely as possible) to the credit activities in relation to which the application was made.
Note: ASIC must not grant a licence to a person contrary to a banning order or disqualification order, or if a prescribed State or Territory order is in force against the person or certain representatives of the person (see section 40).
39 Regulations may prescribe streamlined process for other applicants
Despite sections 36 and 37, the regulations may provide that:
(a) some or all of sections 36 and 37 do not apply in relation to particular classes of applicants; and
(b) alternative processes apply to applications for licences by, and the grant of licences to, those classes of applicants.
40 Licences must not be granted to certain applicants
Banning or disqualification order in force against person
(1) Despite subsection 37(1) and section 38, ASIC must not grant a licence that authorises a person to engage in a credit activity if a banning order or disqualification order under Part 2‑4 is in force against the person in relation to that credit activity.
Prescribed State or Territory order in force against person etc.
(2) Despite subsection 37(1) and section 38, ASIC must not grant a licence to a person if:
(a) the person is a natural person against whom a prescribed State or Territory order is in force; or
(b) the person is a body corporate, and a prescribed State or Territory order is in force against a director, secretary or senior manager of the body corporate who would perform duties in relation to the credit activities to be authorised by the licence; or
(c) the person is a partnership or the trustees of a trust, and a prescribed State or Territory order is in force against a partner or trustee who would perform duties in relation to the credit activities to be authorised by the licence.
41 Applicant must be given hearing before refusal of licence
ASIC may only refuse to grant a licence after giving the person who applied for the licence an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC in relation to the refusal.
42 Notice of grant or refusal of licence and date of effect
(1) ASIC must give a person (the applicant) who has applied for a licence written notice of:
(a) ASIC’s decision on the application; and
(b) if the decision is to grant the applicant a licence—the day on which the licence takes effect; and
(c) if the decision is not to grant the applicant a licence—the reasons for the decision.
(2) The licence comes into force on the day specified in the notice, which must not be before the day on which the decision to grant the licence was made.
43 Australian credit licence numbers
(1) ASIC must allocate each licence a unique Australian credit licence number when it is granted.
(2) If:
(a) a person is granted a licence; and
(b) the person holds an Australian financial services licence;
then the Australian credit licence number that ASIC gives to the licence held by that person must be the same number as the person’s Australian financial services licence number.
(3) ASIC must give the licensee written notice of the Australian credit licence number.
44 Basis on which licence is granted
A licence granted under this Division is granted on the basis that:
(a) conditions on the licence may be imposed, varied or revoked under section 45 or 46; and
(b) the licence may be suspended under section 54, 55 or 56; and
(c) the licence may be cancelled under section 54, 55 or 56; and
(d) the licence may be varied under section 57; and
(e) the licence may be cancelled, revoked, terminated or varied by or under later legislation; and
(f) no compensation is payable if:
(i) conditions on the licence are imposed, varied or revoked as referred to in paragraph (a); or
(ii) the licence is suspended, cancelled, varied, revoked or terminated as referred to in paragraphs (b) to (e).
Division 4—Conditions on an Australian credit licence
45 The conditions on the licence
ASIC may impose, vary or revoke conditions on licences
(1) ASIC may, at any time:
(a) impose conditions, or additional conditions, on a licence; and
(b) vary or revoke conditions imposed on a licence.
(2) ASIC may do so:
(a) on its own initiative; or
(b) if the licensee lodges an application with ASIC for the imposition, variation or revocation.
(3) The application must be in the approved form.
Notice and effect of imposition, variation or revocation of conditions
(4) ASIC must give the licensee written notice of the imposition, variation or revocation of the conditions. The imposition, variation or revocation of the conditions comes into force on the day specified in the notice, which must not be before the day on which the decision to impose, vary or revoke the conditions was made.
ASIC must give the licensee a hearing
(5) Despite subsection (1), ASIC may only impose conditions or additional conditions, or vary or revoke the conditions, on the licence after giving the licensee an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC in relation to the conditions.
This subsection does not apply to ASIC imposing conditions when the licence is granted.
Condition in relation to credit activities authorised
(6) ASIC must ensure that the licence is subject to a condition that specifies the credit activities or classes of credit activities that the licensee is authorised to engage in.
Regulations may prescribe conditions
(7) The licence is subject to such other conditions as are prescribed by the regulations. However, ASIC cannot vary or revoke those conditions.
46 Licence conditions—special procedures for APRA‑regulated bodies
Special procedures for APRA‑regulated bodies (other than ADIs)
(1) If the licensee, or a related body corporate, is a body (the APRA body) regulated by APRA (other than an ADI), then the following provisions apply:
(a) ASIC cannot:
(i) impose, vary or revoke a condition on the licence that, in ASIC’s opinion, has or would have the result of preventing the APRA body from being able to carry on all or any of its usual activities (being activities in relation to which APRA has regulatory or supervisory responsibilities); or
(ii) vary a condition so that it would, in ASIC’s opinion, become a condition that would have a result as described in subparagraph (i);
unless ASIC has first consulted APRA about the proposed action;
(b) if ASIC imposes, varies or revokes a condition on the licence and paragraph (a) does not apply to that action, ASIC must, within one week, inform APRA of the action that has been taken.
Special procedures for ADIs
(2) If the licensee, or a related body corporate, is an ADI, then the following provisions apply:
(a) subject to paragraphs (b) and (c), the powers that ASIC would otherwise have under section 45:
(i) to impose, vary or revoke a condition on the licence that, in ASIC’s opinion, has or would have the result of preventing the ADI from being able to carry on all or any of its banking business (within the meaning of the Banking Act 1959); or
(ii) to vary a condition so that it would, in ASIC’s opinion, become a condition that would have a result as described in subparagraph (i);
are instead powers of the Minister;
(b) the following provisions apply in relation to a power to which paragraph (a) applies:
(i) the procedures for the exercise of the power are the same as would apply if ASIC could exercise the power, except that the Minister must not exercise the power unless he or she has first considered advice from ASIC on the proposed action, being advice given after ASIC has consulted APRA about the proposed action;
(ii) ASIC (rather than the Minister) must still conduct any hearing required under paragraph 45(5)(a) and receive any submissions under paragraph 45(5)(b);
(c) if ASIC imposes, varies or revokes a condition on the licence and paragraph (a) does not apply to that action, ASIC must, within one week, inform APRA of the action that has been taken.
Division 5—Obligations of licensees
47 General conduct obligations of licensees
General conduct obligations
(1) A licensee must:
(a) do all things necessary to ensure that the credit activities authorised by the licence are engaged in efficiently, honestly and fairly; and
(b) have in place adequate arrangements to ensure that clients of the licensee are not disadvantaged by any conflict of interest that may arise wholly or partly in relation to credit activities engaged in by the licensee or its representatives; and
(c) comply with the conditions on the licence; and
(d) comply with the credit legislation; and
(e) take reasonable steps to ensure that its representatives comply with the credit legislation; and
(f) maintain the competence to engage in the credit activities authorised by the licence; and
(g) ensure that its representatives are adequately trained, and are competent, to engage in the credit activities authorised by the licence; and
(h) have an internal dispute resolution procedure that:
(i) complies with standards and requirements made or approved by ASIC in accordance with the regulations; and
(ii) covers disputes in relation to the credit activities engaged in by the licensee or its representatives; and
(i) be a member of an approved external dispute resolution scheme; and
(j) have compensation arrangements in accordance with section 48; and
(k) have adequate arrangements and systems to ensure compliance with its obligations under this section, and a written plan that documents those arrangements and systems; and
(l) unless the licensee is a body regulated by APRA:
(i) have available adequate resources (including financial, technological and human resources) to engage in the credit activities authorised by the licence and to carry out supervisory arrangements; and
(ii) have adequate risk management systems; and
(m) comply with any other obligations that are prescribed by the regulations.
Assessment of whether compliance is adequate
(2) For the purposes of paragraphs (1)(b), (g), (k) and (l), in considering whether a matter is adequate, the nature, scale and complexity of the credit activities engaged in by the licensee must be taken into account.
Regulations in relation to internal dispute resolution procedures
(3) Regulations made for the purposes of paragraph (1)(h) may also deal with the variation or revocation of:
(a) standards or requirements made by ASIC; or
(b) approvals given by ASIC.
48 Requirements for compensation arrangements
Requirement to have adequate compensation arrangements
(1) A licensee must have adequate arrangements for compensating persons for loss or damage suffered because of a contravention of this Act by the licensee or its representatives.
When arrangements are adequate
(2) For the purposes of subsection (1), arrangements are adequate if, and only if, they:
(a) satisfy any requirements prescribed by the regulations; or
(b) are approved in writing by ASIC.
Approval of arrangements by ASIC
(3) Before approving arrangements under paragraph (2)(b), ASIC must have regard to:
(a) the credit activities authorised by the licence; and
(b) whether the arrangements will continue to cover persons after the licensee ceases to engage in credit activities, and the length of time for which that cover will continue; and
(c) any other matters that are prescribed by the regulations.
(4) Without limiting paragraph (3)(c), the regulations may, in particular, prescribe additional details in relation to the matters to which ASIC must have regard under paragraphs (3)(a) and (b).
49 Obligation to provide a statement or obtain an audit report if directed by ASIC
Notice to licensee to provide a statement
(1) ASIC may give a licensee a written notice directing the licensee to lodge with ASIC a written statement containing specified information about the credit activities engaged in by the licensee or its representatives.
(2) Notices under subsection (1):
(a) may be given at any time; and
(b) may be given to one or more particular licensees, or to each licensee in one or more classes of licensee, or to all licensees; and
(c) may require all the same information, or may contain differences as to the information they require; and
(d) may require a statement containing information to be given on a periodic basis, or each time a particular event or circumstance occurs, without ASIC having to give a further written notice.
Notice to licensee to obtain an audit report
(3) ASIC may also give a licensee a written notice directing the licensee to obtain an audit report, prepared by a suitably qualified person specified in the notice, on a statement, or on each statement in a class of statements, under subsection (1) before the statement is given to ASIC.
(4) A notice under subsection (3) is not a legislative instrument.
Notice must specify day by which licensee must comply
(5) A notice given under this section must specify the day by which the licensee must comply with the notice (which must be a reasonable period after the notice is given). ASIC may extend the day by giving a written notice to the licensee.
Requirement to comply with notice
(6) The licensee must comply with a notice given under this section within the time specified in the notice.
Civil penalty: 2,000 penalty units.
Offence
(7) A person commits an offence if:
(a) the person is subject to a requirement under subsection (6); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 25 penalty units, or 6 months imprisonment, or both.
Strict liability offence
(8) A person commits an offence if:
(a) the person is subject to a requirement under subsection (6); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 10 penalty units.
(9) Subsection (8) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
50 Obligation to give ASIC information required by the regulations
Regulations may require licensee to give information
(1) The regulations may require a licensee, or each licensee in a class of licensees, to give ASIC specified information about the credit activities engaged in by the licensee or its representatives.
Requirement to comply with regulations
(2) If regulations under subsection (1) require a licensee to give ASIC information, the licensee must give ASIC that information.
Civil penalty: 2,000 penalty units.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement to give ASIC information under subsection (2); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 25 penalty units, or 6 months imprisonment, or both.
Strict liability offence
(4) A person commits an offence if:
(a) the person is subject to a requirement to give ASIC information under subsection (2); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 10 penalty units.
(5) Subsection (4) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
51 Obligation to provide ASIC with assistance if reasonably requested
Requirement to provide assistance
(1) If ASIC, or a person authorised by ASIC, reasonably requests assistance from a licensee in relation to whether the licensee and its representatives are complying with the credit legislation, the licensee must give ASIC or the authorised person the requested assistance.
Civil penalty: 2,000 penalty units.
(2) If the request is in writing, it is not a legislative instrument.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement to give ASIC or an authorised person assistance under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 25 penalty units, or 6 months imprisonment, or both.
Assistance may include showing ASIC credit books etc.
(4) The assistance referred to in subsection (1) may include showing ASIC the person’s credit books or giving ASIC other information.
52 Obligation to cite Australian credit licence number
When this section applies
(1) This section applies on or after the day that is 2 years after the day section 3 commences.
Requirement to include licence number in documents
(2) Whenever a licensee identifies itself in a document of a kind prescribed by the regulations, the licensee must:
(a) include in the document the licensee’s Australian credit licence number; and
(b) identify in the document that the number is the licensee’s Australian credit licence number.
Civil penalty: 2,000 penalty units.
Strict liability offence
(3) A person commits an offence if:
(a) the person is subject to a requirement under subsection (2) to include and identify its Australian credit licence number in a document; and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 10 penalty units.
(4) Subsection (3) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
53 Obligation to lodge annual compliance certificate
Requirement to lodge annual compliance certificate
(1) A licensee must, no later than 45 days after the licensee’s licensing anniversary in each year, lodge a compliance certificate with ASIC in accordance with this section. ASIC may extend the day by giving a written notice to the licensee.
Civil penalty: 2,000 penalty units.
Compliance certificate must be in approved form
(2) The compliance certificate must be in the approved form.
Who must sign compliance certificate
(3) The compliance certificate must be signed by:
(a) if the licensee is a single natural person—the licensee; or
(b) if the licensee is a body corporate—a person of a kind prescribed by the regulations; or
(c) if the licensee is a partnership or the trustees of a trust—a partner or trustee who performs duties in relation to credit activities.
Requirement to ensure compliance certificate is lodged
(4) Each person by whom the compliance certificate may be signed under subsection (3) must ensure that the licensee lodges the compliance certificate with ASIC in accordance with this section.
Civil penalty: 2,000 penalty units.
Strict liability offence
(5) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1) or (4); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 60 penalty units.
(6) Subsection (5) is an offence of strict liability.
Meaning of licensing anniversary
(7) Licensing anniversary of a licensee means the anniversary of the day on which the licensee’s licence came into force under section 42.
Division 6—When a licence can be suspended, cancelled or varied
Subdivision A—Suspensions and cancellations
54 Suspension or cancellation without hearing
(1) ASIC may suspend or cancel a licensee’s licence if:
(a) the licensee lodges with ASIC an application for the suspension or cancellation; or
(b) the licensee does not engage, or ceases to engage, in credit activities; or
(c) any of the matters set out in subsection (2) applies to any of the following persons:
(i) the licensee;
(ii) if the licensee is a body corporate—a director, secretary or senior manager of the body corporate who performs duties in relation to credit activities;
(iii) if the licensee is a partnership or the trustees of a trust—a partner or trustee who performs duties in relation to credit activities; or
(d) in the case of a licensee that is a leviable entity (within the meaning of the ASIC Supervisory Cost Recovery Levy Act 2017)—the following have not been paid in full at least 12 months after the due date for payment:
(i) an amount of levy (if any) payable in respect of the licensee;
(ii) an amount of late payment penalty payable (if any) in relation to the levy;
(iii) an amount of shortfall penalty payable (if any) in relation to the levy.
(2) For the purposes of paragraph (1)(c), the matters are as follows:
(a) if the person is not the trustees of a trust—the person is insolvent;
(b) if the person is a natural person:
(i) the person is convicted of serious fraud; or
(ii) the person is incapable of managing his or her affairs because of physical or mental incapacity; or
(iii) a prescribed State or Territory order is in force against the person.
(3) An application for suspension or cancellation of a licence must be in the approved form.
55 Suspension or cancellation after offering a hearing
(1) ASIC may suspend or cancel a licensee’s licence (subject to complying with subsection (4)) if:
(a) the licensee has contravened an obligation under section 47 (which deals with general conduct obligations of licensees); or
(b) ASIC has reason to believe that the licensee is likely to contravene an obligation under that section; or
(c) ASIC has reason to believe that the licensee is not a fit and proper person to engage in credit activities; or
(d) the application for the licence:
(i) was false in a material particular or materially misleading; or
(ii) omitted a material matter.
(2) For the purposes of paragraphs (1)(b) and (c), ASIC must (subject to Part VIIC of the Crimes Act 1914) have regard to the following:
(a) if the person is a natural person—the matters set out in paragraphs 37(2)(a) to (f) and subparagraph 37(2)(g)(i) in relation to the person;
(b) if the person is not a natural person:
(i) the matters set out in paragraphs 37(2)(a) to (f) in relation to the person; and
(ii) whether ASIC has reason to believe that any of the persons referred to in paragraph 37(2)(h) in relation to the person is not a fit and proper person to engage in credit activities;
(c) any criminal conviction of the person, within 10 years before the licence is proposed to be suspended or cancelled;
(d) any other matter ASIC considers relevant;
(e) any other matter prescribed by the regulations.
Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
(3) ASIC must (subject to Part VIIC of the Crimes Act 1914), in considering whether it has reason to believe that a person referred to in subparagraph (2)(b)(ii) is not a fit and proper person to engage in credit activities, have regard to the matters set out in paragraphs (2)(a), (c), (d) and (e) in relation to the person.
(4) ASIC may only suspend or cancel a licensee’s licence under this section after giving the licensee an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC on the matter.
56 Suspension and cancellation—special procedures for APRA‑regulated bodies
Special procedures for APRA‑regulated bodies (other than ADIs)
(1) If a licensee, or a related body corporate, is a body (the APRA body) regulated by APRA (other than an ADI), then the following provisions apply:
(a) ASIC cannot suspend or cancel the licensee’s licence if doing so would, in ASIC’s opinion, have the result of preventing the APRA body from being able to carry on all or any of its usual activities (being activities in relation to which APRA has regulatory or supervisory responsibilities), unless ASIC has first consulted APRA about the proposed action;
(b) if ASIC suspends or cancels the licensee’s licence and paragraph (a) does not apply to that action, ASIC must, within one week, inform APRA of the action that has been taken.
Special procedures for ADIs
(2) If:
(a) a licensee is an ADI; or
(b) a related body corporate of a licensee is an ADI, and cancellation or suspension of the licensee’s licence would, in ASIC’s opinion, have the result of preventing the ADI from being able to carry on all or any of its banking business (within the meaning of the Banking Act 1959);
then the following provisions have effect:
(c) subject to paragraph (d), the powers that ASIC would otherwise have under this Division to cancel or suspend the licensee’s licence, or to revoke a suspension to which this subsection applied, are instead powers of the Minister;
(d) the procedures for the exercise of a power to which paragraph (c) applies are the same as would apply if ASIC could exercise the power, except that the Minister must not exercise the power unless he or she has first considered advice from ASIC on the proposed action, being advice given after ASIC has consulted APRA about the proposed action;
(e) ASIC (rather than the Minister) must still conduct any hearing required under paragraph 55(4)(a) and receive any submissions under paragraph 55(4)(b).
Subdivision B—Variations
57 Varying licences
ASIC may vary a person’s licence to take account of a change in the person’s name.
Note: The conditions on the licence can be varied under section 45.
Subdivision C—Miscellaneous rules about suspensions, cancellations and variations
58 Effect of suspension
(1) A suspended licence has no effect while it remains suspended.
(2) Subsection (1) has effect subject to section 62 (which deals with the continued effect of some suspended or cancelled licences).
59 Revocation of suspension
ASIC may at any time revoke the suspension of a licence.
60 Date of effect, notice and publication of variation, cancellation or suspension etc.
(1) ASIC must give a licensee written notice of a variation, suspension, revocation of a suspension, or cancellation of the licensee’s licence.
(2) A variation, suspension, revocation of a suspension, or cancellation of a licence comes into force when the written notice of that action is given to the licensee.
(3) As soon as practicable after the notice is given to the licensee, ASIC must publish a notice of the action on ASIC’s website. The notice must state when the action took effect.
61 Statement of reasons
A notice of suspension or cancellation given to a licensee must be accompanied by a statement of reasons for the action taken.
62 ASIC may allow licence to continue in force
(1) If ASIC gives a written notice of suspension or cancellation to a licensee, ASIC may include terms in the notice specifying that the licence continues in force as though the suspension or cancellation had not happened for the purposes of specified provisions of this Act in relation to specified matters, a specified period, or both.
(2) If ASIC includes terms in a notice under subsection (1), the licence continues in force in accordance with the terms of the notice.
Part 2‑3—Credit representatives and other representatives of licensees
Division 1—Introduction
63 Guide to this Part
This Part is about credit representatives of licensees (which are a particular type of representative of licensees). A person who is authorised as a credit representative of a licensee does not need to hold an Australian credit licence when engaging in credit activities on behalf of the licensee.
This Part also deals with information that ASIC may give to licensees about their representatives (such as their employees, directors and credit representatives, and persons who act on their behalf), and the liability of licensees for their representatives.
Division 2 deals with how a credit representative may be authorised to engage in credit activities on behalf of a licensee. It also deals with certain obligations of licensees in relation to the authorisation of their credit representatives.
Division 3 deals with information about representatives that ASIC may give to a licensee and the use of that information.
Division 4 deals with the liability of licensees for the conduct of their representatives.
Division 2—Authorisation of credit representatives
64 Licensee may authorise credit representatives
Authorisation of credit representative by licensee
(1) A licensee may give a person a written notice authorising the person to engage in specified credit activities on behalf of the licensee.
(2) A person who is authorised under subsection (1) is a credit representative of the relevant licensee.
(3) The credit activities specified may be some or all of the credit activities authorised by the licensee’s licence.
When authorisation is of no effect
(4) The authorisation:
(a) is of no effect if subsection (5) applies to it when it is given; and
(b) ceases to have effect if and when subsection (5) starts to apply to it after it is given;
to the extent that subsection (5) applies.
(5) This section applies to the authorisation to the extent that it purports to authorise:
(a) a person to engage in a credit activity that is not authorised by the licensee’s licence; or
(b) a person to engage in a credit activity, and a banning order or disqualification order under Part 2‑4 is in force against the person in relation to the credit activity; or
(c) a person who is not a member of an approved external dispute resolution scheme; or
(d) a person who is banned from engaging in a credit activity under a law of a State or Territory; or
(e) a natural person who has been convicted, within the last 10 years, of serious fraud; or
(f) a natural person against whom a prescribed State or Territory order is in force; or
(g) a person that is a body corporate, if a prescribed State or Territory order is in force against a director, secretary or senior manager of the body corporate who would perform duties in relation to the credit activities specified in the authorisation; or
(h) a person that is a partnership or the trustees of a trust, if a prescribed State or Territory order is in force against a partner or trustee who would perform duties in relation to the credit activities specified in the authorisation.
65 Credit representative that is a body corporate may sub‑authorise natural persons as credit representatives
Authorisation of natural person as credit representative by credit representative that is a body corporate
(1) A body corporate that is a credit representative of a licensee may, in that capacity, give a natural person a written notice authorising that natural person to engage in specified credit activities on behalf of the licensee.
(2) A natural person who is authorised under subsection (1) is a credit representative of the relevant licensee.
(3) The credit activities specified may be some or all of the credit activities authorised by the licensee’s licence.
Licensee must give consent to authorisation
(4) The authorisation can only be given if the licensee gives the body corporate its written consent to the authorisation. The licensee may give consent in relation to either a specified natural person or a specified class of natural persons (the membership of which might change from time to time).
When authorisation is of no effect
(5) The authorisation:
(a) is of no effect if subsection (6) applies to it when it is given; and
(b) ceases to have effect if and when subsection (6) starts to apply to it after it is given;
to the extent that subsection (6) applies.
(6) This subsection applies to the authorisation to the extent that it purports to authorise:
(a) a natural person to engage in a credit activity that is not authorised by the licensee’s licence; or
(b) a natural person to engage in a credit activity, and a banning order or disqualification order under Part 2‑4 is in force against the natural person in relation to the credit activity; or
(c) a natural person who is not a member of an approved external dispute resolution scheme; or
(d) a natural person who is banned from engaging in a credit activity under a law of a State or Territory; or
(e) a natural person who has been convicted, within the last 10 years, of serious fraud; or
(f) a natural person against whom a prescribed State or Territory order is in force; or
(g) a natural person in relation to the authorisation of whom the licensee has not given its written consent in accordance with subsection (4).
(7) To avoid doubt, an authorisation under subsection (1) is taken, for the purposes of sections 66 to 72, to be given by the body corporate, not the licensee.
66 Credit representative of 2 or more licensees
(1) One person can be the credit representative of 2 or more licensees, but only if:
(a) each of those licensees has consented to the person also being the credit representative of each of the other licensees; or
(b) each of the licensees is a related body corporate of each of the other licensees.
(2) An authorisation:
(a) is of no effect if it contravenes subsection (1) when it is given; and
(b) ceases to have effect if and when it starts to contravene subsection (1) after it is given.
67 A person cannot be a credit representative in relation to credit activities authorised by a person’s licence
(1) A person must not authorise another person to engage in a credit activity as a credit representative under subsection 64(1) or 65(1) if the other person holds a licence authorising the person to engage in the credit activity.
(2) An authorisation:
(a) is of no effect if it contravenes subsection (1) when it is given; and
(b) ceases to have effect if and when it starts to contravene subsection (1) after it is given.
68 Variation and revocation of authorisations and sub‑authorisations
Variation and revocation of authorisations
(1) An authorisation under subsection 64(1) may be varied or revoked at any time by the licensee giving written notice to the credit representative.
Variation and revocation of sub‑authorisations
(2) An authorisation under subsection 65(1) may be varied or revoked at any time by:
(a) the licensee in relation to whom the authorisation was given; or
(b) the body corporate that gave the authorisation;
giving written notice to the credit representative.
(3) If a person varies or revokes an authorisation under subsection (2), that person must give the other person who could have varied or revoked the authorisation written notice of the variation or revocation.
69 Obligation not to give authorisation that has no effect
Requirement not to give authorisation
(1) A person must not purport to authorise a credit representative under subsection 64(1) or 65(1) if, at the time the person first purports to give the authorisation, it is of no effect, to any extent, under this Division.
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.
70 Obligation to vary or revoke authorisation that ceases to have effect
Requirement to vary or revoke authorisation
(1) If a person:
(a) has authorised a credit representative under subsection 64(1) or 65(1); and
(b) becomes aware of a matter because of which the authorisation of the credit representative has ceased to have effect under this Division;
the person must, as soon as practicable:
(c) revoke the authorisation; or
(d) vary the authorisation so that it is no longer, to any extent, of no effect under this Division.
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is required to vary or revoke an authorisation under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes subsection (1).
Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.
71 Obligation to notify ASIC etc. about credit representatives
Requirement to notify ASIC when credit representative authorised
(1) If a person authorises a credit representative under subsection 64(1) or 65(1), the person must, within 15 business days of the authorisation, lodge with ASIC a written notice in accordance with subsection (3).
Civil penalty: 2,000 penalty units.
Requirement to notify licensee of sub‑authorisation
(2) If:
(a) a person authorises a natural person as a credit representative of a licensee under subsection 65(1) (which deals with sub‑authorisations); and
(b) the consent of the licensee to the authorisation was given in relation to a specified class of natural persons;
then the person must, within 15 business days of the authorisation, give the licensee written notice of the authorisation in accordance with subsection (3).
Civil penalty: 2,000 penalty units.
Details to be included in notice
(3) The notice must include the following details:
(a) the name and business address of the credit representative;
(b) details of the authorisation, including the date on which it was made and what the credit representative is authorised to do on behalf of the licensee;
(c) details of the external dispute resolution scheme of which the credit representative is a member;
(d) details of each other licensee on behalf of whom the credit representative is a credit representative.
Requirement to notify ASIC of change in details etc.
(4) If:
(a) a person authorises a credit representative under subsection 64(1) or 65(1); and
(b) either:
(i) any of the details that are referred to in subsection (3) in relation to the credit representative changes; or
(ii) the person revokes the authorisation;
then the person must, within 10 business days of the change or revocation, lodge with ASIC a written notice of the change or revocation.
Civil penalty: 2,000 penalty units.
(5) A notice given under subsection (1), (2) or (4) must be in the approved form.
Strict liability offence
(6) A person commits an offence if:
(a) the person is subject to a requirement to give a notice under subsection (1), (2) or (4); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 25 penalty units, or 6 months imprisonment, or both.
(7) Subsection (6) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
72 Credit representative numbers
(1) Within a reasonable period after receiving a notice under subsection 71(1) of the authorisation of a credit representative, ASIC must allocate the credit representative a unique credit representative number.
(2) ASIC must give written notice of the credit representative number to:
(a) the credit representative; and
(b) the person who authorised the credit representative.
(3) This section does not apply in relation to a credit representative that has already been allocated a credit representative number.
Division 3—Information about representatives
73 ASIC may give licensee information about representatives
ASIC may give licensee information about representatives
(1) If ASIC considers it appropriate to do so, it may give information to a licensee about a person whom ASIC believes is, or will be, a representative of the licensee. However, ASIC may only do so if it believes, on reasonable grounds, that the information is true.
Requirements about use of information
(2) A licensee to whom information is given under subsection (1) may make use of, make a record of, or give to another person, the information for a purpose connected with:
(a) the licensee making a decision about what action (if any) to take in relation to the representative, as a consequence of receiving the information; or
(b) the licensee taking action pursuant to such a decision.
(3) A licensee to whom information is given under subsection (1) must not make use of, make a record of, or give to another person, the information other than as permitted by subsection (2).
Civil penalty: 2,000 penalty units.
(4) A person to whom information has been given for a purpose or purposes under subsection (2) or this subsection may make use of, make a record of, or give to another person, that information for that purpose or any of those purposes.
(5) A person to whom information has been given for a purpose or purposes under subsection (2) or (4) must not make use of, make a record of, or give to another person, the information other than as permitted by subsection (4).
Civil penalty: 2,000 penalty units.
Offence
(6) A person commits an offence if:
(a) the person is subject to a requirement under subsection (3) or (5); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units, or 1 year imprisonment, or both.
Qualified privilege
(7) A person has qualified privilege in relation to an act done by the person under subsection (2) or (4).
Use of information obtained under this section in court
(8) A person to whom information is given in accordance with this section must not give any of the information to a court, or produce in a court a document that sets out some or all of the information, except:
(a) for a purpose connected with:
(i) a licensee making a decision about what action (if any) to take in relation to the representative, as a consequence of receiving some or all of the information; or
(ii) a licensee taking action pursuant to that decision; or
(iii) proving in proceedings in that court that particular action taken by a licensee in relation to the representative was taken pursuant to that decision; or
(b) in proceedings in that court, in so far as the proceedings relate to an alleged contravention of this section; or
(c) in proceedings about giving to a court false information some, at least, of which was the information given under this section.
(9) For the purposes of subsection (8), a licensee takes action in relation to a representative if the licensee:
(a) takes action by way of making, terminating or varying the terms and conditions of an agreement; or
(b) otherwise takes action in relation to an agreement;
to the extent that the agreement relates to the representative acting on behalf of the licensee.
(10) Subsection (8) also has the effect it would have if:
(a) a reference in it to a court were a reference to a court of an external Territory or of a country outside Australia and the external Territories; and
(b) paragraph (8)(b) were omitted.
Division 4—Liability of licensees for representatives
74 Application of this Division
This Division applies to any conduct of a representative of a licensee:
(a) that relates to a credit activity; and
(b) on which a third person (the client) could reasonably be expected to rely; and
(c) on which the client in fact relied in good faith.
75 Responsibility if representative of only one licensee
If the representative is the representative of only one licensee, the licensee is responsible, as between the licensee and the client, for the conduct of the representative, whether or not the representative’s conduct is within the authority of the licensee.
76 Representatives of multiple licensees
When this section applies
(1) This section applies if the representative is the representative of more than one licensee.
Conduct covered by only one authority
(2) If:
(a) the representative is the representative of one of the licensees only in relation to a particular class of credit activity; and
(b) the conduct relates to that class of credit activity;
that licensee is responsible for the conduct, as between that licensee and the client, whether or not the conduct is within the authority of the licensee.
Conduct covered by multiple authorities
(3) If:
(a) the representative is the representative of more than one of the licensees in relation to a particular class of credit activity; and
(b) the conduct relates to that class of credit activity; and
(c) the conduct is within the authority of:
(i) only one of those licensees (the authorising licensee); or
(ii) 2 or more of those licensees (the authorising licensees);
then:
(d) if subparagraph (c)(i) applies—the authorising licensee is responsible for the conduct, as between that licensee and the client; or
(e) if subparagraph (c)(ii) applies—the authorising licensees are jointly and severally responsible for the conduct, as between themselves and the client.
All other cases
(4) In any other case, all of the licensees are jointly and severally responsible for the conduct, as between themselves and the client, whether or not the representative’s conduct is within the authority of any of them.
77 Responsibility extends to loss or damage suffered by client
The responsibility of a licensee under this Division extends so as to make the licensee liable to the client in relation to any loss or damage suffered by the client as a result of the representative’s conduct.
78 Effect of this Division
(1) If a licensee is responsible for the conduct of its representative under this Division, the client has the same remedies against the licensee that the client has against the representative.
(2) The licensee and the representative (along with any other licensees that are also responsible) are all jointly and severally liable to the client in relation to those remedies.
(3) However, nothing in this Division imposes:
(a) any criminal responsibility; or
(b) any civil liability under a provision of this Act apart from this Division;
on a licensee that would not otherwise be imposed on the licensee.
(4) This Division does not relieve a representative of a licensee of any liability that the representative has to the client or the licensee.
(5) An agreement has no effect in so far as it purports to alter or restrict the operation of section 75, 76 or 77.
(6) However, subsection (5) does not apply to the extent that the agreement:
(a) provides for a representative of a licensee to indemnify the licensee for a liability of the licensee in relation to the representative; or
(b) provides for a licensee, for whom a representative acts, to indemnify another licensee for a liability in relation to the representative.
(7) A licensee must not make, or offer to make, an agreement that has, or would have, no effect under subsection (5).
Part 2‑4—Banning or disqualification of persons from engaging in credit activities
Division 1—Introduction
79 Guide to this Part
This Part is about the banning and disqualification of persons from engaging in credit activities.
Division 2 deals with banning orders, which are orders made by ASIC that prohibit a person from engaging in credit activities.
Division 3 deals with disqualification orders, which are orders of the court that disqualify a person from engaging in credit activities.
Division 2—Banning orders
80 ASIC’s power to make a banning order
(1) ASIC may make a banning order against a person:
(a) if ASIC suspends or cancels a licence of the person; or
(b) for a person other than the trustees of a trust—if the person becomes insolvent; or
(c) for a natural person—if the person is convicted of fraud; or
(d) if the person has:
(i) contravened any credit legislation; or
(ii) been involved in a contravention of a provision of any credit legislation by another person; or
(e) if ASIC has reason to believe that the person is likely to:
(i) contravene any credit legislation; or
(ii) be involved in a contravention of a provision of any credit legislation by another person; or
(f) if ASIC has reason to believe that the person is not a fit and proper person to engage in credit activities; or
(g) if a prescribed State or Territory order is in force against the person; or
(h) in any other circumstances prescribed by the regulations.
(2) For the purposes of paragraphs (1)(e) and (f), ASIC must (subject to Part VIIC of the Crimes Act 1914) have regard to the following:
(a) if the person is a natural person—the matters set out in paragraphs 37(2)(a) to (f) and subparagraph 37(2)(g)(i) in relation to the person;
(b) if the person is not a natural person:
(i) the matters set out in paragraphs 37(2)(a) to (f) in relation to the person; and
(ii) whether ASIC has reason to believe that any of the persons referred to in paragraph 37(2)(h) in relation to the person is not a fit and proper person to engage in credit activities;
(c) any criminal conviction of the person, within 10 years before the banning order is proposed to be made;
(d) any other matter ASIC considers relevant;
(e) any other matter prescribed by the regulations.
Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
(3) ASIC must (subject to Part VIIC of the Crimes Act 1914), in considering whether it has reason it has reason to believe that a person referred to in subparagraph (2)(b)(ii) is not a fit and proper person to engage in credit activities, have regard to the matters set out in paragraphs (2)(a), (c), (d) and (e) in relation to the person.
(4) Despite subsection (1), ASIC may only make a banning order against a person after giving the person an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC on the matter.
(5) Subsection (4) does not apply if:
(a) ASIC’s grounds for making the banning order against the person include that ASIC has suspended or cancelled a licence of the person (see paragraph (1)(a)); and
(b) the suspension or cancellation took place without a hearing under section 54.
(6) Subsection (4) also does not apply if:
(a) ASIC’s grounds for making the banning order against the person include that the person has been convicted of fraud (see paragraph (1)(c)); and
(b) the person has been convicted of serious fraud.
(7) ASIC must give a copy of the banning order to the person against whom it was made.
81 What is a banning order?
(1) A banning order is a written order that prohibits a person from engaging in any credit activities or specified credit activities in specified circumstances or capacities.
(2) The order may prohibit the person against whom it is made from engaging in a credit activity:
(a) permanently; or
(b) for a specified period.
(3) A banning order may include a provision allowing the person against whom it was made, subject to any specified conditions:
(a) to do specified acts; or
(b) to do specified acts in specified circumstances;
that the order would otherwise prohibit them from doing.
(4) A banning order is not a legislative instrument.
82 Effect of banning orders
Requirement not to engage in conduct contrary to banning order
(1) A person must not engage in conduct that is contrary to a banning order that is in force against the person.
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.
Note: A person against whom a banning order is in force cannot be granted a licence authorising the person to engage in a credit activity to which the banning order applies (see subsection 40(1)).
83 Variation or cancellation of banning orders
(1) ASIC may vary or cancel a banning order if ASIC is satisfied that it is appropriate to do so because of a change in any of the circumstances based on which ASIC made the order.
(2) ASIC may do so:
(a) on its own initiative; or
(b) if the person against whom the order was made lodges with ASIC an application for the variation or cancellation.
(3) The application must be in the approved form.
(4) If ASIC proposes not to vary or cancel a banning order in accordance with an application given by a person under paragraph (2)(b), ASIC must give the person an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC on the matter.
(5) ASIC must give written notice of the variation or cancellation of a banning order to the person against whom the order was made.
84 Date of effect, notice and publication of banning order, variation or cancellation
(1) A banning order comes into force when it is given to the person against whom it is made.
(2) A variation or cancellation of a banning order comes into force when written notice of the variation or cancellation is given to the person against whom the order was made.
(3) ASIC must publish a notice on ASIC’s website as soon as practicable after making, varying or cancelling a banning order. The notice must state when the banning order, or variation or cancellation of the banning order, came into force and:
(a) in the case of the making of a banning order—set out a copy of the banning order; or
(b) in the case of the variation of a banning order—set out a copy of the banning order as varied.
(4) However, if the banning order contains a provision of the kind referred to in subsection 81(3) and ASIC considers that the notice on its website would be unreasonably long if that provision were included, the notice may instead set out a summary of the provision’s effect.
85 Statement of reasons
(1) A copy of a banning order given to a person must be accompanied by a statement of reasons for the order.
(2) If ASIC varies a banning order made against a person, ASIC must, on request by the person, give the person a statement of reasons for the variation.
Division 3—Disqualification by the court
86 Disqualification by the court
(1) ASIC may apply to the court for an order under subsection (2) in relation to a person if ASIC:
(a) cancels a licence of the person; or
(b) makes a banning order against the person that is to operate permanently.
(2) The court may make:
(a) an order disqualifying the person, permanently or for a specified period, from engaging in credit activities, or specified credit activities, in specified circumstances or capacities; or
(b) any other order the court considers appropriate.
Note: A person against whom a disqualification order is in force cannot be granted a licence authorising the person to engage in a credit activity to which the disqualification order applies (see subsection 40(1)).
Part 2‑5—Financial records, trust accounts and audit reports
Division 1—Introduction
87 Guide to this Part
This Part is about financial records, trust accounts and matters relating to audit reports required under this Act.
Division 2 deals with the requirement for licensees to keep certain financial records, and provides for how those records must be kept.
Division 3 deals with trust accounts. Licensees that provide credit services and that receive money on behalf of others in the course of those services are required to maintain a trust account. Those licensees must also comply with requirements in relation to trust account money, trust account statements and trust account audit reports.
Division 4 has requirements relating to audit reports required by this Act, and the auditors that prepare those reports.
Division 2—Financial records of licensees
88 Obligation to keep financial records
Requirement to keep financial records
(1) A licensee must:
(a) keep financial records that correctly record and explain the transactions and financial position of any business of engaging in credit activities carried on by the licensee; and
(b) keep those records in accordance with this Division; and
(c) comply with subsection 90(2) in relation to the conversion of records into the English language; and
(d) comply with section 91 in relation to the location and production of records and particulars.
Civil penalty: 2,000 penalty units.
Meaning of financial records
(2) Financial records includes:
(a) invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; and
(b) documents of prime entry; and
(c) any trust account statement or trust account report required under section 100.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement in relation to financial records under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes subsection (1).
Criminal penalty: 200 penalty units, or 5 years imprisonment, or both.
Financial records may be kept with other records
(4) A licensee does not contravene this Division merely because some or all of the financial records are prepared as a part of, or in conjunction with, the records relating to any other business that is carried on by the licensee.
Note: For the purposes of subsection (3), a defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code).
89 How financial records are to be kept
The financial records must be kept in a way that:
(a) enables true and fair profit and loss statements, and balance sheets, of the business referred to in paragraph 88(1)(a) to be prepared from time to time; and
(b) allows those statements and balance sheets to be conveniently and properly audited in accordance with the auditing standards (if any) prescribed by regulations made under section 106.
90 Language of financial records
(1) The financial records must be kept in writing in the English language, or in a manner that enables them to be readily accessible and readily converted into writing in the English language.
(2) If any of the financial records are not kept in writing in the English language, the licensee must, if required to convert the financial records concerned into writing in the English language by a person who is entitled to examine the financial records concerned, comply with the requirement within a reasonable time.
91 Location of financial records
If any of the financial records are kept outside this jurisdiction, the licensee must:
(a) cause to be sent to and retained at a place in this jurisdiction such particulars in relation to the business dealt with in those financial records as will enable true and fair profit and loss statements and balance sheets to be prepared; and
(b) if required by ASIC to produce those financial records at a place in this jurisdiction, comply with the requirement not later than 28 days after the requirement is made.
92 Information to be shown in financial records
The financial records must be kept in sufficient detail to show particulars of:
(a) all money received or paid by the licensee; and
(b) for each credit contract under which the licensee is the credit provider:
(i) the amount and day of all payments made by or on behalf of the debtor under the credit contract; and
(ii) all amounts (including principal, interest, fees and charges) owed by the debtor under the credit contract; and
(c) for each consumer lease under which the licensee is the lessor—the amount and day of all payments made by or on behalf of the lessee under the consumer lease; and
(d) for each guarantee under which the licensee is the beneficiary of the guarantee—the amount and day of all payments made by or on behalf of the guarantor under the guarantee; and
(e) all income received by the licensee from commissions, interest, and other sources, and all expenses, commissions, and interest paid by the licensee; and
(f) all the assets and liabilities (including contingent liabilities) of the licensee; and
(g) any other matters prescribed by the regulations.
93 Regulations may impose additional requirements
The regulations may impose additional requirements to be complied with in relation to the financial records including, for example:
(a) requirements for things to be contained in the records; and
(b) requirements relating to the level of detail to be shown in the records.
94 Financial records taken to be made with licensee’s authority
An entry in the records is, unless the contrary is proved, to be taken to have been made by, or with the authority of, the licensee.
95 Obligation to retain financial records for 7 years
Requirement to retain financial records
(1) A licensee that is required by this Division to make a financial record must retain it for 7 years after the transactions covered by the record are completed.
Civil penalty: 2,000 penalty units.
Regulations
(2) The regulations may prescribe financial records to which subsection (1) does not apply.
Records to be kept even if person stops carrying on business
(3) Financial records must be retained in accordance with this section, even if the person stops carrying on any business to which they relate.
Offence
(4) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units, or 6 months imprisonment, or both.
96 Financial records are prima facie evidence of matters
(1) In proceedings in a court, a financial record kept under this Division is admissible as prima facie evidence of any matter in the financial record.
(2) A document purporting to be a financial record kept by a licensee under this Division is, unless the contrary is proved, presumed to be a financial record kept by the licensee under this Division.
(3) If:
(a) because of subsection (1) a financial record is prima facie evidence of a matter; and
(b) the financial record, or a part of the financial, is kept or prepared by recording or storing matters (including that matter) by means of a mechanical, electronic or other device;
a written reproduction of that matter as so recorded or stored is admissible as prima facie evidence of that matter in a proceeding in a court.
(4) A written document that purports to reproduce a matter recorded or stored by means of a mechanical, electronic or other device is, unless the contrary is proved, presumed to be a reproduction of that matter.
Division 3—Trust accounts of credit service licensees
97 Application of this Division
This Division applies to a licensee (the credit service licensee) that:
(a) holds a licence that authorises the licensee to provide a credit service; and
(b) in the course of providing the credit service, receives money on behalf of another person.
98 Obligation for credit service licensees to maintain trust account
Requirement to maintain trust account
(1) The credit service licensee must maintain one more trust accounts (the trust account) in accordance with this section.
Civil penalty: 2,000 penalty units.
Requirements for trust accounts
(2) The trust account must be maintained with an Australian ADI (within the meaning of section 9 of the Corporations Act 2001).
(3) The trust account must be designated as the credit service licensee’s trust account.
Offence
(4) The credit service licensee commits an offence if:
(a) the credit service licensee is subject to a requirement under subsection (1); and
(b) the credit service licensee engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 25 penalty units, or 6 months imprisonment, or both.
99 Obligations in relation to trust account money
Requirement to pay money to credit of trust account
(1) The credit service licensee must pay to the credit of the trust account any money received by the credit service licensee on behalf of another person in relation to the credit service provided by the licensee.
Civil penalty: 2,000 penalty units.
Requirement in relation to withdrawal of money from trust account
(2) The credit service licensee must not withdraw any money paid into the trust account, other than for the purpose of paying the money in accordance with subsection (3).
Civil penalty: 2,000 penalty units.
Requirement in relation to payment of money from trust account
(3) The credit service licensee must pay any money withdrawn from the trust account to the person or persons lawfully entitled to receive that money.
Civil penalty: 2,000 penalty units.
Offence
(4) The credit service licensee commits an offence if:
(a) the credit service licensee is subject to a requirement under subsection (1), (2) or (3); and
(b) the credit service licensee engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 25 penalty units, or 6 months imprisonment, or both.
Trust account money not available for payment of debts etc.
(5) Money paid into a trust account by the credit service licensee under this section:
(a) is not available for the payment of a debt of any other creditor of the credit service licensee; and
(b) is not liable to be attached or taken in execution under the order or process of a court at the instance of any such creditors.
100 Obligation to lodge trust account statement and trust account audit report
Requirement to prepare and lodge trust account statement
(1) The credit service licensee must, for each financial year of the credit service licensee:
(a) prepare a written statement in relation to the trust account (the trust account statement) in accordance with this section; and
(b) lodge the trust account statement with ASIC in accordance with this section.
Civil penalty: 2,000 penalty units.
Requirement to prepare and lodge trust account audit report
(2) The credit service licensee must, with the trust account statement, lodge with ASIC an auditor’s report (the trust account audit report) in accordance with this section.
Civil penalty: 2,000 penalty units.
Requirements for statement and audit report
(3) Each of the trust account statement and trust account audit report must:
(a) be in the approved form; and
(b) contain the information and matters prescribed by the regulations; and
(c) be lodged with ASIC in accordance with section 101.
(4) The trust account audit report must be prepared by a person who complies with any eligibility requirements prescribed by the regulations.
Offence
(5) The credit service licensee commits an offence if:
(a) the credit service licensee is subject to a requirement under subsection (1) or (2); and
(b) the credit service licensee engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 200 penalty units, or 5 years imprisonment, or both.
Meaning of financial year
(6) A financial year of the credit service licensee means:
(a) if the credit service licensee is not a body corporate—a year ending on 30 June; and
(b) if the credit service licensee is a body corporate—a financial year of the body corporate (within the meaning of section 323D of the Corporations Act 2001).
101 Time of lodgment of trust account statement and trust account audit report
(1) Unless an extension is granted under subsection (3), the trust account statement and trust account audit report must be lodged with ASIC before the day that is 3 months after the end of the financial year of the credit service licensee to which they relate.
(2) If an extension is granted under subsection (3), the trust account statement and trust account audit report must be lodged with ASIC before the end of the extended period.
(3) ASIC may, on application made:
(a) by the credit service licensee and the auditor that is to prepare the trust account audit report; and
(b) before the end of the period that would otherwise apply;
approve an extension of the period for lodging the trust account statement and trust account audit report. The extension may be of the period originally applicable or the period applicable under a previous extension.
(4) An approval may be given subject to any conditions imposed by ASIC.
(5) If an approval is given subject to conditions, the licensee must comply with those conditions.
Division 4—Matters relating to audit reports
102 Auditor’s right of access to records, information etc.
Auditor is entitled to access and assistance etc. from licensee
(1) An auditor (the auditor) who prepares one of the following audit reports (the audit report):
(a) an audit report required under subsection 49(3) in relation to a licensee;
(b) a trust account audit report required under subsection 100(2) in relation to a licensee;
has a right of access at all reasonable times to the financial records or other credit books of the licensee for purposes relating to the audit report.
(2) The auditor is entitled to require:
(a) from the licensee; or
(b) if the licensee is a body corporate—from any director, secretary or senior manager of the licensee;
any assistance and explanations that the auditor desires for purposes relating to the audit report.
Requirement to give auditor access and assistance etc.
(3) The licensee, or a director, secretary or senior manager of the licensee if it is a body corporate, must not:
(a) refuse or fail to allow the auditor access, in accordance with subsection (1), to financial records or other credit books of the licensee; or
(b) refuse or fail to give assistance, or an explanation, to the auditor as and when required under subsection (2); or
(c) otherwise hinder, obstruct or delay the auditor in the performance or exercise of the auditor’s duties or powers.
Civil penalty: 2,000 penalty units.
Offence
(4) A person commits an offence if:
(a) the person is subject to a requirement under subsection (3); and
(b) the person engages in conduct; and
(c) the person’s conduct contravenes the requirement.
Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.
103 Auditor’s fees and expenses
(1) The reasonable fees and expenses of the auditor for preparing the audit report are payable by the licensee.
(2) The auditor may recover those fees by action against the licensee.
104 Auditor to report on certain matters
Requirement for auditor to disclose maters
(1) If the auditor, in the performance of duties relating to the audit report, becomes aware of a matter referred to in subsection (2), the auditor must, within 7 days after becoming aware of the matter:
(a) lodge a written report on the matter with ASIC; and
(b) give a copy of the report to the licensee.
Civil penalty: 2,000 penalty units.
Matters that must be disclosed
(2) A report must be given in relation to any matter that, in the opinion of the auditor:
(a) has adversely affected, is adversely affecting or may adversely affect the ability of the licensee to meet the licensee’s obligations as a licensee; or
(b) constitutes or may constitute a contravention of:
(i) Division 2 or 3 (or regulations made under those Divisions); or
(ii) a condition of the licensee’s licence; or
(c) constitutes an attempt to unduly influence, coerce, manipulate or mislead the auditor in the preparation of the audit report.
Offence
(3) The auditor commits an offence if:
(a) the auditor is subject to a requirement under subsection (1); and
(b) the auditor engages in conduct; and
(c) the auditor’s conduct contravenes the requirement.
Criminal penalty: 50 penalty units, or 1 year imprisonment, or both.
105 Qualified privilege for auditor etc.
Qualified privilege for auditor
(1) The auditor has qualified privilege in relation to:
(a) a statement that the auditor makes, orally or in writing, in the course of its duties relating to the audit report; or
(b) the lodging of a report with ASIC under subsection 104(1); or
(c) the giving of a report to the licensee under subsection 104(1).
Note: If the auditor is a company, the company has qualified privilege under this subsection in relation to statements made, and reports lodged or sent, by natural persons on behalf of the company if those statements and notices can be properly attributed to the company.
Qualified privilege for registered company auditor acting on behalf of company
(2) If the auditor is a company registered under the Corporations Act 2001, a registered company auditor acting on behalf of the company has qualified privilege in relation to:
(a) a statement that the registered company auditor makes (orally or in writing) in the course of the performance, on behalf of the company, of the company’s duties relating to the audit report; or
(b) the lodging by the registered company auditor, on behalf of the company, of a report with ASIC under subsection 104(1); or
(c) the giving by the registered company auditor, on behalf of the company, of a report to the licensee under subsection 104(1).
Qualified privilege for subsequent publication
(3) A person has qualified privilege in relation to the publishing of a document prepared by the auditor in the course of the auditor’s duties relating to the audit report.
(4) A person has qualified privilege in relation to the publishing of a statement:
(a) made by the auditor as referred to in subsection (1); or
(b) made by a registered company auditor as referred to in subsection (2).
106 Regulations in relation to audit reports etc.
The regulations may make provision in relation to:
(a) the audit reports referred to in subsection 102(1); and
(b) audit reports that persons who have applied for a licence may be requested to lodge under subsection 37(4); and
(c) the auditors that prepare those reports; and
(d) auditing standards that must be complied with in relation to those reports.
Part 2‑6—Exemptions and modifications relating to this Chapter
Division 1—Introduction
107 Guide to this Part
This Part is about exemptions from, and modifications of, the provisions of this Chapter.
Division 2 deals with how exemptions and modifications may be made by ASIC or by the regulations.
Division 2—Exemptions and modifications relating to this Chapter
108 Provisions to which this Part applies
The provisions to which this Part applies are:
(a) this Chapter; and
(b) definitions in this Act, as they apply to references in this Chapter; and
(c) instruments made for the purposes of this Chapter.
109 Exemptions and modifications by ASIC
Exemptions and modifications
(1) ASIC may:
(a) exempt:
(i) a person; or
(ii) a person and all of the person’s credit representatives;
from all or specified provisions to which this Part applies; or
(b) exempt a credit activity that is engaged in in relation to a specified credit contract, mortgage, guarantee or consumer lease from all or specified provisions to which this Part applies; or
(c) declare that provisions to which this Part applies apply in relation to a person, or a credit activity referred to in paragraph (1)(b), as if specified provisions were omitted, modified or varied as specified in the declaration.
(2) An exemption or declaration under subsection (1) is not a legislative instrument.
(3) ASIC may, by legislative instrument:
(a) exempt a class of persons from all or specified provisions to which this Part applies; or
(b) exempt a credit activity (other than a credit activity referred to in paragraph (1)(b)) from all or specified provisions to which this Part applies; or
(c) exempt a class of credit activities from all or specified provisions to which this Part applies; or
(d) declare that provisions to which this Part applies apply in relation to a credit activity (other than a credit activity referred to in paragraph (1)(b)), or a class of persons or credit activities, as if specified provisions were omitted, modified or varied as specified in the declaration.
Conditions on exemptions
(4) An exemption may apply unconditionally or subject to specified conditions. A person to whom a condition specified in an exemption applies must comply with the condition. The court may order the person to comply with the condition in a specified way. Only ASIC may apply to the court for the order.
Publication of exemptions and declarations
(5) An exemption or declaration under subsection (1) must be in writing and ASIC must publish notice of it on its website.
Special rules in relation to offences
(6) If conduct (including an omission) of a person would not have constituted an offence if a particular declaration under paragraph (1)(c) or (3)(d) had not been made, that conduct does not constitute an offence unless, before the conduct occurred:
(a) the text of the declaration was published by ASIC on its website; or
(b) ASIC gave written notice setting out the text of the declaration to the person;
(in addition to complying with the requirements of the Legislative Instruments Act 2003 if the declaration is made under subsection (3)).
(7) In a prosecution for an offence to which subsection (6) applies, the prosecution must prove that paragraph (6)(a) or (b) was complied with before the conduct occurred.
110 Exemptions and modifications by the regulations
The regulations may:
(a) exempt a person or class of persons from all or specified provisions to which this Part applies; or
(b) exempt a credit activity or a class of credit activities from all or specified provisions to which this Part applies; or
(c) provide that the provisions to which this Part applies apply as if specified provisions were omitted, modified or varied as specified in the regulations.
Chapter 3—Responsible lending conduct
Part 3‑1—Licensees that provide credit assistance in relation to credit contracts
Division 1—Introduction
111 Guide to this Part
This Part has rules that apply to licensees that provide credit assistance in relation to credit contracts. These rules are aimed at better informing consumers and preventing them from being in unsuitable credit contracts. However, these rules do not apply to a licensee that will be the credit provider under the credit contract.
Division 2 requires a licensee to give its credit guide to a consumer. The credit guide has information about the licensee and some of the licensee’s obligations under this Act.
Division 3 requires a licensee to give a quote before providing credit assistance to a consumer. The quote must set out the maximum amount the consumer will be required to pay to the licensee. The licensee must not charge more than that amount.
Division 4 requires a licensee, before providing credit assistance to a consumer in relation to a credit contract, to make a preliminary assessment as to whether the contract will be unsuitable for the consumer. To do this, the licensee must make inquiries and verifications about the consumer’s requirements, objectives and financial situation. The licensee must give the consumer a copy of the assessment if requested.
Division 5 requires a licensee, when providing credit assistance to a consumer in relation to a credit contract, to give the consumer a document that discloses certain information (for example, the commission the licensee is likely to receive).
Division 6 prohibits a licensee from providing credit assistance to a consumer in relation to a credit contract if the contract will be unsuitable for the consumer.
Division 7 prohibits a licensee from providing credit assistance to a consumer in relation to short‑term credit contracts. It also imposes requirements on a licensee who makes representations about providing credit assistance in relation to small amount credit contracts.
112 Application of this Part
This Part does not apply in relation to credit assistance provided by a licensee in relation to a credit contract if the licensee is or will be the credit provider under the contract.
Division 2—Credit guide of credit assistance providers
113 Credit guide of credit assistance providers
Requirement to give credit guide
(1) A licensee must, as soon as practicable after it becomes apparent to the licensee that it is likely to provide credit assistance to a consumer in relation to a credit contract, give the consumer the licensee’s credit guide in accordance with subsection (2).
Civil penalty: 2,000 penalty units.
(2) The licensee’s credit guide must:
(a) be in writing; and
(b) be in the form (if any) prescribed by the regulations; and
(c) specify the licensee’s name and contact details; and
(d) specify the licensee’s Australian credit licence number; and
(e) give information about:
(i) any fees that are payable by a consumer to the licensee for the licensee’s credit assistance; and
(ii) any charges that are payable by a consumer to the licensee for matters associated with providing the credit assistance; and
(iii) the method for working out the amount of the fees and charges; and
(f) give information about:
(i) if there are 6 or fewer credit providers that the licensee conducts business with when providing credit assistance in relation to credit contracts—the names of those credit providers; and
(ii) if there are more than 6 credit providers that the licensee conducts business with when providing credit assistance in relation to credit contracts—the names of the 6 credit providers with whom the licensee reasonably believes it conducts the most business; and
(g) give information about:
(i) any commissions that the licensee, or an employee, director or credit representative of the licensee, is likely to receive, directly or indirectly, from credit providers in relation to credit contracts for which the licensee has provided credit assistance; and
(ii) a reasonable estimate of the amounts of those commissions or the range of those amounts; and
(iii) the method for working out those amounts; and
(h) give information about the licensee’s procedure for resolving disputes with a consumer, including contact details for a consumer to access:
(i) the licensee’s internal dispute resolution procedure; and
(ii) the approved external dispute resolution scheme of which the licensee is a member; and
(i) give information about the licensee’s obligations under sections 120 and 123; and
(j) comply with any other requirements prescribed by the regulations.
(3) The regulations may prescribe:
(a) information that need not be included in the credit guide, despite subsection (2); and
(b) for the purposes of paragraph (2)(g):
(i) the method for working out amounts of commissions; and
(ii) how commissions or amounts of commissions must be described.
Manner of giving credit guide
(4) The licensee must give the consumer the licensee’s credit guide in the manner (if any) prescribed by the regulations.
Strict liability offence
(5) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
(6) Subsection (5) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Division 3—Quote for providing credit assistance etc. in relation to credit contracts
114 Quote for providing credit assistance etc.
Requirement to give quote
(1) A licensee must not provide credit assistance to a consumer by:
(a) suggesting that the consumer apply, or assisting the consumer to apply, for a particular credit contract with a particular credit provider; or
(b) suggesting that the consumer apply, or assisting the consumer to apply, for an increase to the credit limit of a particular credit contract with a particular credit provider; or
(c) suggesting that the consumer remain in a particular credit contract with a particular credit provider;
unless:
(d) the licensee has given the consumer a quote in accordance with subsection (2); and
(e) the consumer has signed and dated that quote or otherwise indicated the consumer’s acceptance of it (and the day that happens) in the manner (if any) prescribed by the regulations; and
(f) the licensee has given the consumer a copy of the accepted quote.
Civil penalty: 2,000 penalty units.
(2) The quote must:
(a) be in writing; and
(b) give information about the credit assistance and other services that the quote covers; and
(c) specify the maximum amount that will be payable by the consumer to the licensee in relation to the licensee’s credit assistance and other services; and
(d) give information about what that amount relates to, including:
(i) the maximum amount of the licensee’s fee for providing the credit assistance and other services; and
(ii) the maximum amount of charges that will be incurred by the licensee for matters associated with providing the credit assistance and other services; and
(iii) the maximum amount of fees or charges that will be payable by the licensee to another person on the consumer’s behalf; and
(e) state whether the maximum amount or any other amount will be payable by the consumer to the licensee if a credit contract is not entered or a credit limit is not increased; and
(f) comply with any other requirements prescribed by the regulations.
Manner of giving quote
(3) The licensee must give the quote to the consumer in the manner (if any) prescribed by the regulations.
No demanding payment of amount exceeding quoted amount
(4) The licensee must not request or demand payment of an amount that exceeds the maximum amount set out in the quote.
Civil penalty: 2,000 penalty units.
No demanding payment before credit assistance provided
(5) The licensee must not request or demand payment of an amount for the licensee’s credit assistance before the licensee provides the assistance.
Civil penalty: 2,000 penalty units.
Caveats
(6) The licensee must not lodge, or threaten to lodge, a caveat in relation to land to induce the consumer to pay an amount to the licensee for the licensee’s credit assistance or other services.
Civil penalty: 2,000 penalty units.
Division 4—Obligations of credit assistance providers before providing credit assistance for credit contracts
115 Obligations of credit assistance providers before providing credit assistance for credit contracts
(1) A licensee must not provide credit assistance to a consumer on a day (the assistance day) by:
(a) suggesting that the consumer apply, or assisting the consumer to apply, for a particular credit contract with a particular credit provider; or
(b) suggesting that the consumer apply, or assisting the consumer to apply, for an increase to the credit limit of a particular credit contract with a particular credit provider;
unless the licensee has, within 90 days (or other period prescribed by the regulations) before the assistance day:
(c) made a preliminary assessment that:
(i) is in accordance with subsection 116(1); and
(ii) covers the period proposed for the entering of the contract or the increase of the credit limit; and
(d) made the inquiries and verification in accordance with section 117.
Civil penalty: 2,000 penalty units.
(2) A licensee must not provide credit assistance to a consumer on a day (the assistance day) by suggesting that the consumer remain in a particular credit contract with a particular credit provider unless the licensee has, within 90 days (or other period prescribed by the regulations) before the assistance day:
(a) made a preliminary assessment that:
(i) is in accordance with subsection 116(2); and
(ii) covers a period in which the assistance day occurs; and
(b) made the inquiries and verification in accordance with section 117.
Civil penalty: 2,000 penalty units.
116 Preliminary assessment of unsuitability of the credit contract
(1) For the purposes of paragraph 115(1)(c), the licensee must make a preliminary assessment that:
(a) specifies the period the assessment covers; and
(b) assesses whether the credit contract will be unsuitable for the consumer if the contract is entered or the credit limit is increased in that period.
(2) For the purposes of paragraph 115(2)(a), the licensee must make a preliminary assessment that:
(a) specifies the period the assessment covers; and
(b) assesses whether the credit contract will be unsuitable for the consumer if the consumer remains in the contract in that period.
Note: The licensee is not required to make a preliminary assessment under this section if the credit assistance is not provided.
117 Reasonable inquiries etc. about the consumer
(1) For the purposes of paragraph 115(1)(d) or 115(2)(b), the licensee must, before making the preliminary assessment:
(a) make reasonable inquiries about the consumer’s requirements and objectives in relation to the credit contract; and
(b) make reasonable inquiries about the consumer’s financial situation; and
(c) take reasonable steps to verify the consumer’s financial situation; and
(d) make any inquiries prescribed by the regulations about any matter prescribed by the regulations; and
(e) take any steps prescribed by the regulations to verify any matter prescribed by the regulations.
Civil penalty: 2,000 penalty units.
(1A) If:
(a) the credit contract is a small amount credit contract; and
(b) the consumer holds (whether alone or jointly with another person) an account with an ADI into which income payable to the consumer is credited;
the licensee must, in verifying the consumer’s financial situation for the purposes of paragraph 115(1)(d), obtain and consider account statements that cover at least the immediately preceding period of 90 days.
(1B) Subsection (1A) does not limit paragraph (1)(c) of this section.
(2) The regulations may prescribe particular inquiries or steps that must be made or taken, or do not need to be made or taken, for the purposes of paragraph (1)(a), (b) or (c).
118 When the credit contract must be assessed as unsuitable—entering contract or increasing the credit limit
Requirement to assess the contract as unsuitable
(1) For a preliminary assessment under subsection 116(1) about entering a credit contract or increasing a credit limit of a credit contract, the licensee must assess that the contract will be unsuitable for the consumer if the contract will be unsuitable for the consumer under subsection (2).
Civil penalty: 2,000 penalty units.
Note: Even if the contract will not be unsuitable for the consumer under subsection (2), the licensee may still assess that the contract will be unsuitable for other reasons.
Particular circumstances when the contract will be unsuitable
(2) The contract will be unsuitable for the consumer if, at the time of the preliminary assessment, it is likely that:
(a) the consumer will be unable to comply with the consumer’s financial obligations under the contract, or could only comply with substantial hardship, or
(b) the contract will not meet the consumer’s requirements or objectives; or
(c) if the regulations prescribe circumstances in which a credit contract is unsuitable—those circumstances will apply to the contract;
if the contract is entered in the period proposed for it to be entered or the credit limit is increased in the period proposed for it to be increased.
(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer’s financial obligations under the contract by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.
(3A) If the contract is a small amount credit contract (the relevant contract) and either of the following apply:
(a) at the time of the preliminary assessment:
(i) the consumer is a debtor under another small amount credit contract; and
(ii) the consumer is in default in payment of an amount under that other contract;
(b) in the 90‑day period before the time of the preliminary assessment, the consumer has been a debtor under 2 or more other small amount credit contracts;
then, for the purposes of paragraph (2)(a), it is presumed that the consumer could only comply with the consumer’s financial obligations under the relevant contract with substantial hardship, unless the contrary is proved.
Information to be used to determine if contract will be unsuitable
(4) For the purposes of determining under subsection (2) whether the contract will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:
(a) the information is about the consumer’s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 117(1)(d) or (e);
(b) at the time of the preliminary assessment:
(i) the licensee had reason to believe that the information was true; or
(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 117.
119 When the credit contract must be assessed as unsuitable—remaining in credit contract
Requirement to assess the contract as unsuitable
(1) For a preliminary assessment under subsection 116(2) about remaining in a credit contract, the licensee must assess that the contract will be unsuitable for the consumer if the contract will be unsuitable for the consumer under subsection (2).
Civil penalty: 2,000 penalty units.
Note: Even if the contract will not be unsuitable for the consumer under subsection (2), the licensee may still assess that the contract will be unsuitable for other reasons.
Particular circumstances when the contract will be unsuitable
(2) The contract will be unsuitable for the consumer if, at the time of the preliminary assessment, it is likely that:
(a) the consumer will be unable to comply with the consumer’s financial obligations under the contract, or could only comply with substantial hardship, if the consumer remains in the contract in the period covered by the preliminary assessment; or
(b) the contract will not meet the consumer’s requirements or objectives if the consumer remains in the contract in the period covered by the preliminary assessment; or
(c) if the regulations prescribe circumstances in which a credit contract is unsuitable—those circumstances will apply to the contract if the consumer remains in the contract in the period covered by the preliminary assessment.
(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer’s financial obligations under the contract by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.
Information to be used to determine if contract will be unsuitable
(4) For the purposes of determining under subsection (2) whether the contract will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:
(a) the information is about the consumer’s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 117(1)(d) or (e);
(b) at the time of the preliminary assessment:
(i) the licensee had reason to believe that the information was true; or
(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 117.
120 Providing the consumer with the preliminary assessment
Requirement to give assessment if requested
(1) If the consumer requests the licensee for a copy of the preliminary assessment within 7 years of the date of the credit assistance quote under section 114, the licensee must give the consumer a written copy of the assessment:
(a) if the request is made within 2 years of the quote—before the end of 7 business days after the day the licensee receives the request; and
(b) otherwise—before the end of 21 business days after the day the licensee receives the request.
Note: The licensee is not required to give the consumer a copy of the preliminary assessment if the licensee does not provide credit assistance to the consumer.
Civil penalty: 2,000 penalty units.
Manner of giving assessment
(2) The licensee must give the consumer the copy of the assessment in the manner (if any) prescribed by the regulations.
No payment for assessment
(3) The licensee must not request or demand payment of an amount for giving the consumer a copy of the preliminary assessment.
Civil penalty: 2,000 penalty units.
Strict liability offence
(4) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1) or (3); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
(5) Subsection (4) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Division 5—Fees, commissions etc. relating to credit contracts
121 Fees, commissions etc. relating to credit contracts
Requirement for disclosure
(1) A licensee must, at the same time as providing credit assistance to a consumer by:
(a) suggesting that the consumer apply, or assisting the consumer to apply, for a particular credit contract with a particular credit provider; or
(b) suggesting that the consumer apply, or assisting the consumer to apply, for an increase to the credit limit of a particular credit contract with a particular credit provider; or
(c) suggesting that the consumer remain in a particular credit contract with a particular credit provider;
give the consumer a credit proposal disclosure document in accordance with subsection (2).
Civil penalty: 2,000 penalty units.
(2) The credit proposal disclosure document must contain the following:
(a) the total amount of any fees or charges that the consumer is liable to pay to the licensee in relation to the credit contract and the method used for working out that amount;
(b) a reasonable estimate of the total amount of any commissions that the licensee, or an employee, director or credit representative of the licensee, is likely to receive in relation to the credit contract and the method used for working out that amount;
(c) a reasonable estimate of the total amount of any fees or charges that the consumer is likely to be liable to pay to the credit provider in relation to applying for the credit contract;
(d) a reasonable estimate of the total amount of any fees or charges that the consumer is likely to be liable to pay to any other person in relation to applying for the credit contract;
(e) if the credit is to be applied to pay any of the amounts in the above paragraphs—a reasonable estimate of the likely amount of credit that will be available to the consumer after payments under paragraphs (a), (c) and (d) are made.
(3) For the purposes of paragraph (2)(b), the regulations may prescribe:
(a) the method for working out amounts of commissions; and
(b) how amounts of commissions must be described.
Manner of giving credit proposal disclosure document
(4) The licensee must give the credit proposal disclosure document to the consumer in the manner (if any) prescribed by the regulations.
122 No profiting from fees etc. paid to third parties
Requirement not to profit
(1) If, in the course of providing credit assistance to a consumer in relation to a credit contract, a licensee pays an amount (the third party amount) to another person on behalf of the consumer, the licensee must not request or demand payment of an amount, as reimbursement for the third party amount, that exceeds the third party amount.
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 25 penalty units, or 6 months imprisonment, or both.
Division 6—Prohibition on suggesting, or assisting with, unsuitable credit contracts
123 Prohibition on suggesting or assisting consumers to enter, or increase the credit limit under, unsuitable credit contracts
Prohibition on suggesting, or assisting with, unsuitable contracts
(1) A licensee must not provide credit assistance to a consumer by:
(a) suggesting that the consumer apply, or assisting the consumer to apply, for a particular credit contract with a particular credit provider; or
(b) suggesting that the consumer apply, or assisting the consumer to apply, for an increase to the credit limit of a particular credit contract with a particular credit provider;
if the contract will be unsuitable for the consumer under subsection (2).
Civil penalty: 2,000 penalty units.
When the contract will be unsuitable
(2) The contract will be unsuitable for the consumer if, at the time the licensee provides the credit assistance, it is likely that:
(a) the consumer will be unable to comply with the consumer’s financial obligations under the contract, or could only comply with substantial hardship; or
(b) the contract will not meet the consumer’s requirements or objectives; or
(c) if the regulations prescribe circumstances in which a credit contract is unsuitable—those circumstances will apply to the contract;
if the contract is entered in the period proposed for it to be entered or the credit limit is increased in the period proposed for it to be increased.
(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer’s financial obligations under the contract by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.
(3A) If the contract is a small amount credit contract (the relevant contract) and either of the following apply:
(a) at the time the licensee provides the credit assistance:
(i) the consumer is a debtor under another small amount credit contract; and
(ii) the consumer is in default in payment of an amount under that other contract;
(b) in the 90‑day period before the time the licensee provides the credit assistance, the consumer has been a debtor under 2 or more other small amount credit contracts;
then, for the purposes of paragraph (2)(a), it is presumed that the consumer could only comply with the consumer’s financial obligations under the relevant contract with substantial hardship, unless the contrary is proved.
Information to be used to determine if contract will be unsuitable
(4) For the purposes of determining under subsection (2) whether the contract will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:
(a) the information is about the consumer’s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 117(1)(d) or (e);
(b) at the time the licensee provides the credit assistance:
(i) the licensee had reason to believe that the information was true; or
(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 117.
Credit contract not unsuitable under regulations
(5) The regulations may prescribe particular situations in which a credit contract is taken not to be unsuitable for a consumer, despite subsection (2).
Offence
(6) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.
124 Prohibition on suggesting to consumers to remain in unsuitable credit contracts
Prohibition on suggesting to remain in unsuitable contracts
(1) A licensee must not provide credit assistance to a consumer by suggesting that the consumer remain in a particular credit contract with a particular credit provider if the contract is unsuitable for the consumer under subsection (2).
Civil penalty: 2,000 penalty units.
When the contract is unsuitable
(2) The credit contract is unsuitable for the consumer if, at that time the licensee provides the credit assistance:
(a) the consumer is, or is likely to be, unable to comply with the consumer’s financial obligations under the contract, or only able to comply with substantial hardship; or
(b) the contract does not meet the consumer’s requirements or objectives; or
(c) if the regulations prescribe circumstances in which a credit contract is unsuitable—those circumstances apply to the contract.
(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer’s financial obligations under the contract by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.
Information to be used to determine if contract is unsuitable
(4) For the purposes of determining under subsection (2) whether the contract is unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:
(a) the information is about the consumer’s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 117(1)(d) or (e);
(b) at the time the licensee provides the credit assistance:
(i) the licensee had reason to believe that the information was true; or
(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 117.
Credit contract not unsuitable under regulations
(5) The regulations may prescribe particular situations in which a credit contract is taken not to be unsuitable for a consumer, despite subsection (2).
Offence
(6) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.
Defence
(7) For the purposes of subsections (1) and (6), it is a defence if:
(a) the licensee suggested that the consumer remain in the credit contract because, after making reasonable inquiries, the licensee reasonably believed that there was no other credit contract that was not unsuitable for the consumer; and
(b) the licensee informed the consumer that there is a procedure under sections 72 and 94 of the National Credit Code for consumers in hardship.
Note: For the purposes of subsection (6), a defendant bears an evidential burden in relation to the matter in subsection (7) (see subsection 13.3(3) of the Criminal Code).
(8) The regulations may prescribe particular inquiries that must be made, or do not need to be made, for the purposes of paragraph (7)(a).
Division 7—Special rules for short‑term and small amount credit contracts
124A Prohibition on providing credit assistance in relation to short‑term credit contracts
Prohibition
(1) A licensee must not provide credit assistance to a consumer by:
(a) suggesting that the consumer apply, or assisting the consumer to apply, for a short‑term credit contract; or
(b) suggesting that the consumer apply, or assisting the consumer to apply, for an increase to the credit limit of a particular short‑term credit contract with a particular credit provider.
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
124B Licensee who makes representations about credit assistance in relation to small amount credit contracts must display information etc.
Requirement
(1) If a licensee represents that the licensee provides, or is able to provide, credit assistance to consumers in relation to small amount credit contracts:
(a) the licensee must display information in accordance with the regulations at a place prescribed by the regulations; and
(b) the licensee must ensure that any website of the licensee complies with the requirements prescribed by the regulations.
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.