A Bill for an Act to amend the law relating to consumer credit and consumer leases, and for related purposes
The Parliament of Australia enacts:
1 Short title
This Act is the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Act 2020.
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 |
| Provisions | Commencement | Date/Details |
| 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table | The day this Act receives the Royal Assent. | |
| 2. Schedule 1, Parts 1 and 2 | The later of: (a) the day after this Act receives the Royal Assent; and (b) 1 March 2021. | |
| 3. Schedule 1, Part 3 | The day after the end of the period of 6 months beginning on the day the provisions covered by table item 2 commence. | |
| 4. Schedules 2 and 3 | The day after the end of the period of 6 months beginning on the day this Act receives the Royal Assent. | |
| 5. Schedule 4 | The day after this Act receives the Royal Assent. | |
| 6. Schedules 5 and 6 | The day after the end of the period of 6 months beginning on the day this Act receives the Royal Assent. | |
| 7. Schedule 7 | The day after this Act receives the Royal Assent. | |
Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.
(2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.
3 Schedules
Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Schedule 1—New regulatory framework for provision of consumer credit
Part 1—Main amendments
National Consumer Credit Protection Act 2009
1 Subsection 5(1)
Insert:
low limit credit contract: a credit contract is a low limit credit contract if:
(a) the contract is a small amount credit contract; or
(b) the contract would be a small amount credit contract if paragraph (b) of the definition of small amount credit contract (which is about credit providers who are not ADIs) were disregarded.
non‑ADI credit conduct: see subsection 133EA(5).
non‑ADI credit standard means a standard determined under section 133EA.
reverse mortgaged property, in relation to a credit contract for a reverse mortgage, has the same meaning as in section 204 of the National Credit Code.
2 Section 111 (paragraph beginning “This Part”)
Omit “These rules are aimed at better informing consumers and preventing them from being in unsuitable credit contracts.”.
3 Section 111 (paragraph beginning “Division 4”)
Omit “Division 4 requires a licensee, before providing credit assistance to a consumer in relation to a credit contract”, substitute “Division 4 applies only in relation to low limit credit contracts. It requires a licensee, before providing credit assistance to a consumer in relation to a low limit credit contract”.
4 Section 111 (paragraph beginning “Division 6”)
Repeal the paragraph, substitute:
Division 6 applies only in relation to low limit credit contracts. It prohibits a licensee from providing credit assistance to a consumer in relation to a low limit credit contract if the contract will be unsuitable for the consumer.
5 Paragraph 113(2)(i)
Repeal the paragraph, substitute:
(i) give information about the licensee’s obligations under sections 120 and 123 in relation to low limit credit contracts; and
6 Division 4 of Part 3‑1 (heading)
Before “credit contracts”, insert “low limit”.
7 Section 115 (heading)
Before “credit contracts”, insert “low limit”.
8 Paragraphs 115(1)(a) and (b)
Before “credit contract”, insert “low limit”.
9 Subsection 115(2)
Before “credit contract”, insert “low limit”.
10 Section 116 (heading)
Before “credit contract”, insert “low limit”.
11 Paragraph 116(1)(b)
Before “credit contract”, insert “low limit”.
12 Paragraph 116(2)(b)
Before “credit contract”, insert “low limit”.
13 Paragraph 117(1)(a)
Before “credit contract”, insert “low limit”.
14 Subsection 117(1A)
Repeal the subsection, substitute:
(1A) If 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.
15 Section 118 (heading)
Before “credit contract”, insert “low limit”.
16 Subsection 118(1)
Before “credit contract” (wherever occurring), insert “low limit”.
17 Subsection 118(3AA)
Repeal the subsection.
18 Subsection 118(3A)
Omit “the contract is a small amount credit contract (the relevant contract) and”.
19 Subsection 118(3A)
Omit “under the relevant contract”, substitute “under the contract”.
20 Section 119 (heading)
Omit “the credit contract”, substitute “the low limit credit contract”.
21 Subsection 119(1)
Before “credit contract”, insert “low limit”.
22 Subsection 119(3A)
Repeal the subsection.
23 Division 6 of Part 3‑1 (heading)
Before “credit contracts”, insert “low limit”.
24 Section 123 (heading)
Before “credit contracts”, insert “low limit”.
25 Paragraphs 123(1)(a) and (b)
Before “credit contract”, insert “low limit”.
26 Subsection 123(3AA)
Repeal the subsection.
27 Subsection 123(3A)
Omit “the contract is a small amount credit contract (the relevant contract) and”.
28 Subsection 123(3A)
Omit “under the relevant contract”, substitute “under the contract”.
29 Section 124 (heading)
Before “credit contracts”, insert “low limit”.
30 Subsection 124(1)
Before “credit contract”, insert “low limit”.
31 Subsection 124(3A)
Repeal the subsection.
32 Part 3‑2 (heading)
Omit “: general rules”.
33 Section 125 (paragraph beginning “This Part”)
Omit “These rules are aimed at better informing consumers and preventing them from being in unsuitable credit contracts.”.
34 Section 125 (paragraph beginning “Division 3”)
Omit “Division 3 requires a licensee, before doing particular things (such as entering a credit contract)”, substitute “Division 3 applies only in relation to low limit credit contracts. It requires a licensee, before doing particular things (such as entering a low limit credit contract)”.
35 Section 125 (paragraph beginning “Division 4”)
Repeal the paragraph, substitute:
Division 4 applies only in relation to low limit credit contracts. It prohibits a licensee from entering or increasing the credit limit of a low limit credit contract that is unsuitable for a consumer.
36 Paragraph 126(2)(f)
Repeal the paragraph, substitute:
(f) give information about the licensee’s obligations under sections 132 and 133 in relation to low limit credit contracts; and
37 Division 3 of Part 3‑2 (heading)
After “unsuitability”, insert “of low limit credit contract”.
38 Section 128 (at the end of the heading)
Add “of low limit credit contract”.
39 Paragraphs 128(a), (aa) and (b)
Before “credit contract”, insert “low limit”.
40 Paragraph 128(ba)
Before “credit contract”, insert “a low limit”.
41 Section 129 (heading)
Before “credit contract”, insert “low limit”.
42 Paragraph 129(b)
Before “credit contract”, insert “low limit”.
43 Paragraph 130(1)(a)
Before “credit contract”, insert “low limit”.
44 Section 131 (heading)
Before “credit contract”, insert “low limit”.
45 Subsection 131(1)
Before “credit contract”, insert “low limit”.
46 Subsection 131(3AA)
Repeal the subsection.
47 Subsection 131(3A)
Omit “the contract is a small amount credit contract (the relevant contract) and”.
48 Subsection 131(3A)
Omit “under the relevant contract”, substitute “under the contract”.
49 Subsection 132(1)
Before “credit contract”, insert “low limit”.
50 Paragraph 132(2)(a)
Before “credit contract”, insert “low limit”.
51 Division 4 of Part 3‑2 (heading)
Before “credit contracts”, insert “low limit”.
52 Section 133 (heading)
Before “credit contracts”, insert “low limit”.
53 Paragraphs 133(1)(a) and (b)
Before “credit contract”, insert “low limit”.
54 Subsection 133(3AA)
Repeal the subsection.
55 Subsection 133(3A)
Omit “the contract is a small amount credit contract (the relevant contract) and”.
56 Subsection 133(3A)
Omit “under the relevant contract”, substitute “under the contract”.
57 Sections 133A, 133B and 133C (paragraphs beginning “This Part”)
Omit “general”.
58 Section 133DA (paragraph beginning “Before”)
Repeal the paragraph, substitute:
Before providing credit assistance, or entering into a credit contract, for a reverse mortgage, licensees must provide information to the consumer. The information includes projections of the person’s equity in the property that may be covered by the reverse mortgage and also a comparison of this projection and the person’s likely aged care accommodation costs.
59 At the end of section 133DA
Add:
In certain circumstances, licensees must not enter, or offer to enter, a credit contract for a reverse mortgage, or increase, or offer to increase, the credit limit of a credit contract for a reverse mortgage.
60 Section 133DB (heading)
Omit “projections of equity”, substitute “information”.
61 Subsection 133DB(1) (heading)
Repeal the heading, substitute:
Requirement to give information
62 Subsection 133DB(1)
Omit “Before a licensee makes a preliminary assessment for the purposes of paragraph 115(1)(c) or (2)(a), or an assessment for the purposes of paragraph 128(c), in connection with a credit contract with a consumer for a reverse mortgage,”, substitute “Before a licensee engages in conduct covered by subsection (1A) in connection with a credit contract with a consumer for a reverse mortgage”.
63 After paragraph 133DB(1)(b)
Insert:
(ba) show the consumer in person, or give the consumer in a way prescribed by the regulations, a comparison of:
(i) the projections; and
(ii) the likely amount of the person’s aged care accommodation costs, based on the consumer’s stated requirements and objectives in meeting possible future aged care accommodation needs, including the time (if any) at which the consumer has stated that the consumer is likely to incur costs for future aged care accommodation and the likely amount of those costs; and
(bb) give the consumer a printed copy of the comparison; and
64 After subsection 133DB(1)
Insert:
(1A) This subsection covers conduct that consists of a licensee:
(a) providing credit assistance to the consumer in relation to a credit contract for a reverse mortgage; or
(b) entering a credit contract for a reverse mortgage with a consumer who will be the debtor under the contract; or
(c) making an unconditional representation to a consumer that the licensee considers that the consumer is eligible to enter a credit contract for a reverse mortgage with the licensee; or
(d) increasing the credit limit of a credit contract for a reverse mortgage with a consumer who is the debtor under the contract; or
(e) making an unconditional representation to a consumer that the licensee considers that the credit limit of a credit contract for a reverse mortgage between the consumer and the licensee will be able to be increased.
65 After subsection 133DB(4)
Insert:
Defences for not giving a comparison
(4A) For the purposes of paragraphs (1)(ba) and (bb), and of subsection (2) so far as it relates to either of those paragraphs, it is a defence if the licensee reasonably believes that:
(a) another person has:
(i) shown the consumer in person the comparison described in paragraph (1)(ba); and
(ii) given the consumer a printed copy of the comparison; and
(b) the comparison is the same, or substantially the same, as the comparison paragraph (1)(ba) requires the licensee to show the consumer.
Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (4A) (see subsection 13.3(3) of the Criminal Code).
(4B) For the purposes of paragraphs (1)(ba) and (bb), and of subsection (2) so far as it relates to either of those paragraphs, it is a defence if the circumstances prescribed by the regulations exist.
Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (4B) (see subsection 13.3(3) of the Criminal Code).
66 At the end of Part 3‑2D
Add:
133DF Prohibition on certain conduct relating to reverse mortgages
(1) A licensee must not:
(a) enter a credit contract for a reverse mortgage with a consumer who will be a debtor under the contract; or
(b) make an unconditional representation to a consumer that the licensee considers that the consumer is eligible to enter a credit contract for a reverse mortgage with the licensee under which the consumer will be a debtor; or
(c) increase the credit limit of a credit contract for a reverse mortgage with a consumer who is a debtor under the contract; or
(d) make an unconditional representation to a consumer who is a debtor under a credit contract for a reverse mortgage with the licensee that the licensee considers that the credit limit of the contract will be able to be increased;
on a day (the credit day) if the circumstances referred to in subsection (2) or (3) exist.
Note: Sections 178 and 179 provide for remedies for anyone who suffers, or is likely to suffer, loss or damage because of a breach of this section. For example, if a licensee makes a credit contract for a reverse mortgage with a consumer when the circumstances referred to in subsection (2) or (3) of this section exist, a person who suffers, or is likely to suffer, loss as a result may be able to get court orders under section 178 or 179 to put the person in a position like the one the person would have been in had the circumstances not existed.
Civil penalty: 5,000 penalty units.
Youngest debtor is aged under 56 years
(2) The circumstances are that, on the credit day:
(a) the youngest person who is, or would be, a debtor under the credit contract is aged under 56 years; and
(b) the loan to value ratio of the mortgage worked out under subsection (5) exceeds 15%.
Youngest debtor is aged 56 years or older
(3) The circumstances are that, on the credit day:
(a) the youngest person who is, or would be, a debtor under the credit contract is aged 56 years or older; and
(b) the loan to value ratio of the mortgage worked out under subsection (5) exceeds the sum of:
(i) 16%; and
(ii) 1% for each year (if any) that the person is aged more than 56 years.
Exception for special circumstances
(4) Subsection (1) does not apply if the licensee reasonably believed that the credit contract, or the increase to the credit limit of the credit contract, was appropriate because of special circumstances of the consumer.
Loan to value ratio
(5) For the purposes of paragraphs (2)(b) and (3)(b), the loan to value ratio of a reverse mortgage is the amount of credit owed, or intended to be owed, under the credit contract for the reverse mortgage, expressed as a percentage of the value of the dwelling or land that is, or may become, reverse mortgaged property.
67 After Part 3‑2D
Insert:
Part 3‑2E—Licensees that are credit providers under credit contracts: additional rules for non‑ADI credit conduct
Division 1—Introduction
133E Guide to this Part
This Part has rules that apply to licensees in relation to credit contracts (other than small amount credit contracts), where the credit provider is not an ADI.
The Part provides that the Minister may make standards specifying requirements for systems, policies and processes a licensee must establish and maintain.
Division 2—Standards for conduct relating to non‑ADI credit conduct
133EA Non‑ADI credit standards
Power to make standards
(1) The Minister may, by legislative instrument, determine non‑ADI credit standards that specify requirements with which a licensee’s systems, policies and processes relating to non‑ADI credit conduct must comply.
(2) The non‑ADI credit standards may require a licensee to give a consumer a copy of a document at a time, and in a manner, specified in the standard.
(3) The non‑ADI credit standards may be of general application or may be limited as provided in the determination.
(4) Without limiting subsection 33(3A) of the Acts Interpretation Act 1901, the non‑ADI credit standards may make different provision in relation to:
(a) different situations; or
(b) different activities; or
(c) different classes of licensees; or
(d) different classes of credit providers.
Non‑ADI credit conduct
(5) Non‑ADI credit conduct is conduct that consists of a licensee:
(a) entering a credit contract covered by subsection (6) with a consumer who will be the debtor under the contract; or
(b) making an unconditional representation to a consumer that the licensee considers that the consumer is eligible to enter a credit contract covered by subsection (6) with the licensee; or
(c) increasing the credit limit of a credit contract covered by subsection (6) with a consumer who is the debtor under the contract; or
(d) making an unconditional representation to a consumer that the licensee considers that the credit limit of a credit contract covered by subsection (6) between the consumer and the licensee will be able to be increased.
Non‑ADI credit contracts
(6) This subsection covers a credit contract if:
(a) the contract is not a small amount credit contract; and
(b) the credit provider under the contract is not an ADI.
133EB Licensee must establish and maintain systems, policies and processes
(1) A licensee must not engage in non‑ADI credit conduct if:
(a) the non‑ADI credit standards specify requirements relating to systems, policies and processes relating to that conduct; and
(b) either:
(i) the licensee has not established, or does not maintain, systems, policies and processes that comply with those requirements; or
(ii) the licensee does not have a written plan that documents the systems, policies and processes the licensee has established, and maintains, that comply with those requirements.
Civil penalty: 5,000 penalty units.
(2) A licensee must retain a plan described in subparagraph (1)(b)(ii) for 7 years after the end of the period to which the plan relates.
Civil penalty: 5,000 penalty units.
133EC Licensee must comply with requirements of its systems, policies and processes
(1) A licensee must not engage in non‑ADI credit conduct if:
(a) the non‑ADI credit standards specify requirements relating to systems, policies and processes relating to the non‑ADI credit conduct; and
(b) the licensee has established systems, policies and processes for the purpose or purported purpose of complying with those requirements; and
(c) those systems, policies and processes require the licensee to engage in conduct (the required conduct) before the licensee engages in the non‑ADI credit conduct; and
(d) the licensee has not engaged in the required conduct.
(2) A licensee must not repeatedly contravene subsection (1).
Civil penalty: 5,000 penalty units.
(3) The obligation a licensee has to comply with subsection (1) is taken for the purposes of the following provisions not to be an obligation under the credit legislation:
(a) paragraph 37(1)(b) (when a licence may be granted);
(b) paragraph 47(1)(d) (general conduct obligations for licensees);
(c) paragraph 55(1)(a) (when a licence can be suspended or cancelled);
(d) paragraphs 80(1)(d) and (e) (when ASIC may make a banning order).
(4) To avoid doubt, subsection (3) does not affect the operation of the provisions referred to in that subsection in relation to the obligation that arises under subsection (2).
133ED Giving a consumer a document
(1) If the non‑ADI credit standards require a licensee to give a consumer a copy of a document at a time, the licensee must give the consumer a copy of the document at that time.
Civil penalty: 5,000 penalty units.
(2) The licensee must give the consumer a copy of the document in the manner (if any) specified in the standards.
(3) The licensee must not request or demand payment of an amount for giving the consumer a copy of the document.
Civil penalty: 5,000 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.
68 Section 160A (paragraph beginning “Division 5”)
Repeal the paragraph.
69 Division 5 of Part 3‑6A
Repeal the Division.
Part 2—Related amendments
Age Discrimination Act 2004
70 Schedule 2 (after table item 8)
Insert:
| 8A | National Consumer Credit Protection Act 2009 | section 133DF |
Part 3—Amendments relating to best interests obligations
National Consumer Credit Protection Act 2009
71 Part 3‑5A (heading)
Repeal the heading, substitute:
Part 3‑5A—Best interests obligations and remuneration
72 Section 158K
Repeal the section, substitute:
158K Guide to this Part
This Part imposes obligations on licensees and credit representatives.
Division 2 requires certain credit assistance providers and their credit representatives to act in the best interests of consumers when providing credit assistance in relation to credit contracts or consumer leases. Where there is a conflict of interest, these credit assistance providers or representatives must give priority to consumers in providing the credit assistance.
Division 4 prohibits mortgage brokers and mortgage intermediaries from accepting conflicted remuneration. Employers, credit providers and mortgage intermediaries must not give conflicted remuneration to mortgage brokers or mortgage intermediaries. The circumstances in which these bans on conflicted remuneration apply are to be set out in the regulations.
73 Subdivision A of Division 2 of Part 3‑5A (heading)
Omit “provide credit assistance in relation to credit contracts”, substitute “carry on a business of providing credit assistance”.
74 Section 158L
Repeal the section, substitute:
158L Application of this Subdivision
Mortgage brokers
(1) This Subdivision applies in relation to credit assistance provided by a licensee to a consumer in relation to a credit contract if the licensee is a mortgage broker.
Certain other credit brokers
(2) This Subdivision also applies in relation to credit assistance provided by a licensee to a consumer in relation to a credit contract if:
(a) the licensee carries on a business of providing credit assistance in relation to credit contracts; and
(b) the licensee does not perform the obligations, or exercise the rights, of a credit provider in relation to the majority of those credit contracts; and
(c) in carrying on the business, the licensee provides credit assistance in relation to credit contracts offered by more than one credit provider.
Brokers of consumer leases
(3) This Subdivision also applies in relation to credit assistance provided by a licensee to a consumer in relation to a consumer lease if:
(a) the licensee carries on a business of providing credit assistance in relation to consumer leases; and
(b) the licensee does not perform the obligations, or exercise the rights, of a lessor in relation to the majority of those consumer leases; and
(c) in carrying on the business, the licensee provides credit assistance in relation to consumer leases offered by more than one lessor.
Credit representatives not covered
(4) However, this Subdivision does not apply in relation to credit assistance provided to a consumer by a credit representative acting within the scope of the credit representative’s actual or apparent authority from the licensee.
Note 1: A credit representative in these circumstances is covered by Subdivision B.
Note 2: The conduct of any other representative, acting within the scope of actual or apparent authority from the licensee, is taken to have been engaged in also by the licensee: see sections 324 and 325.
75 Section 158LD
Repeal the section, substitute:
158LD Application of this Subdivision
Mortgage brokers
(1) This Subdivision applies in relation to credit assistance provided to a consumer in relation to a credit contract by a credit representative acting within the scope of the credit representative’s actual or apparent authority from a licensee, if either the credit representative or the licensee is a mortgage broker.
Certain other credit brokers
(2) This Subdivision also applies in relation to credit assistance provided to a consumer in relation to a credit contract by a credit representative acting within the scope of the credit representative’s actual or apparent authority from a licensee, if:
(a) the credit representative, or the licensee, carries on a business of providing credit assistance in relation to credit contracts; and
(b) neither the credit representative nor the licensee performs the obligations, or exercises the rights, of a credit provider in relation to the majority of those credit contracts; and
(c) in carrying on the business, the credit representative or the licensee (as the case requires) provides credit assistance in relation to credit contracts offered by more than one credit provider.
Brokers of consumer leases
(3) This Subdivision also applies in relation to credit assistance provided to a consumer in relation to a consumer lease by a credit representative acting within the scope of the credit representative’s actual or apparent authority from a licensee, if:
(a) the credit representative, or the licensee, carries on a business of providing credit assistance in relation to consumer leases; and
(b) neither the credit representative nor the licensee performs the obligations, or exercises the rights, of a lessor in relation to the majority of those consumer leases; and
(c) in carrying on the business, the credit representative or the licensee (as the case requires) provides credit assistance in relation to consumer leases offered by more than one lessor.
76 Division 4 of Part 3‑5A (heading)
Repeal the heading, substitute:
Division 4—Mortgage brokers and mortgage intermediaries: conflicted remuneration
Schedule 2—Small amount credit contracts
National Consumer Credit Protection Act 2009
1 Subsection 5(1)
Insert:
repayment date: see subsection 133CD(3).
unsolicited communication to a consumer: see subsection 133CF(2).
2 Section 111 (paragraph beginning “Division 7”)
Repeal the paragraph, substitute:
Division 7 prohibits a licensee from providing credit assistance to a consumer in relation to short‑term credit contracts, and imposes requirements on a licensee who makes representations about providing credit assistance in relation to small amount credit contracts. It also imposes requirements in relation to recording the preliminary assessment that a small amount credit contract is not unsuitable.
3 Subsection 118(3A)
Repeal the subsection.
4 Subsection 123(3A)
Repeal the subsection.
5 Section 124B
Repeal the section, substitute:
124B Licensee who makes representations about credit assistance in relation to small amount credit contracts must display and give information
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, the licensee must:
(a) display information; and
(b) give information to consumers;
in accordance with any determination made by ASIC under subsection (2).
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine one or more of the following matters relating to licensees that make representations described in subsection (1):
(a) the information that the licensees must display;
(b) how the licensees must display the information;
(c) when the licensees must display the information;
(d) the information that the licensees must give to consumers;
(e) how the licensees must give the information to consumers;
(f) when the licensees must give the information to consumers.
(3) In making the determination under subsection (2), ASIC must take into account the risks associated with small amount credit contracts and the alternatives that may be available to consumers.
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.
124C Written documentation required in relation to the preliminary assessment for a small amount credit contract
(1) If, in a preliminary assessment made for the purposes of paragraph 115(1)(c) or (2)(a), the licensee assesses that a small amount credit contract is not unsuitable for a consumer, before providing credit assistance to the consumer by:
(a) suggesting that the consumer apply, or assisting the consumer to apply, for the small amount credit contract; or
(b) suggesting that the consumer apply, or assisting the consumer to apply, for the increase to the credit limit of the small amount credit contract which is the subject of that preliminary assessment; or
(c) suggesting that the consumer remain in the small amount credit contract;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
(d) the preliminary assessment; and
(e) the inquiries and verification made for the purposes of paragraph 115(1)(d) or (2)(b) in relation to that preliminary assessment.
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(d) and (e) are to be documented in writing.
(3) Before making a determination under subsection (2), ASIC must:
(a) consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and
(b) have regard to any submissions made by the Information Commissioner because of that consultation.
6 Subsection 131(3A)
Repeal the subsection.
7 Subsection 133(3A)
Repeal the subsection.
8 Section 133C (paragraph beginning “Division 2”)
Repeal the paragraph, substitute:
Division 2 prohibits a licensee from entering into, or increasing the credit limit of, short‑term credit contracts. It also imposes requirements on a licensee who makes representations about entering into small amount credit contracts and prohibits a licensee from entering into, or offering to enter into, small amount credit contracts in certain circumstances. Division 2 imposes requirements in relation to recording the assessment that a small amount credit contract is not unsuitable and prohibits a licensee from making certain unsolicited communications in relation to small amount credit contracts. It also provides that the consumer is not liable to pay certain fees and charges under small amount credit contracts in certain circumstances.
9 Section 133CB
Repeal the section, substitute:
133CB Licensee who makes representations in relation to small amount credit contracts must display and give information
Requirement
(1) If a licensee represents that the licensee enters into, or is able to enter into, small amount credit contracts with consumers under which the licensee would be the credit provider, the licensee must:
(a) display information; and
(b) give information to consumers;
in accordance with any determination made by ASIC under subsection (2).
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine one or more of the following matters relating to licensees that make representations described in subsection (1):
(a) the information that the licensees must display;
(b) how the licensees must display the information;
(c) when the licensees must display the information;
(d) the information that the licensees must give to consumers;
(e) how the licensees must give the information to consumers;
(f) when the licensees must give the information to consumers.
(3) In making a determination under subsection (2), ASIC must take into account the risks associated with small amount credit contracts and the alternatives that may be available to consumers.
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.
10 Subsection 133CC(1)
Repeal the subsection (not including the heading), substitute:
(1) A licensee must not enter into, or offer to enter into, a small amount credit contract with a consumer who will be the debtor under the contract if the repayments that would be required under the contract would not meet the requirements prescribed by the regulations.
Civil penalty: 5,000 penalty units.
Note: For example, the regulations may provide that the amount of a repayment must not exceed a specified percentage of the consumer’s income.
11 At the end of section 133CC
Add:
Loss of certain fees and charges
(3) If:
(a) a licensee enters into a small amount credit contract in contravention of subsection (1); and
(b) either:
(i) the court has made a declaration that the licensee has contravened subsection (1) in relation to that contract; or
(ii) the licensee is found guilty of an offence against subsection (2) in relation to that contract;
then:
(c) the consumer is not liable (and is taken never to have been liable) to pay a fee or charge of the kind referred to in paragraph 31A(1)(a) or (b) of the National Credit Code under that small amount credit contract (whether or not the liability is imposed consistently with the National Credit Code); and
(d) the consumer may recover as a debt due to the consumer the total of any amounts paid by the consumer that, in accordance with paragraph (c), the consumer is not liable to pay.
12 At the end of Division 2 of Part 3‑2C
Add:
133CD Licensee must not enter into a small amount credit contract if repayment amounts and intervals are not equal
Requirement
(1) A licensee must not enter into, or offer to enter into, a small amount credit contract with a consumer who will be the debtor under the contract if any of the following applies:
(a) repayments that would be required under the contract are not equal;
(b) the intervals between repayment dates would not be equal;
(c) the interval between the date on which credit would be first provided under the contract and the first repayment date would be longer than twice the interval between the first repayment date and the second repayment date.
Civil penalty: 5,000 penalty units.
(2) For the purposes of paragraph (1)(a), repayments that would be required under a small amount credit contract are taken to be equal if:
(a) each repayment is of the same amount; or
(b) both of the following apply:
(i) each repayment (other than the last repayment) is the same amount;
(ii) the last repayment is up to 5% less than each other repayment; or
(c) the repayments meet the conditions determined by ASIC under subsection (5).
(3) A repayment date in relation to a small amount credit contract is the date on or by which a repayment is required to be made under the contract.
(4) For the purposes of paragraph (1)(b), if a small amount credit contract provides that:
(a) repayments that would be required under the contract are to be made on or by a fixed day of each week, fortnight or month; and
(b) if that fixed day falls on a day that is not a business day—the repayment would be required to be made on or by the immediately preceding or succeeding business day;
the intervals between repayment dates are taken to be equal.
(5) ASIC may, by legislative instrument, determine conditions for the purposes of paragraph (2)(c).
(6) Nothing in this section is intended to limit the regulations which may be made for the purposes of section 133CC.
Offence
(7) 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.
Strict liability offence
(8) 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: 10 penalty units.
(9) Subsection (8) is an offence of strict liability.
133CE Written documentation required in relation to the assessment for a small amount credit contract
(1) If, in an assessment made for the purposes of paragraph 128(c), the licensee assesses that a small amount credit contract is not unsuitable for a consumer, before:
(a) entering into the small amount credit contract with the consumer; or
(b) making an unconditional representation to the consumer that the licensee considers that the consumer is eligible to enter into the small amount credit contract with the licensee; or
(c) increasing the credit limit of the small amount credit contract which is the subject of that assessment; or
(d) making an unconditional representation to the consumer that the licensee considers that the credit limit of the small amount credit contract between the consumer and the licensee will be able to be increased;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
(e) the assessment; and
(f) the inquiries and verification made for the purposes of paragraph 128(d) in relation to that assessment.
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(e) and (f) are to be documented in writing.
(3) Before making a determination under subsection (2), ASIC must:
(a) consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and
(b) have regard to any submissions made by the Information Commissioner because of that consultation.
133CF Licensee not to make certain unsolicited communications in relation to a small amount credit contract
Prohibition on certain unsolicited communications
(1) A licensee must not make, or arrange for the making of, an unsolicited communication to a consumer (whether orally, in writing or by electronic means) that contains:
(a) an offer to the consumer to enter into a small amount credit contract; or
(b) an invitation to the consumer to apply for a small amount credit contract;
if the consumer is or has at any time been a debtor under a small amount credit contract with the licensee or another credit provider.
Civil penalty: 5,000 penalty units.
Meaning of unsolicited communication to a consumer
(2) An unsolicited communication to a consumer is a communication to a consumer or a consumer’s agent that is made by a person by dealing directly with the consumer or the consumer’s agent in any of the following circumstances:
(a) no prior request has been made by the consumer to the licensee for that communication;
(b) the consumer has made a prior request to the licensee for that communication and that request was solicited by or on behalf of the licensee;
(c) circumstances of a kind prescribed by the regulations.
However, the regulations may prescribe that specified kinds of communications are not unsolicited communications to which this section applies.
Offence
(3) 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.
Loss of certain fees and charges
(4) If:
(a) a licensee makes an unsolicited communication to a consumer in contravention of subsection (1); and
(b) the licensee enters into a small amount credit contract with that consumer within 30 days of that unsolicited communication being made; and
(c) either:
(i) the court has made a declaration that the licensee has contravened subsection (1) in relation to that unsolicited communication; or
(ii) the licensee is found guilty of an offence against subsection (3) in relation to that unsolicited communication;
then:
(d) the consumer is not liable (and is taken never to have been liable) to pay a fee or charge of the kind referred to in paragraph 31A(1)(a) or (b) of the National Credit Code under the small amount credit contract (whether or not the liability is imposed consistently with the National Credit Code); and
(e) the consumer may recover as a debt due to the consumer the amount paid by the consumer that, in accordance with paragraph (d), the consumer is not liable to pay.
13 After section 31B of the National Credit Code
Insert:
31C Prohibition on unexpired monthly fees in relation to small amount credit contracts
Requirement
(1) A credit provider must not require or accept payment by the debtor under a small amount credit contract of an unexpired monthly fee.
Note: A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.
(2) An unexpired monthly fee in relation to a small amount credit contract is each permitted monthly fee that is in respect of a month that commences after the date on which the contract is paid out.
(3) If a credit provider contravenes subsection (1) in relation to a small amount credit contract:
(a) the debtor is not liable (and is taken never to have been liable) to make the payment of the unexpired monthly fee to the credit provider; and
(b) the debtor may recover as a debt due to the debtor the amount of any payment of the unexpired monthly fee made by the debtor to the credit provider.
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: 100 penalty units.
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: 10 penalty units.
(6) Subsection (5) is an offence of strict liability.
14 Subsection 72(3) of the National Credit Code (paragraph (a) of the note)
After “such as”, insert “family violence,”.
15 Paragraph 82(2)(b) of the National Credit Code
Repeal the paragraph, substitute:
(b) either:
(i) for a credit contract that is not a small amount credit contract—the interest charges and all other fees and charges payable by the debtor to the credit provider up to the date of termination; or
(ii) for a small amount credit contract—all fees and charges payable by the debtor to the credit provider up to the date of termination, excluding any unexpired monthly fee;
16 After paragraph 111(1)(i) of the National Credit Code
Insert:
(ia) section 31C;
17 Subsection 204(1) of the National Credit Code
Insert:
unexpired monthly fee: see subsection 31C(2).
Schedule 3—Consumer leases
National Consumer Credit Protection Act 2009
1 Subsection 5(1)
Insert:
consumer lease for household goods has the same meaning as in section 204 of the National Credit Code.
household goods has the same meaning as in section 204 of the National Credit Code.
2 At the end of section 134
Add:
Division 7 imposes requirements on a licensee who makes representations about providing credit assistance in relation to consumer leases for household goods. It also imposes requirements in relation to recording the preliminary assessment that a consumer lease is not unsuitable.
3 After subsection 140(1)
Insert:
(1A) If:
(a) the consumer lease is a consumer lease for household goods; 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 138(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).
4 At the end of Part 3‑3
Add:
Division 7—Special rules for consumer leases for household goods
147A Licensee who makes representations about credit assistance in relation to consumer leases for household goods must display and give information
Requirement
(1) If a licensee represents that the licensee provides, or is able to provide, credit assistance to consumers in relation to consumer leases for household goods, the licensee must:
(a) display information; and
(b) give information to consumers;
in accordance with any determination made by ASIC under subsection (2).
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine one or more of the following matters relating to licensees that make representations described in subsection (1):
(a) the information that the licensees must display;
(b) how the licensees must display the information;
(c) when the licensees must display the information;
(d) the information that the licensees must give to consumers;
(e) how the licensees must give the information to consumers;
(f) when the licensees must give the information to consumers.
(3) In making a determination under subsection (2), ASIC must take into account the risks associated with consumer leases for household goods and the alternatives that may be available to consumers.
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.
147B Written documentation required in relation to the preliminary assessment for a consumer lease for household goods
(1) If, in a preliminary assessment made for the purposes of paragraph 138(1)(c) or (2)(a), the licensee assesses that a consumer lease for household goods is not unsuitable for a consumer, before providing credit assistance to the consumer by:
(a) suggesting that the consumer apply for a particular consumer lease with a particular lessor; or
(b) assisting the consumer to apply for a particular consumer lease with a particular lessor; or
(c) suggesting that the consumer remain in a particular consumer lease with a particular lessor;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
(d) the preliminary assessment; and
(e) the inquiries and verification made for the purposes of paragraph 138(1)(d) or (2)(b) in relation to that preliminary assessment.
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(d) and (e) are to be documented in writing.
(3) Before making a determination under subsection (2), ASIC must:
(a) consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and
(b) have regard to any submissions made by the Information Commissioner because of that consultation.
5 At the end of section 148
Add:
Division 5 prohibits a licensee from entering into, or offering to enter into, a consumer lease for household goods in certain circumstances and imposes requirements on a licensee who makes representations about consumer leases for household goods. It also imposes requirements in relation to recording an assessment that a consumer lease is not unsuitable.
6 After subsection 153(1)
Insert:
(1A) If:
(a) the consumer lease is a consumer lease for household goods; 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 151(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).
7 At the end of Part 3‑4
Add:
Division 5—Special rules for consumer leases for household goods
156A Licensee who makes representations about consumer leases for household goods must display and give information
Requirement
(1) If a licensee represents that the licensee enters into, or is able to enter into, consumer leases for household goods with consumers under which the licensee would be the lessor, the licensee must:
(a) display information; and
(b) give information to consumers;
in accordance with any determination made be ASIC under subsection (2).
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine one or more of the following matters relating to licensees that make representations described in subsection (1):
(a) the information that the licensees must display;
(b) how the licensees must display the information;
(c) when the licensees must display the information;
(d) the information that the licensees must give to consumers;
(e) how the licensees must give the information to consumers;
(f) when the licensees must give the information to consumers.
Offence
(3) 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.
156B Licensee must not enter into a consumer lease for household goods if the payments do not meet the prescribed requirements
Requirement
(1) A licensee must not enter into, or offer to enter into, a consumer lease for household goods with a consumer who will be the lessee under the lease if the amount that would be required to be paid under the lease by the lessee would not meet the requirements prescribed by the regulations.
Civil penalty: 5,000 penalty units.
Note: For example, the regulations may provide that the amount of a payment must not exceed a specified percentage of the lessee’s income.
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.
Loss of certain fees and charges
(3) If:
(a) the licensee enters into a consumer lease for household goods in contravention of subsection (1); and
(b) either:
(i) the court has made a declaration that the licensee has contravened subsection (1) in relation to that consumer lease; or
(ii) the licensee is found guilty of an offence against subsection (2) in relation to that consumer lease;
then:
(c) the lessee is not liable (and is taken never to have been liable) to pay any amount under that consumer lease that exceeds the base price of the goods hired under that consumer lease (whether or not the liability is imposed consistently with the National Credit Code); and
(d) the lessee may recover as a debt due to the lessee the amount of any payment made by the lessee that, in accordance with paragraph (c), the lessee is not liable to pay.
156C Written documentation required in relation to the assessment for a consumer lease for household goods
(1) If, in an assessment made for the purposes of paragraph 151(c), the licensee assesses that a consumer lease for household goods is not unsuitable for a consumer, before:
(a) entering into the consumer lease with the consumer; or
(b) making an unconditional representation to the consumer that the licensee considers that the consumer is eligible to enter a consumer lease with the licensee;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
(c) the assessment; and
(d) the inquiries and verification made for the purposes of paragraph 151(d) in relation to that assessment.
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(c) and (d) are to be documented in writing.
(3) Before making a determination under subsection (2), ASIC must:
(a) consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and
(b) have regard to any submissions made by the Information Commissioner because of that consultation.
8 Part 6 of the National Credit Code (at the end of the heading)
Add “and lessors”.
9 After subsection 111(2) of the National Credit Code
Insert:
(2A) For the purposes of this Division, a key requirement in connection with a consumer lease is any one of the requirements of this Code contained in the following provisions:
(a) subsection 174(1A);
(b) subsection 175AA(1);
(c) subsection 175AA(2);
(d) section 179VA.
10 Subsections 112(1) and (2) of the National Credit Code
Repeal the subsections, substitute:
(1) An application for an order under this Division may be made by:
(a) a party to a credit contract or consumer lease; or
(b) a guarantor in relation to a credit contract; or
(c) ASIC.
(2) A debtor, lessee or guarantor may not make an application for an order under this Division in respect of a contravention in connection with a contract or consumer lease if the contravention is or has been subject to an application for an order made by the credit provider, lessor or ASIC anywhere in Australia under this Code.
11 Subsection 113(1) of the National Credit Code
Repeal the subsection (not including the heading), substitute:
(1) The court must, on an application being made, by order declare whether or not the credit provider or lessor has contravened a key requirement in connection with the credit contract or contracts concerned, or consumer lease or leases concerned.
12 Subsection 113(2) of the National Credit Code
After “credit provider” (wherever occurring), insert “or lessor”.
13 Subsection 113(3) of the National Credit Code
Repeal the subsection, substitute:
Prudential standing
(3) The court, in considering the imposition of a penalty, must have regard primarily to the prudential standing of:
(a) any credit provider or lessor concerned; or
(b) any subsidiary of the credit provider or lessor (within the meaning of the Corporations Act 2001);
if the credit provider, lessor or subsidiary takes deposits or is a borrowing corporation (within the meaning of that Act). However, the court is to have regard to that prudential standing only if the credit provider or lessor requests the court to do so.
14 Paragraph 113(4)(a) of the National Credit Code
Before “the conduct”, insert “in the case of a credit contract—”.
15 After paragraph 113(4)(a) of the National Credit Code
Insert:
(aa) in the case of a consumer lease—the conduct of the lessor and lessee before and after the consumer lease was entered into;
16 Paragraph 113(4)(c) of the National Credit Code
After “debtor”, insert “or lessee”.
17 Paragraphs 113(4)(d), (e) and (f) of the National Credit Code
After “credit provider”, insert “or lessor”.
18 Paragraph 113(4)(g) of the National Credit Code
Repeal the paragraph, substitute:
(g) any action taken by the credit provider or lessor to remedy the contravention or compensate the debtor or lessee or to prevent further contraventions;
19 After section 114 of the National Credit Code
Insert:
114A Penalty if application made by lessee
(1) On application being made by a lessee for an order in relation to a consumer lease, the maximum penalty that may be imposed by the court for a contravention of a key requirement is an amount not exceeding the difference between:
(a) the total amount payable by the lessee under the consumer lease; and
(b) the base price of the goods hired under the lease.
(2) The court may, however, impose a greater penalty if the lessee satisfies the court that the lessee has suffered a loss. The amount of the penalty is to be not less than the amount of the loss.
(3) For the purposes of paragraph (1)(a), the amount payable under a consumer lease to the extent it relates to amounts payable in the future is to be calculated on the assumptions in sections 180 and 182.
20 Section 115 of the National Credit Code (heading)
After “debtor”, insert “, lessee”.
21 Subsection 115(1) of the National Credit Code
Repeal the subsection, substitute:
(1) An amount of penalty ordered by the court to be paid may:
(a) if the order was made on an application by a debtor or a guarantor in relation to a credit contract—be set off by the debtor or guarantor against any amount that is due or becomes due to the credit provider under the contract; or
(b) if the order was made on an application by a lessee in relation to a consumer lease—be set off by the lessee against any amount that is due or becomes due to the lessor under the lease.
If there is no such amount, the amount of the penalty is a debt due by the credit provider or lessor to the debtor, lessee or guarantor
22 Subsection 115(3) of the National Credit Code
Repeal the subsection, substitute:
(3) An order made on application by a debtor, a lessee or a guarantor may include such directions as the court considers appropriate relating to the payment of the amount owed by the debtor or lessee, or the credit provider or lessor, as a result of the order.
23 Sections 116 to 119 of the National Credit Code
Repeal the sections, substitute:
116 Penalty if application made by credit provider, lessor or ASIC
(1) On application being made by a credit provider, a lessor or ASIC for an order, the maximum penalty that may be imposed by the court for a contravention of a key requirement relating to a contract affected by the application is an amount calculated so that the total penalty for all contraventions of the requirement in Australia (as disclosed by the credit provider or lessor) does not exceed 5,000 penalty units.
(2) However, section 167B of the National Credit Act applies in the same way in relation to the contravention of a key requirement as it would apply in relation to a civil penalty provision under that Act.
117 Payment of penalty
An amount of penalty ordered by the court to be paid on an application for an order made by a credit provider, a lessor or ASIC must be paid by the credit provider or lessor to ASIC on behalf of the Commonwealth.
118 Compensation for debtor, lessee or guarantor
(1) The court may, on application by a debtor, a lessee or a guarantor, order that the credit provider or lessor pay to the debtor, lessee or guarantor an amount by way of compensation for loss arising from the contravention of a key requirement.
(2) The court may only order an amount to be paid by way of compensation if the debtor, lessee or guarantor satisfies the court that the debtor, lessee or guarantor has suffered a loss arising from the contravention. The amount of compensation is not to exceed the amount of the loss.
(3) The court may not make an order under this section if the debtor, lessee or guarantor has previously obtained or been refused a penalty referred to in section 115 relating to the same contravention.
(4) An amount payable under this section does not affect the amount of a penalty for the purposes of section 116.
119 General provisions relating to applications by credit providers, lessors or ASIC
(1) An application for an order by a credit provider, a lessor or ASIC:
(a) may apply to any one or more credit contracts or consumer leases; and
(b) may apply to all or any class of credit contracts entered into by the credit provider or lessor during a specified period (for example, all credit contracts entered into during a specified period which are affected by a specified contravention).
(2) The court may require notice of any such application to be published by notice, in a form approved by the court, in a newspaper circulating throughout one or more States or Territories, as the court determines.
(3) Notice of an application by a credit provider or lessor must be given by the credit provider or lessor to ASIC.
24 Section 120 of the National Credit Code (at the end of the heading)
Add “and lessees”.
25 At the end of section 120 of the National Credit Code
Add “or lessees”.
26 Subsection 121(1) of the National Credit Code
Repeal the subsection, substitute:
(1) The court may, before disposing of an application by a debtor, lessee or guarantor for an order under this Division, make such directions as it considers appropriate to protect the interests of the debtor, lessee or guarantor concerned.
27 Paragraph 121(2)(a) of the National Credit Code
After “guarantor)”, insert “, or the lessee’s obligations,”.
28 Subsection 121(4) of the National Credit Code
After “credit provider”, insert “or lessor”.
29 Subsection 124(1) of the National Credit Code
After “credit provider” (wherever occurring), insert “or lessor”.
30 After subsection 174(1) of the National Credit Code
Insert:
(1A) A consumer lease for household goods must also contain:
(a) the base price of the goods hired under the consumer lease; and
(b) the difference between the base price of the goods hired under the lease and the sum of:
(i) the total amount payable by the lessee in connection with the lease (including any applicable taxes and any add‑on fees) but not including an amount described in subsection 175AA(4); and
(ii) the fee or charge (if any) described in paragraph 175AA(4)(a) (about a single fee or charge relating to creation of the lease); and
(c) any other information required by the regulations.
Note: A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.
31 After section 175A of the National Credit Code
Insert:
175AA Cap on fees and charges for consumer leases
Overall cap for every consumer lease
(1) A lessor must not enter into, or vary, a consumer lease so that the total amount that would be payable by the lessee in connection with the lease (including any applicable taxes and any add‑on fees) is more than the permitted cap for the lease.
Note: A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.
Monthly cap for consumer lease for indefinite period
(2) A lessor must not enter into, or vary, a consumer lease for an indefinite period so that the total amount that would be payable by the lessee in connection with the lease (including any applicable taxes and any add‑on fees) in any month is more than 1/48 of the permitted cap for the lease.
Note: A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.
What is an add‑on fee?
(3) An add‑on fee for a consumer lease is any fee or charge (whether an interest charge or not) for which the following conditions are met:
(a) the fee or charge is one that:
(i) the lessee is liable to pay to the lessor; or
(ii) the lessee is liable to pay to another person under an agreement facilitated by or on behalf of the lessor or the other person;
(b) the fee or charge relates to a service or product that either:
(i) facilitates or complements the lessee’s use of the goods hired under the consumer lease; or
(ii) is marketed or offered by the lessor or another person as being complementary to the lessee’s use of the goods hired under the consumer lease;
(c) either:
(i) failure by the lessee to pay the fee or charge, or to acquire a service or product to which the fee or charge relates, affects the lessee’s rights or obligations under the consumer lease; or
(ii) the lessor or another person has represented to the lessee that failure by the lessee to pay the fee or charge, or to acquire a service or product to which the fee or charge relates, will or may affect the lessee’s rights or obligations under the consumer lease.
Amounts that do not count against caps
(4) For the purposes of subsections (1) and (2), the following amounts are not included in the total amount payable by the lessee in connection with the consumer lease:
(a) a fee or charge that:
(i) relates to the creation of the consumer lease; and
(ii) is charged only once (not on a recurring basis); and
(iii) is not more than 20% of the base price of the goods hired under the consumer lease;
(b) a fee or charge that is payable in the event of a default in payment under the consumer lease;
(c) enforcement expenses of an amount not exceeding the amount which could be recovered by the lessor under subsection 179R(1).
What is the permitted cap?
(5) The permitted cap for a consumer lease is the sum of the following amounts:
(a) the base price of the goods hired under the consumer lease;
(b) the permitted delivery fee (if any) for the consumer lease;
(c) the permitted installation fees (if any) for the consumer lease;
(d) the amount worked out by multiplying the sum of the amounts described in paragraphs (a), (b) and (c) by:
(i) in the case of a consumer lease for a fixed term—0.04 for each whole month of the consumer lease to a maximum of 48 months; or
(ii) in the case of a consumer lease for an indefinite period—1.92.
What is the base price of goods?
(6) The base price of the goods hired under a consumer lease is the amount worked out in accordance with the regulations.
What is a permitted delivery fee?
(7) A fee or charge is a permitted delivery fee for a consumer lease if it:
(a) is for the delivery to the lessee, at the lessee’s request, of the goods hired under the consumer lease; and
(b) is limited to the reasonable cost of delivery of the goods to the lessee.
What are permitted installation fees?
(8) ASIC may, by legislative instrument, declare that specified fees which relate to installation of particular kinds of goods hired under a consumer lease are permitted installation fees for the lease.
175AB Imposing fees or charges above the permitted cap—offence
A person commits an offence if:
(a) the person is subject to a requirement under subsection 175AA(1) or (2); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 100 penalty units.
175AC Lessee may recover fees and charges exceeding base price if cap is breached
If a lessor contravenes subsection 175AA(1) or (2) in relation to a consumer lease:
(a) the lessee is not liable (and is taken never to have been liable) to pay any amount under the consumer lease that exceeds the base price of the goods hired under the consumer lease (whether or not the liability is imposed consistently with this Code); and
(b) the lessee may recover as a debt due to the lessee the amount of any payment made by the lessee that, in accordance with paragraph (a), the lessee is not liable to pay.
32 Subsection 177B(3) of the National Credit Code (paragraph (a) of the note)
After “such as”, insert “family violence,”.
33 At the end of Subdivision C of Division 8 of Part 11 of the National Credit Code
Add:
179GA Limit on amount that may be recovered if there is default under a consumer lease
(1) If there is a default in payment under a consumer lease and the regulations prescribe a way of working out a limit on the amount that may be recovered for the default, the lessor must not recover more than the limit for the default.
Civil penalty: 5,000 penalty units.
(2) Any provision of the lease that confers a greater right is void to the extent that it does so. If an amount is in fact recovered in excess of this limitation, it may be recovered back.
(3) This section does not apply to enforcement expenses.
Note: Section 179R deals with enforcement expenses.
34 At the end of Division 10 of Part 11 of the National Credit Code
Add:
179VA Canvassing of consumer leases for household goods at home
(1) A lessor must not visit (personally or in the person of an employee or agent) a place of residence for the purpose of inducing a person who resides there to apply for or obtain a consumer lease for household goods, except by prior arrangement by the lessor with a person who resides there.
Criminal penalty: 100 penalty units.
(2) A lessor must not visit (personally or in the person of an employee or agent) a place of residence for the purpose of inducing a person who resides there to apply for or obtain a consumer lease for household goods, except by prior arrangement by the lessor with a person who resides there.
Criminal penalty: 10 penalty units.
(3) Subsection (2) is an offence of strict liability.
179VB Using postal, telegraphic, telephonic or other like services to enter into a consumer lease for an indefinite period
Requirement
(1) A lessor must not use postal, telegraphic, telephonic or other like services (within the meaning of paragraph 51(v) of the Constitution) to enter into a consumer lease for an indefinite period if the lessor is not a constitutional corporation.
Civil penalty: 5,000 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.
179VC Entering into a consumer lease for an indefinite period in the course of constitutional trade and commerce
Requirement
(1) A lessor must not, in the course of constitutional trade and commerce, enter into a consumer lease for an indefinite period unless the lessor is a constitutional corporation.
Civil penalty: 5,000 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.
35 Subsection 204(1) of the National Credit Code
Insert:
add‑on fee: see subsection 175AA(3).
base price: see subsection 175AA(6).
consumer lease for household goods means a consumer lease to which Part 11 applies where any of the goods hired under the lease are household goods, but does not include a consumer lease where the goods hired under the lease include:
(a) motor vehicles; or
(b) vehicles that:
(i) are not for use on a road; and
(ii) are of a kind intended primarily for use by persons with restricted mobility; or
(c) goods that are ordinarily used for accommodation (either permanently or temporarily).
credit assistance has the same meaning as in section 8 of the National Credit Act.
household goods means goods of a kind ordinarily acquired for domestic or household purposes.
36 Subsection 204(1) of the National Credit Code (definition of market value)
After “credit contract”, insert “or consumer lease”.
37 Subsection 204(1) of the National Credit Code
Insert:
permitted cap: see subsection 175AA(5).
permitted delivery fee: see subsection 175AA(7).
permitted installation fees: see subsection 175AA(8).
Schedule 4—Avoidance
National Consumer Credit Protection Act 2009
1 Subsection 5(1)
Insert:
avoidance purpose: see subsection 323A(2).
constitutional corporation means a corporation to which paragraph 51(xx) of the Constitution applies.
constitutional trade and commerce means trade and commerce:
(a) between Australia and places outside Australia; or
(b) between the States; or
(c) between a State and a Territory; or
(d) between 2 Territories; or
(e) within a Territory.
scheme means:
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied; or
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.
2 Section 323
After:
This Part deals with miscellaneous matters.
insert:
Division 1A has rules that prohibit schemes that are designed to avoid the application of this Act in relation to small amount credit contracts and consumer leases.
3 After Division 1 of Part 7‑1
Insert:
Division 1A—Avoidance schemes
323A Schemes to avoid rules about small amount credit contracts and consumer leases
General prohibition
(1) A person must not, either alone or with others, engage in any of the following conduct:
(a) enter into a scheme;
(b) begin to carry out a scheme;
(c) carry out a scheme;
if, having regard to the matters referred to in subsection 323B(1), it would be reasonable to conclude that the purpose, or one of the purposes, of the person engaging in that conduct was an avoidance purpose.
Civil penalty: 5,000 penalty units.
What is an avoidance purpose?
(2) Each of the following is an avoidance purpose:
(a) to prevent a contract from being a small amount credit contract or a consumer lease;
(b) to cause a contract to cease to be a small amount credit contract or a consumer lease;
(c) to avoid the application of a provision of this Act to a small amount credit contract or a consumer lease;
(d) to avoid the application of a provision of this Act to a contract that has ceased to be a small amount credit contract or a consumer lease.
Constitutional corporations
(3) A constitutional corporation must not, either alone or with other persons, engage in any of the following conduct:
(a) enter into a scheme;
(b) begin to carry out a scheme;
(c) carry out a scheme;
if, having regard to the matters referred to in subsection 323B(1), it would be reasonable to conclude that the purpose, or one of the purposes, of the constitutional corporation engaging in that conduct was an avoidance purpose.
Civil penalty: 5,000 penalty units.
Constitutional trade and commerce
(4) A person must not in the course of constitutional trade and commerce, either alone or with others, engage in any of the following conduct:
(a) enter into a scheme;
(b) begin to carry out a scheme;
(c) carry out a scheme;
if, having regard to the matters referred to in subsection 323B(1), it would be reasonable to conclude that the purpose, or one of the purposes, of the person engaging in that conduct was an avoidance purpose.
Civil penalty: 5,000 penalty units.
Use of communications service
(5) A person must not use postal, telegraphic, telephonic or other like services (within the meaning of paragraph 51(v) of the Constitution), either alone or with other persons, in order to engage in any of the following conduct:
(a) enter into a scheme;
(b) begin to carry out a scheme;
(c) carry out a scheme;
if, having regard to the matters referred to in subsection 323B(1), it would be reasonable to conclude that the purpose, or one of the purposes, of the person engaging in that conduct was an avoidance purpose.
Civil penalty: 5,000 penalty units.
Prohibitions independent of each other
(6) To avoid doubt, subsections (1), (3), (4) and (5) are independent from and do not limit each other.
Note: However, a person can be ordered to pay a pecuniary penalty under only one of those subsections in relation to the same conduct: see section 175.
Offence
(7) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1), (3), (4) or (5); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 100 penalty units.
323B Whether it is reasonable to draw conclusion as to purpose
(1) Regard must be had to the following matters in determining for the purposes of section 323A whether it would be reasonable to conclude that a purpose of a person (the first person) entering into or carrying out (to any extent) a scheme was an avoidance purpose relating to a contract:
(a) whether the scheme or the contract was, is or would be:
(i) a means of providing a consumer with credit in a manner more complex, or more costly to the consumer, than a small amount credit contract would have been; or
(ii) a means of providing a consumer with financial accommodation equivalent to providing the consumer with credit in a manner more complex, or more costly to the consumer, than a small amount credit contract would have been; or
(iii) a means of enabling a consumer to have the use of goods in a manner more complex, or more costly to the consumer, than a consumer lease would have been;
(b) whether representations were made (by the first person or anyone else, and whether in an advertisement or otherwise) about the scheme or the contract, or about schemes or contracts of that kind, that:
(i) were similar to representations made (by the first person or anyone else, and whether in an advertisement or otherwise) about small amount credit contracts or consumer leases; or
(ii) were made to persons in a group similar to a group of persons to whom representations about small amount credit contracts or consumer leases were made (by the first person or anyone else, and whether in an advertisement or otherwise);
(c) a matter prescribed by the regulations.
(2) Subsection (1) does not limit the matters to which regard may be had in making a determination described in that subsection.
323C Presumption of avoidance for certain schemes in civil cases
(1) For the purposes of subsection 323A(1), (3), (4) or (5), it is reasonable to conclude that a person entered into or carried out a scheme for an avoidance purpose if:
(a) the scheme is of a kind prescribed by the regulations; or
(b) the scheme is of a kind determined by ASIC under subsection (3).
(2) A conclusion that this section provides for has effect except so far as the contrary is proved by the person, having regard to the matters referred to in subsection 323B(1).
(3) ASIC may, by legislative instrument, determine a scheme, or a class of schemes, for the purposes of this section.
(4) This section does not have effect for the purposes of subsection 323A(7).
323D Exemption by ASIC
(1) ASIC may, by legislative instrument, exempt a scheme, or class of schemes, from all or specified provisions of section 323A.
(2) An exemption may apply subject to any specific conditions imposed by ASIC.
Schedule 5—Consumer leases for indefinite terms
National Consumer Credit Protection Act 2009
1 Subsection 171(1) of the National Credit Code (heading)
Omit “or indefinite”.
2 Subsection 171(1) of the National Credit Code
Omit all the words after “or less”.
3 After subsection 171(1) of the National Credit Code
Insert:
Leases for an indefinite period
(1A) This Part does not apply to a consumer lease for an indefinite period unless:
(a) the lessor is a constitutional corporation at the time that the lease is entered into; or
(b) the lease was entered into in the course of constitutional trade and commerce; or
(c) the lease was entered into using postal, telegraphic, telephonic or other like services (within the meaning of paragraph 51(v) of the Constitution).
4 Subsection 175H(1) of the National Credit Code
Omit “not later than 90 days before the end of the fixed term of a consumer lease”, substitute “by the time specified in subsection (1A)”.
5 After subsection 175H(1) of the National Credit Code
Insert:
(1A) The time by which the statement required by subsection (1) must be given is:
(a) in the case of a consumer lease for an indefinite period—before the end of the period of 7 business days after:
(i) the lessor receives a request for the statement from the lessee; or
(ii) if the lessor does not receive such a request before the consumer lease ends—the day that the consumer lease ends; or
(b) in the case of a consumer lease for a fixed term—not later than 90 days before the end of the fixed term of the consumer lease.
6 Before subsection 179(1) of the National Credit Code
Insert:
Early termination of consumer leases for fixed terms
7 Subsection 179(1) of the National Credit Code
After “consumer lease”, insert “for a fixed term”.
8 After subsection 179(1) of the National Credit Code
Insert:
Consumer leases for indefinite periods
(1A) A lessee under a consumer lease for an indefinite period may, at any time, end the lease by returning the goods hired under the lease to the lessor:
(a) during ordinary business hours; or
(b) at such other time as may be agreed with the lessor or fixed by the court on the application of the lessee.
9 Before subsection 179(2) of the National Credit Code
Insert:
Amount payable by lessee on termination
10 Subsection 179(2) of the National Credit Code
Omit “before the end of its fixed term”.
11 Subsection 204(1) of the National Credit Code
Insert:
constitutional corporation has the same meaning as in section 5 of the National Credit Act.
constitutional trade and commerce has the same meaning as in section 5 of the National Credit Act.
Schedule 6—Consequential and other amendments
National Consumer Credit Protection Act 2009
1 Subsection 5(1)
Insert:
constrained document: see subsection 160CA(1).
hardship notice has the same meaning as in section 204 of the National Credit Code.
2 Section 160A (after the paragraph beginning “Division 2”)
Insert:
Division 2A restricts the use and disclosure of certain documents (including account statements) and of information contained in those documents.
3 After Division 2 of Part 3‑6A
Insert:
Division 2A—Use or disclosure of certain documents
160CA Application of this Division
(1) This Division applies to a person who:
(a) is or was a licensee who has received or obtained a document (the constrained document) that either is an account statement or is prescribed by the regulations, in connection with:
(i) a proposed small amount credit contract; or
(ii) a small amount credit contract; or
(iii) a proposed consumer lease for household goods; or
(iv) a consumer lease for household goods; or
(b) has received or obtained the constrained document from the person described in paragraph (a).
(2) However, this Division does not apply to a person in relation to a constrained document about the financial affairs of the person (either alone or with others).
160CB Prohibition on use or disclosure of constrained documents
Requirement
(1) A person must not use or disclose a constrained document or information contained in a constrained document.
Civil penalty: 5,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person uses or discloses a document or information; and
(b) the document is a constrained document or the information is contained in a constrained document.
Criminal penalty: 100 penalty units.
Strict liability offence
(3) A person commits an offence if the person uses or discloses a constrained document or information contained in a constrained document.
Criminal penalty: 10 penalty units.
(4) Subsection (3) is an offence of strict liability.
Defence
(5) For the purposes of subsection (1), (2) or (3) it is a defence if the use or disclosure is:
(a) necessary for the person to comply with the person’s obligations under this Act; or
(b) required or authorised by or under a law of the Commonwealth, or of a State or Territory, or a court or tribunal order; or
(c) for the purposes of considering a hardship notice; or
(d) for the purposes of assisting ASIC to perform its functions or exercise its powers; or
(e) for the purposes of allowing the operator of the AFCA scheme to perform its functions or exercise its powers.
Note: For the purposes of subsection (2) or (3), a defendant bears an evidential burden in relation to the matter in subsection (5) (see subsection 13.3(3) of the Criminal Code).
4 Section 335A
Repeal the section.
Schedule 7—Application provisions
National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009
1 In the appropriate position
Insert:
Schedule 19—Application provisions for the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Act 2020
Part 1—Definitions
1 Definitions
In this Schedule:
amending Act means the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Act 2020.
Part 2—Schedule 1 (new regulatory framework) to the amending Act
2 Application of amendments made by Schedule 1 (other than those relating to best interests obligations)
Credit assistance and representations
(1) Subject to item 3, the amendments of the National Credit Act made by Part 1 of Schedule 1 to the amending Act apply to credit assistance provided, and representations made, on or after the day that Part commences, regardless of whether:
(a) the assistance or representations were sought, or commenced being provided, before, on or after that day; or
(b) the assistance or representations related to a credit contract entered before, on or after that day.
Increases in credit limits
(2) The amendments of the National Credit Act made by Part 1 of Schedule 1 to the amending Act apply to increasing the credit limit of a credit contract on or after the day that Part commences, whether the credit contract is entered before, on or after that day.
Entering a credit contract
(3) The amendments of the National Credit Act made by Part 1 of Schedule 1 to the amending Act apply to entering a credit contract on or after the day that Part commences.
Assessments
(4) To avoid doubt, sections 120 and 132 of the National Credit Act, as in force immediately before the day Part 1 of Schedule 1 to the amending Act commences, continue to apply in relation to assessments and preliminary assessments made before that day.
3 Application of amendments made by Schedule 1 relating to best interests obligations
The amendments of Part 3‑5A of the National Credit Act by Part 3 of Schedule 1 to the amending Act apply to credit assistance provided on or after the day Part 3 of Schedule 1 to the amending Act commences (whether or not the assistance was sought, or commenced being provided, before that day).
Part 3—Schedules 2 to 6 (small amount credit contracts and consumer leases) to the amending Act
4 Amendments relating to representations and communications
The amendment or insertion of the following sections of the National Credit Act, as made by Schedules 2 and 3 to the amending Act, applies in relation to representations or communications made on or after the day those Schedules commence:
(a) section 124B;
(b) section 133CB;
(c) section 133CF;
(d) section 147A;
(e) section 156A.
5 Amendments relating to assessments
The amendment or insertion of the following sections of the National Credit Act, as made by Schedules 2 and 3 to the amending Act, applies in relation to preliminary assessments and assessments made on or after the day those Schedules commence:
(a) section 124C;
(b) section 133CE;
(c) section 147B;
(d) section 156C.
6 Amendments relating to inquiries and verifications
The amendments of the following sections of the National Credit Act, as made by Schedule 3 to the amending Act, apply in relation to verifications made on or after the day that Schedule commences:
(a) section 140;
(b) section 153.
7 Amendments relating to payments required under small amount credit contracts or consumer leases
The amendment or insertion of the following sections of the National Credit Act, as made by Schedules 2 and 3 to the amending Act, applies in relation to small amount credit contracts or consumer leases entered into or offers made to enter into small amount credit contracts or consumer leases, on or after the day those Schedules commence:
(a) section 133CC;
(b) section 133CD;
(c) section 156B.
8 Application of Division 1A of Part 7‑1 of the National Credit Act
Division 1A of Part 7‑1 of the National Credit Act, as inserted by Schedule 4 to the amending Act, applies to conduct that:
(a) relates to schemes connected with contracts entered into on or after the day that Schedule commences; and
(b) occurs on or after that day.
9 Application of section 160CB of the National Credit Act
Section 160CB of the National Credit Act, as inserted by Schedule 6 to the amending Act, applies to uses or disclosures of constrained documents, or information contained in constrained documents, on or after the day that Schedule commences.
10 Application of section 31C of the new Credit Code
Section 31C of the new Credit Code, as inserted by Schedule 2 to the amending Act, applies to small amount credit contracts entered into on or after the day that Schedule commences.
11 Application of subsection 82(2) of the new Credit Code
Subsection 82(2) of the new Credit Code, as amended by Schedule 2 to the amending Act, applies in relation to small amount credit contracts entered into before, on or after the day that Schedule commences.
12 Amendments relating to consumer leases—new Credit Code
(1) The amendment or insertion of the following sections of the new Credit Code, as made by Schedules 3 and 5 to the amending Act, applies in relation to consumer leases entered into on or after the day those Schedules commence:
(a) section 111;
(b) section 112;
(c) section 113;
(d) section 114A;
(e) section 115;
(f) section 116;
(g) section 117;
(h) section 118;
(i) section 119;
(j) section 120;
(k) section 121;
(l) section 124;
(m) section 171;
(n) section 174;
(o) section 175AA;
(p) section 175AC;
(q) section 175H;
(r) section 179;
(s) section 179GA;
(t) section 179VB;
(u) section 179VC.
(2) The insertion of sections 175AA and 175AC of the new Credit Code, as made by Schedule 3 to the amending Act, also applies in relation to the variation on or after the day that Schedule commences of consumer leases (whether entered into before, on or after that day).
13 Application of section 179VA of the new Credit Code
Section 179VA of the new Credit Code, as inserted by Schedule 3 to the amending Act, applies to a visit made on or after the day that Schedule commences.