Federal Register of Legislation - Australian Government

Primary content

National Consumer Credit Protection Act 2009

Authoritative Version
Act No. 134 of 2009 as amended, taking into account amendments up to Corporate Collective Investment Vehicle Framework and Other Measures Act 2022
An Act relating to credit, and for related purposes
Administered by: Treasury
Registered 18 Jul 2022
Start Date 01 Jul 2022
Table of contents.

Commonwealth Coat of Arms of Australia

National Consumer Credit Protection Act 2009

No. 134, 2009

Compilation No. 36

Compilation date:                              1 July 2022

Includes amendments up to:            Act No. 8, 2022

Registered:                                         18 July 2022

This compilation is in 2 volumes

Volume 1:       sections 1–322

Volume 2:       sections 323–337

                        Schedule 1

                        Endnotes

Each volume has its own contents

This compilation was rectified to take into account retrospective amendments made by Act No. 69, 2020 (as amended by Act No. 35, 2022). The original compilation is available in the rectification history on the Federal Register of Legislation.

About this compilation

This compilation

This is a compilation of the National Consumer Credit Protection Act 2009 that shows the text of the law as amended and in force on 1 July 2022 (the compilation date).

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Legislation Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on the Legislation Register for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Editorial changes

For more information about any editorial changes made in this compilation, see the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on the Legislation Register for the compiled law.

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

  

  

  


Contents

Chapter 7—Miscellaneous                                                                                    1

Part 7‑1—Miscellaneous                                                                                                     1

Division 1—Introduction                                                                                            1

323........ Guide to this Part................................................................................ 1

Division 2—Liability of persons for conduct of their agents etc.          2

324........ Liability for bodies corporate for conduct of their agents, employees etc.                2

325........ Liability of persons (other than bodies corporate) for the conduct of their agents, employees etc.           3

326........ Regulations for the purposes of this Division..................................... 4

Division 3—Review of ASIC’s decisions                                                            5

327........ Review by Administrative Appeals Tribunal of decisions by ASIC under this Act 5

328........ Notice of reviewable decision and review rights................................. 6

Division 4—Regulations                                                                                              8

329........ Regulations......................................................................................... 8

330........ Regulations—where proceedings may be brought.............................. 8

Division 5—Other miscellaneous provisions                                                    9

332........ Civil penalty provisions contravened or offences committed partly in and partly out of this jurisdiction 9

333........ Contravention of Act does not generally affect validity of transactions etc.              9

334........ Contracting out etc.............................................................................. 9

335........ Indemnities........................................................................................ 10

335A..... Review relating to small amount credit contracts............................... 11

336........ Acquisition of property..................................................................... 12

337........ Minister may delegate prescribed functions and powers under this Act 12

Schedule 1—National Credit Code                                                           13

Part 1—Preliminary                                                                                                           13

1............ Short title........................................................................................... 13

2............ Interpretation generally...................................................................... 13

3............ Meaning of credit and amount of credit............................................ 13

4............ Meaning of credit contract................................................................ 14

5............ Provision of credit to which this Code applies.................................. 14

6............ Provision of credit to which this Code does not apply...................... 15

7............ Mortgages to which this Code applies.............................................. 19

8............ Guarantees to which this Code applies.............................................. 19

9............ Goods leases with option to purchase to be regarded as sale by instalments            20

10.......... Deciding application of Code to particular contracts for the sale of land by instalments           21

11.......... Deciding application of Code to particular contracts for the sale of goods by instalments        23

12.......... Deciding application of Code to particular contracts for the sale of goods by instalments under related contracts   24

13.......... Presumptions relating to application of Code.................................... 24

13A....... Reverse mortgages............................................................................ 26

Part 2—Credit contracts                                                                                                  27

Division 1—Negotiating and making credit contracts                              27

14.......... Credit contract to be in form of written contract document................ 27

15.......... Other forms of contract..................................................................... 27

16.......... Precontractual disclosure................................................................... 28

17.......... Matters that must be in contract document........................................ 29

18.......... Form and expression of contract document....................................... 35

18A....... Provisions that must not be included in credit contract for reverse mortgage           35

18B....... Disclosure if credit contract for reverse mortgage does not protect tenancy of person other than debtor  36

18C....... Independent legal advice before entry into credit contract for reverse mortgage       37

19.......... Alteration of contract document........................................................ 37

20.......... Copy of contract for debtor............................................................... 38

21.......... When debtor may terminate contract................................................. 38

22.......... Offence for noncompliance............................................................... 38

Division 2—Debtor’s monetary obligations                                                   40

23.......... Prohibited monetary obligations—general........................................ 40

23A....... Prohibited monetary obligations—small amount credit contracts...... 40

24.......... Offences related to prohibited monetary obligations—credit providers 41

24A....... Offences related to prohibited monetary obligations—credit assistance providers   42

25.......... Loan to be in money or equivalent.................................................... 42

26.......... Early payments and crediting of payments........................................ 43

26A....... Regulations about residential investment property............................ 44

Division 3—Interest charges                                                                                  45

27.......... Definitions relating to interest........................................................... 45

27A....... Application of this Division.............................................................. 45

28.......... Limit on interest charges................................................................... 45

29.......... Early debit or payment of interest charges prohibited........................ 46

30.......... Default interest.................................................................................. 47

30A....... Regulations about residential investment property............................ 47

30B....... Regulations about credit card contracts............................................. 47

Division 4—Fees and charges                                                                                49

31.......... Prohibited credit fees or charges....................................................... 49

31A....... Restrictions on fees and charges for small amount credit contracts... 49

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............................................................................... 50

32.......... Fees or charges in relation to third parties......................................... 51

Division 4A—Annual cost rate of certain credit contracts                    52

32A....... Prohibitions relating to credit contracts if the annual cost rate exceeds 48%             52

32AA.... Prohibition relating to the annual cost rate of credit contracts—later increases of the annual percentage rate etc.     53

32B....... Calculation of annual cost rate........................................................... 53

Division 5—Credit provider’s obligation to account                                 58

33.......... Statements of account........................................................................ 58

34.......... Information to be contained in statements of account........................ 59

35.......... Opening balance must not exceed closing balance of previous statement 62

36.......... Statement of amount owing and other matters................................... 62

37.......... Court may order statement to be provided......................................... 63

38.......... Disputed accounts............................................................................. 64

39.......... Dating and adjustment of debits and credits in accounts................... 65

Division 5A—Additional rules relating to small amount credit contracts            67

39A....... Limit on the application of amount of credit provided under a small amount credit contract     67

39B....... Limit on amount that may be recovered if there is default under a small amount credit contract               68

39C....... Credit provider must do prescribed things if a default in payment by direct debit occurs         68

Division 6—Certain transactions not to be treated as new contracts 69

40.......... Changes etc. under contracts............................................................. 69

Part 3—Related mortgages and guarantees                                                        70

Division 1—Mortgages                                                                                              70

41.......... Application of Division..................................................................... 70

42.......... Form of mortgage............................................................................. 70

43.......... Copy of mortgage for mortgagor...................................................... 70

44.......... Mortgages over all property void...................................................... 71

45.......... Restriction on mortgage of future property....................................... 71

46.......... Mortgages and continuing credit contracts........................................ 71

47.......... All accounts mortgages..................................................................... 72

48.......... Third party mortgages prohibited...................................................... 72

49.......... Maximum amount which may be secured......................................... 73

50.......... Prohibited securities.......................................................................... 73

51.......... Assignment or disposal of mortgaged property by mortgagor.......... 75

52.......... Conditions on consent to assignment or disposal of property subject to mortgage   75

53.......... Offence for noncompliance............................................................... 76

Division 2—Guarantees                                                                                            77

54.......... Application of Division..................................................................... 77

55.......... Form of guarantee............................................................................. 77

56.......... Disclosure......................................................................................... 77

57.......... Copies of documents for guarantor................................................... 77

58.......... Guarantor may withdraw before credit is provided........................... 78

59.......... Extension of guarantee...................................................................... 78

60.......... Limitation of guarantor’s liability...................................................... 79

61.......... Increase in guarantor’s liabilities....................................................... 80

62.......... Offence for noncompliance............................................................... 81

Part 4—Changes to obligations under credit contracts, mortgages and guarantees        82

Division 1—Unilateral changes by credit provider                                    82

63.......... Application of Division..................................................................... 82

64.......... Interest rate changes.......................................................................... 82

65.......... Repayment changes........................................................................... 84

66.......... Credit fees and charges changes........................................................ 85

67.......... Changes to credit limits etc. in continuing credit contracts................ 86

67A....... Changes to tenancy protection in credit contracts for reverse mortgages  87

68.......... Other unilateral changes by credit provider....................................... 88

69.......... Particulars of matters as changed only required to be given under this Division in certain cases             88

70.......... Prohibited increases in liabilities....................................................... 89

Division 2—Changes by agreement of parties                                              90

71.......... Changes by agreement...................................................................... 90

Division 3—Changes on grounds of hardship and unjust transactions  91

72.......... Changes on grounds of hardship...................................................... 91

73.......... Notice of change............................................................................... 93

74.......... Changes by court.............................................................................. 93

75.......... Credit provider may apply for variation of change............................ 94

76.......... Court may reopen unjust transactions............................................... 94

77.......... Orders on reopening of transactions................................................. 97

78.......... Court may review unconscionable interest and other charges........... 98

79.......... Applications by ASIC....................................................................... 99

80.......... Time limit.......................................................................................... 99

81.......... Joinder of parties............................................................................. 100

Part 5—Ending and enforcing credit contracts, mortgages and guarantees         101

Division 1—Ending of credit contract by debtor etc.                              101

Subdivision A—Paying out contract etc.                                                          101

82.......... Debtor’s or guarantor’s right to pay out contract............................ 101

83.......... Statement of pay out figure............................................................. 101

84.......... Court may determine pay out figure if credit provider does not provide a pay out figure         102

85.......... Surrender of mortgaged goods and goods subject to sale by instalments 102

86.......... Compensation to debtor or mortgagor............................................. 105

Subdivision B—Ending of reverse mortgage by credit provider receiving value of reverse mortgaged property                                                                                                       106

86A....... Application of this Subdivision....................................................... 106

86B....... Discharge of debtor’s obligations under credit contract and discharge of mortgage 107

86C....... Credit provider must pay debtor excess of receipt over adjusted market value for reverse mortgaged property       107

86D....... Credit provider must not demand or accept further payments......... 107

86E........ Cases in which sections 86B, 86C and 86D do not apply............... 107

86F........ Relationship between this Subdivision and other provisions.......... 108

Subdivision C—Notice of first direct debit default                                        108

87.......... One‑off notice to be given the first time a direct debit default occurs 108

Division 2—Enforcement of credit contracts, mortgages and guarantees          109

88.......... Requirements to be met before credit provider can enforce credit contract or mortgage against defaulting debtor or mortgagor........................................................................................ 109

89.......... Defaults may be remedied............................................................... 113

89A....... Effect of hardship notices on enforcement...................................... 113

90.......... Requirements to be met before credit provider can enforce guarantee against guarantor          115

91.......... Requirements to be met before credit provider can repossess mortgaged goods      115

93.......... Requirements to be met before credit provider can enforce an acceleration clause    116

93A....... Extra requirements for enforcing reverse mortgage if debtor’s liability exceeded value of reverse mortgaged property........................................................................................................ 117

Division 3—Postponement of enforcement proceedings                        119

94.......... Postponement of exercise of rights................................................. 119

95.......... Effect of negotiated postponement.................................................. 120

96.......... Postponement by court.................................................................... 121

97.......... Credit provider may apply for variation of postponement order...... 121

Division 4—Enforcement procedures for goods mortgaged               123

98.......... Information as to location of mortgaged goods............................... 123

99.......... Entry to residential property to take possession of goods............... 123

100........ Court may order entry..................................................................... 124

101........ Order for possession....................................................................... 124

102........ Procedures to be followed by credit provider after taking possession of goods       125

103........ Mortgagor may nominate purchaser of goods taken by credit provider 126

104........ Sale of goods by credit provider..................................................... 126

105........ Matters for which account can be debited after mortgagee sale of goods 127

106........ Compensation to mortgagor............................................................ 128

Division 5—Enforcement expenses                                                                   129

107........ Recovery of enforcement expenses................................................. 129

Division 6—Mortgagor’s remedies                                                                   130

108........ Mortgagor may apply to regain possession of mortgaged goods.... 130

109........ Order for possession for mortgagor................................................ 130

110........ Ancillary or consequential orders.................................................... 131

Part 6—Penalties for defaults of credit providers                                         132

Division 1—Penalties for breach of key disclosure and other requirements      132

111........ Key requirements............................................................................ 132

112........ Application for order relating to key requirements.......................... 133

113........ Penalty may be imposed for contravention of key requirement....... 133

114........ Penalty if application made by debtor or guarantor......................... 135

115........ Payment of penalty to debtor or guarantor...................................... 136

116........ Penalty if application made by a credit provider or ASIC............... 137

117........ Payment of penalty.......................................................................... 137

118........ Compensation for debtor or guarantor............................................ 137

119........ General provisions relating to applications by credit providers or ASIC  138

120........ ASIC may represent interests of debtors......................................... 138

121........ Directions pending court’s decision................................................ 138

122........ Offences.......................................................................................... 139

123........ Time limit for application for orders under this Division................ 139

Division 2—Other penalties                                                                                  140

124........ Civil effect of contraventions.......................................................... 140

Part 7—Related sale contracts                                                                                   141

Division 1—Interpretation and application                                                  141

125........ Meaning of sale contract................................................................ 141

126........ Sale contracts to which this Part applies.......................................... 141

127........ Linked credit providers and tied credit contracts............................. 141

Division 2—Liability of credit providers for suppliers’ misrepresentations       143

128........ Credit provider liable with respect to supplier’s misrepresentations etc. about tied credit contract           143

Division 3—Liability of credit providers in relation to goods            144

129........ Right to damages under sale contract against both supplier and linked credit provider             144

130........ Limits on debtor’s right of action against linked credit provider..... 146

131........ Liability of supplier to linked credit provider.................................. 148

132........ Interest may be awarded.................................................................. 148

133........ Subrogation of credit provider........................................................ 149

Division 4—Termination of related transactions                                      150

134........ Termination of sale contract which is conditional on obtaining credit 150

135........ Termination of (or recredit under) tied credit contract if sale contract terminated      151

136........ Termination of linked maintenance services contract if credit contract terminated    152

137........ Termination of contract under this Part to be in writing.................. 153

138........ Powers of court with respect to termination of contract under this Part 153

139........ Part 5 not to apply to termination of contract under this Part........... 153

Division 5—Other provisions                                                                               154

140........ Requirement as to source of credit for goods or services................ 154

141........ Prohibition on payment for goods or services by postdated bills of exchange or notes which exceed cash price of goods or services....................................................................................... 154

Part 8—Related insurance contracts                                                                      155

142........ Interpretation and application.......................................................... 155

143........ Requirement to take out insurance or to insure with particular insurer or on particular terms   155

144........ Financing of insurance premiums over mortgaged property........... 156

145........ Commission for consumer credit insurance.................................... 157

146........ Supply of copy of credit‑related insurance contract by insurer........ 158

147........ Rejection of debtor’s proposal for insurance................................... 159

148........ Termination of consumer credit insurance contract if credit contract terminated       159

149........ Termination of insurance contract over mortgaged property if credit contract terminated         160

Part 9—Advertising and related conduct                                                            162

150........ Advertising..................................................................................... 162

151........ Persons liable for advertisements.................................................... 163

152........ Defence........................................................................................... 163

153........ Interest rates which may be disclosed............................................. 163

154........ False or misleading representations................................................. 164

155........ Harassment..................................................................................... 165

156........ Canvassing of credit at home.......................................................... 165

Part 10—Comparison rates                                                                                         167

Division 1—Preliminary                                                                                          167

157........ Object of Part.................................................................................. 167

158........ Part not to apply to continuing credit contracts................................ 167

159........ Definitions...................................................................................... 167

Division 2—Comparison rate in credit advertising                                  169

160........ Comparison rate mandatory in advertisements containing annual percentage rate    169

161........ The relevant comparison rate........................................................... 169

162........ Information about comparison rate.................................................. 169

163........ Warning about comparison rate....................................................... 170

164........ Other requirements for comparison rate.......................................... 170

Division 3—Comparison rate in other documents                                    172

165........ Comparison rates in documents other than credit advertising.......... 172

Division 4—Miscellaneous                                                                                     173

166........ Calculation of comparison rates...................................................... 173

167........ Compliance grace period following changes in interest or fees....... 173

168........ Regulations—exemptions and other matters................................... 173

Part 11—Consumer leases                                                                                            174

Division 1—Interpretation and application                                                  174

169........ Meaning of consumer lease............................................................ 174

170........ Consumer leases to which this Part applies..................................... 174

171........ Consumer leases to which this Part does not apply......................... 175

172........ Presumptions relating to application of this Part............................. 176

Division 2—Form of and information to be included in consumer leases             178

173........ Form of consumer lease.................................................................. 178

173A..... Other forms of consumer lease....................................................... 178

174........ Disclosures in consumer leases....................................................... 179

174A..... Alteration of consumer lease document........................................... 180

175........ Copy of lease etc. for lessee............................................................ 180

Division 4—Fees and charges                                                                              181

175A..... Prohibited consumer lease fees or charges...................................... 181

175B..... Fees or charges in relation to third parties....................................... 181

Division 5—Lessor’s obligation to account                                                  183

Subdivision A—Ongoing statements of account                                             183

175C..... Statements of account...................................................................... 183

175D..... Information to be contained in statements of account...................... 183

175E...... Statement of amount owing and other matters................................. 183

175F...... Court may order statement of account to be provided..................... 184

175G..... Disputed accounts........................................................................... 184

Subdivision B—End of lease statements                                                           186

175H..... End of lease statement..................................................................... 186

Division 6—Certain transactions not to be treated as new consumer leases      187

175J...... Changes etc. under consumer leases............................................... 187

Division 7—Changes to obligations under consumer leases                188

Subdivision A—Changes by agreement of parties                                         188

177A..... Changes by agreement.................................................................... 188

Subdivision B—Changes on grounds of hardship and unjust transactions 189

177B..... Changes on grounds of hardship.................................................... 189

177C..... Notice of change............................................................................. 191

177D..... Changes by court............................................................................ 191

177E...... Lessor may apply for variation of change....................................... 192

177F...... Court may reopen unjust transactions............................................. 192

177G..... Orders on reopening of transactions............................................... 194

177H..... Applications by ASIC..................................................................... 195

177J...... Time limit........................................................................................ 195

177K..... Joinder of parties............................................................................. 195

Division 8—Repossession, termination and enforcement of consumer leases    197

Subdivision A—Repossession of goods under consumer lease                   197

178........ Notice of repossession.................................................................... 197

Subdivision B—Termination of consumer lease by lessee                          197

178A..... Termination before goods have been provided................................ 197

179........ Termination after goods have been provided................................... 198

179A..... Statement of amount payable on termination................................... 198

179B..... Court may determine amount payable on termination if lessor does not 199

179C..... One‑off notice to be given the first time a direct debit default occurs 199

Subdivision C—Enforcement of consumer leases                                         200

179D..... Requirements to be met before lessor can enforce consumer lease against defaulting lessee    200

179E...... Defaults may be remedied............................................................... 202

179F...... Effect of hardship notices on enforcement...................................... 203

179G..... Requirements to be met before lessor can enforce an acceleration clause 204

Subdivision D—Postponement of enforcement proceedings                       205

179H..... Postponement of exercise of rights................................................. 205

179J...... Effect of negotiated postponement.................................................. 206

179K..... Postponement by court.................................................................... 207

179L...... Lessor may apply for variation of postponement order................... 207

Subdivision E—Enforcement procedures for goods hired under a consumer lease     208

179M.... Information as to location of goods hired under a consumer lease.. 208

179N..... Entry to residential property to take possession of goods............... 208

179P...... Court may order entry..................................................................... 209

179Q..... Order for possession....................................................................... 209

Subdivision F—Enforcement expenses                                                             209

179R..... Recovery of enforcement expenses................................................. 209

Division 9—Linked lessors and tied consumer leases                              211

Subdivision A—Interpretation and application                                             211

179S...... Linked lessors and tied consumer leases......................................... 211

Subdivision B—Liability of lessors for suppliers’ misrepresentations    212

179T...... Lessor liable for supplier’s misrepresentations about hired goods.. 212

Division 10—Conduct relating to consumer leases                                  213

179U..... False or misleading representations................................................. 213

179V..... Harassment..................................................................................... 213

Division 11—Other Code provisions applicable to consumer leases 215

179W.... Application of certain Code provisions to consumer leases............ 215

Part 12—Miscellaneous                                                                                                  216

Division 1—Tolerances and assumptions                                                       216

180........ Tolerances and assumptions relating to information........................ 216

181........ Tolerances relating to contracts and other documents...................... 217

182........ Regulations..................................................................................... 218

Division 2—Documentary provisions                                                              219

183........ Form of notices............................................................................... 219

184........ Legibility and language................................................................... 219

185........ Copies of contracts and other documents........................................ 220

185A..... Records of nominations of persons to occupy reverse mortgaged properties           221

186........ Signing of documents..................................................................... 221

187........ Electronic transactions and documents............................................ 221

Division 3—General provisions                                                                          223

188........ Assignment by credit provider........................................................ 223

189........ Assignment by debtor, mortgagor or guarantor.............................. 223

190........ Appropriation of payments............................................................. 223

191........ Contracting out................................................................................ 224

192........ Indemnities...................................................................................... 225

193........ Effect of noncompliance.................................................................. 225

194........ Giving notice or other document..................................................... 225

195........ Manner of giving notice or other document.................................... 227

196........ Date of notice or other document.................................................... 228

197........ Extensions of time........................................................................... 229

198........ Orders of court................................................................................ 229

199........ Conduct of agents and related matters............................................. 229

Division 4—Provisions relating to offences                                                  231

200........ Offences by officers, agents or employees...................................... 231

201........ Offences by corporations................................................................ 231

202........ Limitations...................................................................................... 231

203........ Application of section 4K of the Crimes Act 1914.......................... 232

Division 5—Exemptions from this Code                                                         233

203A..... Exemptions by ASIC...................................................................... 233

203B..... Exemptions by the regulations........................................................ 233

Part 13—Principal definitions                                                                                    234

204........ Principal definitions........................................................................ 234

Part 14—Miscellaneous provisions relating to interpretation                 249

Division 1—Preliminary                                                                                          249

205........ Displacement of Part by contrary intention..................................... 249

Division 2—General                                                                                                  250

207........ References to particular Acts and to enactments.............................. 250

208........ Compliance with forms................................................................... 250

Division 3—Terms and references                                                                    251

209........ Provisions relating to defined terms and gender and number.......... 251

210........ Meaning of may and must etc......................................................... 251

211........ Effect of express references to bodies corporate and individuals.... 251

212........ Reference to certain provisions of Code.......................................... 252

213........ Reference to provisions of this Code or an Act is inclusive............ 252

Division 4—Functions and powers                                                                    254

214........ Power to make instrument or decision includes power to amend or repeal               254

215........ Matters for which statutory instruments may make provision......... 254

216........ Presumption of validity and power to make.................................... 255

217........ Exercise of powers between enactment and commencement........... 256

Division 5—Distance, time and age                                                                   259

218........ Matters relating to distance, time and age........................................ 259

Endnotes                                                                                                                                  260

Endnote 1—About the endnotes                                                                          260

Endnote 2—Abbreviation key                                                                              262

Endnote 3—Legislation history                                                                           263

Endnote 4—Amendment history                                                                         270


Chapter 7Miscellaneous

Part 7‑1Miscellaneous

Division 1Introduction

323  Guide to this Part

This Part deals with miscellaneous matters.

Division 2 deals with when a person will be liable for the conduct of others (usually the person’s employee or agent).

Division 3 provides for AAT review of ASIC’s decisions.

Division 4 provides for regulations to be made.

Division 5 has other miscellaneous provisions (such as Ministerial delegations).

Division 2Liability of persons for conduct of their agents etc.

324  Liability for bodies corporate for conduct of their agents, employees etc.

Liability of bodies corporate

             (1)  Any conduct engaged in on behalf of a body corporate:

                     (a)  by a director, employee or agent (an official) of the body within the scope of the person’s actual or apparent authority; or

                     (b)  by any other person at the direction or with the consent or agreement (whether express or implied) of an official of the body, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the official;

is taken, for the purposes of this Act (other than the National Credit Code), to have been engaged in also by the body.

             (2)  Any conduct engaged in by a person (for example, the giving of money) in relation to:

                     (a)  an official of the body acting within the scope of his or her actual or apparent authority; or

                     (b)  any other person acting at the direction or with the consent or agreement (whether express or implied) of an official of the body, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the official;

is taken, for the purposes of this Act (other than the National Credit Code), to have been engaged in also in relation to the body.

State of mind of a body corporate

             (3)  If, for the purposes of this Act (other than the National Credit Code), it is necessary to establish the state of mind of the body corporate in relation to particular conduct, it is enough to show:

                     (a)  that the conduct was engaged in by a person referred to in paragraph (1)(a) or (b); and

                     (b)  that the person had that state of mind.

Disapplication of Part 2.5 of the Criminal Code

             (4)  Part 2.5 of the Criminal Code does not apply to an offence against this Act.

Note:          Part 2.5 of the Criminal Code deals with corporate criminal responsibility, but this section instead deals with that for the purposes of this Act (other than the National Credit Code), and section 199 of the National Credit Code deals with that for the purpose of that Code.

325  Liability of persons (other than bodies corporate) for the conduct of their agents, employees etc.

Liability of principals

             (1)  Any conduct engaged in on behalf of a person (the principal) who is not a body corporate:

                     (a)  by any of the following persons (an official) within the scope of the person’s actual or apparent authority:

                              (i)  an employee or agent of the principal;

                             (ii)  if the principal is a partnership—a partner;

                            (iii)  if the principal is the trustees of a trust—a trustee; or

                     (b)  by any other person at the direction or with the consent or agreement (whether express or implied) of an official of the principal, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the official;

is taken, for the purposes of this Act (other than the National Credit Code), to have been engaged in also by the principal.

             (2)  Any conduct engaged in by a person (for example, the giving of money) in relation to:

                     (a)  an official of the principal acting within the scope of his or her actual or apparent authority; or

                     (b)  any other person acting at the direction or with the consent or agreement (whether express or implied) of an official of the principal, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the official;

is taken, for the purposes of this Act (other than the National Credit Code), to have been engaged in also in relation to the principal.

State of mind of the principal

             (3)  If, for the purposes of this Act (other than the National Credit Code), it is necessary to establish the state of mind of the principal in relation to particular conduct, it is enough to show:

                     (a)  that the conduct was engaged in by a person referred to in paragraph (1)(a) or (b); and

                     (b)  that the person had that state of mind.

326  Regulations for the purposes of this Division

                   The regulations may modify this Division for the purposes prescribed in the regulations.

Division 3Review of ASIC’s decisions

327  Review by Administrative Appeals Tribunal of decisions by ASIC under this Act

             (1)  An application may be made to the Administrative Appeals Tribunal for review of a decision (within the meaning of the Administrative Appeals Tribunal Act 1975) made by ASIC under this Act other than:

                     (a)  a decision of ASIC under subsection 109(3) (which deals with certain exemptions from, and modifications of, Chapter 2); or

                     (b)  a decision of ASIC under subsection 163(3) (which deals with certain exemptions from, and modifications of, Chapter 3); or

                     (c)  a decision of ASIC under section 238A or 238B (which deals with approved codes of conduct); or

                     (d)  a decision of ASIC under Chapter 6 (which deals with compliance and enforcement), except for a decision of ASIC:

                              (i)  to make an order under subsection 300(1) (which deals with orders relating to credit contracts, mortgages, guarantees or consumer leases); or

                             (ii)  to make, or refuse to make, an order under subsection 301(1) (which deals with orders varying or revoking orders made under section 300); or

                            (iii)  to make an order under subsection 301D(1) (which deals with product intervention orders); or

                            (iv)  to amend a product intervention order under section 301J unless, under subsection 301J(6), the amendment must be by legislative instrument; or

                             (v)  to revoke a product intervention order under section 301K unless, under subsection 301K(4), the revocation must be by legislative instrument; or

                     (e)  a decision of ASIC to make a determination under subsection 328(3) (which deals with determinations in relation to notice of reviewable decisions etc.); or

                      (f)  a decision of ASIC under subsection 6(17) of the National Credit Code (which deals with the exclusion of provisions of credit from the application of the National Credit Code); or

                     (g)  a decision of ASIC under subsection 171(6) of the National Credit Code (which deals with the exclusion of consumer leases from the application of the National Credit Code); or

                     (h)  a decision of ASIC under subsection 203A(3) of the National Credit Code (which deals with certain exemptions from the National Credit Code); or

                      (i)  a decision of ASIC under the regulations, unless the regulations specify that an application may be made to the Administrative Appeals Tribunal for review of the decision.

          (1A)  An application may also be made to the Administrative Appeals Tribunal for review of a decision (within the meaning of the Administrative Appeals Tribunal Act 1975) made by the Registrar under the data standards or disclosure framework.

             (2)  Section 27A of the Administrative Appeals Tribunal Act 1975 does not apply to the decision.

328  Notice of reviewable decision and review rights

             (1)  This section applies if ASIC makes a decision to which section 327 applies.

             (2)  Subject to subsection (3), ASIC must take such steps as are reasonable in the circumstances to give to each person whose interests are affected by the decision notice, in writing or otherwise:

                     (a)  of the making of the decision; and

                     (b)  of the person’s right to have the decision reviewed by the Administrative Appeals Tribunal.

             (3)  Subsection (2) does not require ASIC to give notice to a person affected by the decision or to the persons in a class of persons affected by the decision, if ASIC determines that giving notice to the person or persons is not warranted, having regard to:

                     (a)  the cost of giving notice to the person or persons; and

                     (b)  the way in which the interests of the person or persons are affected by the decision.

             (4)  A determination made under subsection (3) is not a legislative instrument.

             (5)  A failure to comply with this section does not affect the validity of the decision.

Division 4Regulations

329  Regulations

                   The Governor‑General may make regulations prescribing matters:

                     (a)  required or permitted by this Act to be prescribed; or

                     (b)  necessary or convenient to be prescribed for carrying out or giving effect to this Act.

330  Regulations—where proceedings may be brought

                   The regulations may prescribe the location for where court proceedings in relation to the following must be brought:

                     (a)  matters arising under this Act;

                     (b)  credit contracts;

                     (c)  mortgages;

                     (d)  guarantees;

                     (e)  consumer leases.

Division 5Other miscellaneous provisions

332  Civil penalty provisions contravened or offences committed partly in and partly out of this jurisdiction

                   If:

                     (a)  a person does or omits to do an act outside this jurisdiction; and

                     (b)  if that person had done or omitted to do that act in this jurisdiction, the person would, by reason of also having done or omitted to do an act in this jurisdiction, have contravened a civil penalty provision or committed an offence against this Act;

the person contravenes that provision or commits that offence.

333  Contravention of Act does not generally affect validity of transactions etc.

             (1)  A failure to comply with any requirement of this Act does not affect the validity or enforceability of any transaction, contract, instrument or other arrangement.

             (2)  Subsection (1) has effect subject to any express provision to the contrary in:

                     (a)  this Act (including regulations made under this Act); or

                     (b)  regulations referred to in subsection (3).

             (3)  Regulations may provide that a failure to comply with a specified requirement referred to in subsection (1) has a specified effect on the validity or enforceability of a transaction, contract, instrument or arrangement.

334  Contracting out etc.

             (1)  A provision of a contract or other instrument by which a person seeks to avoid or modify the effect of this Act (other than the National Credit Code) is void.

Note:          A similar rule applies for the purposes of the National Credit Code (see section 191 of that Code).

             (2)  A provision of a contract or other instrument by which a person seeks to have:

                     (a)  a debtor indemnify a credit provider; or

                     (b)  a mortgagor indemnify a mortgagee; or

                     (c)  a guarantor indemnify a beneficiary of a guarantee; or

                     (d)  a lessee indemnify a lessor;

for any loss or liability arising under this Act (other than the National Credit Code) is void.

Note:          A similar rule applies for the purposes of the National Credit Code (see section 191 of that Code).

             (3)  A person commits an offence if:

                     (a)  the person is a credit provider, mortgagee, beneficiary of a guarantee or lessor; and

                     (b)  the person is a party to a contract or other instrument; and

                     (c)  the contract or other instrument is void under subsection (1) or (2).

Criminal penalty:    100 penalty units.

             (4)  Subsection (3) is an offence of strict liability:

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (5)  Subsection (2) does not affect the operation of subsection 60(2) of the National Credit Code.

335  Indemnities

             (1)  An indemnity for any liability under this Act (other than the National Credit Code) is not void, and cannot be declared void, on the grounds of public policy, despite any rule of law to the contrary.

Note:          A similar rule applies for the purposes of the National Credit Code (see section 192 of that Code).

             (2)  The liabilities to which this section applies include the following:

                     (a)  a liability for any criminal or civil penalty incurred by any person under this Act (other than the National Credit Code);

                     (b)  a payment in settlement of a liability or alleged liability under this Act (other than the National Credit Code);

                     (c)  a liability under another indemnity for any liability under this Act (other than the National Credit Code).

             (3)  This section is subject to subsection 334(2).

             (4)  This section does not derogate from any other rights and remedies that exist apart from this section.

335A  Review relating to small amount credit contracts

             (1)  The Minister must cause an independent review of the following matters to be undertaken as soon as practicable after 1 July 2015:

                     (a)  the operation of the following provisions:

                              (i)  subsections 117(1A), 118(3A), 123(3A), 130(1A), 131(3A) and 133(3A) of this Act;

                             (ii)  Division 7 of Part 3‑1 of this Act;

                            (iii)  Part 3‑2C of this Act;

                            (iv)  sections 23A, 31A, 31B, 39A and 39B of the National Credit Code;

                     (b)  whether a national database of small amount credit contracts should be established;

                     (c)  whether any additional provisions relating to small amount credit contracts should be included in this Act and/or the National Credit Code.

             (2)  The review must be undertaken by 3 persons who, in the Minister’s opinion, possess appropriate qualifications to undertake the review.

             (3)  The persons who undertake the review must give the Minister a written report of the review.

             (4)  The Minister must cause a copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the day on which the report is given to the Minister.

             (5)  The report is not a legislative instrument.

336  Acquisition of property

             (1)  A provision of this Act does not apply, and is taken never to have applied, to the extent that the operation of the provision would result in an acquisition of property from a person otherwise than on just terms.

             (2)  In subsection (1), acquisition of property and just terms have the same meanings as in paragraph 51(xxxi) of the Constitution.

337  Minister may delegate prescribed functions and powers under this Act

             (1)  The Minister may, by signed instrument, delegate to:

                     (a)  an ASIC member; or

                     (b)  an ASIC staff member;

such of the Minister’s functions and powers under this Act as are prescribed.

          (1A)  However, the Minister must not delegate the Minister’s powers under section 301H, 301J, 301K or 301M (which deal with product intervention orders) to a person other than ASIC.

             (2)  In performing functions or exercising powers under a delegation, the delegate must comply with any directions of the Minister.


Schedule 1National Credit Code

Note:       See section 3 of the National Credit Act.

Part 1Preliminary

  

1  Short title

                   This Code may be cited as the National Credit Code.

2  Interpretation generally

             (1)  Part 13 contains the principal definitions of words and expressions used in this Code.

             (2)  Part 14 contains other miscellaneous provisions relating to the interpretation of this Code.

3  Meaning of credit and amount of credit

             (1)  For the purposes of this Code, credit is provided if under a contract:

                     (a)  payment of a debt owed by one person (the debtor) to another (the credit provider) is deferred; or

                     (b)  one person (the debtor) incurs a deferred debt to another (the credit provider).

             (2)  For the purposes of this Code, the amount of credit is the amount of the debt actually deferred. The amount of credit does not include:

                     (a)  any interest charge under the contract; or

                     (b)  any fee or charge:

                              (i)  that is to be or may be debited after credit is first provided under the contract; and

                             (ii)  that is not payable in connection with the making of the contract or the making of a mortgage or guarantee related to the contract.

4  Meaning of credit contract

                   For the purposes of this Code, a credit contract is a contract under which credit is or may be provided, being the provision of credit to which this Code applies.

5  Provision of credit to which this Code applies

             (1)  This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of precontractual obligations) is proposed to be entered into:

                     (a)  the debtor is a natural person or a strata corporation; and

                     (b)  the credit is provided or intended to be provided wholly or predominantly:

                              (i)  for personal, domestic or household purposes; or

                             (ii)  to purchase, renovate or improve residential property for investment purposes; or

                            (iii)  to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes; and

                     (c)  a charge is or may be made for providing the credit; and

                     (d)  the credit provider provides the credit in the course of a business of providing credit carried on in this jurisdiction or as part of or incidentally to any other business of the credit provider carried on in this jurisdiction.

             (2)  If this Code applies to the provision of credit (and to the credit contract and related matters):

                     (a)  this Code applies in relation to all transactions or acts under the contract whether or not they take place in this jurisdiction; and

                     (b)  this Code continues to apply even though the credit provider ceases to carry on a business in this jurisdiction.

             (3)  For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose.

             (4)  For the purposes of this section, the predominant purpose for which credit is provided is:

                     (a)  the purpose for which more than half of the credit is intended to be used; or

                     (b)  if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.

6  Provision of credit to which this Code does not apply

Short term credit

             (1)  This Code does not apply to the provision of credit if, under the contract:

                     (a)  the provision of credit is limited to a total period that does not exceed 62 days; and

                     (b)  the maximum amount of credit fees and charges that may be imposed or provided for does not exceed 5% of the amount of credit; and

                     (c)  the maximum amount of interest charges that may be imposed or provided for does not exceed an amount (calculated as if the Code applied to the contract) equal to the amount payable if the annual percentage rate were 24% per annum.

             (2)  For the purposes of paragraph (1)(b), credit fees and charges imposed or provided for under the contract are taken to include the following, whether or not payable under the contract:

                     (a)  a fee or charge payable by the debtor to any person for an introduction to the credit provider;

                     (b)  a fee or charge payable by the debtor to any person for any service if the person has been introduced to the debtor by the credit provider;

                     (c)  a fee or charge payable by the debtor to the credit provider for any service related to the provision of credit, other than a service mentioned in paragraph (b).

             (3)  For the purposes of paragraphs (2)(a) and (b), it does not matter whether or not there is an association between the person and the credit provider.

Credit without express prior agreement

             (4)  This Code does not apply to the provision of credit if, before the credit was provided, there was no express agreement between the credit provider and the debtor for the provision of credit. For example, when a cheque account becomes overdrawn but there is no expressly agreed overdraft facility or when a savings account falls into debit.

Credit for which only account charge payable

             (5)  This Code does not apply to the provision of credit under a continuing credit contract if the only charge that is or may be made for providing the credit is a periodic or other fixed charge that does not vary according to the amount of credit provided. However, this Code applies if the charge is of a nature prescribed by the regulations for the purposes of this subsection or if the charge exceeds the maximum charge (if any) so prescribed.

Joint credit and debit facilities

             (6)  This Code does not apply to any part of a credit contract under which both credit and debit facilities are available to the extent that the contract or any amount payable or other matter arising out of it relates only to the debit facility.

Bill facilities

             (7)  This Code applies to the provision of credit arising out of a bill facility, that is, a facility under which the credit provider provides credit by accepting, drawing, discounting or endorsing a bill of exchange or promissory note. However, it does not apply if:

                     (a)  the credit is provided by an authorised deposit‑taking institution (within the meaning of subsection 5(1) of the Banking Act 1959); or

                     (b)  the regulations provide that the Code does not apply to the provision of all or any credit arising out of such a facility.

Insurance premiums by instalments

             (8)  This Code does not apply to the provision of credit by an insurer for the purpose of the payment to the insurer of an insurance premium by instalments, even though the instalments exceed the total of the premium that would be payable if the premium were paid in a lump sum, if on cancellation the insured would have no liability to make further payments under the contract.

Pawnbrokers

             (9)  This Code does not apply to the provision of credit on the security of pawned or pledged goods by a pawnbroker in the ordinary course of a pawnbroker’s business (being a business which is being lawfully conducted by the pawnbroker) as long as it is the case that, if the debtor is in default, the pawnbroker’s only recourse is against the goods provided as security for the provision of the credit. However, sections 76 to 81 (Court may reopen unjust transactions) apply to any such provision of credit.

Trustees of estates

           (10)  This Code does not apply to the provision of credit by the trustee of the estate of a deceased person by way of an advance to a beneficiary or prospective beneficiary of the estate. However, sections 76 to 81 (Court may reopen unjust transactions) apply to any such provision of credit.

Employee loans

           (11)  This Code (other than this Part, Part 4, Division 3 of Part 5, Divisions 4 and 5 of Part 7 and Parts 12, 13 and 14) does not apply to the provision of credit by an employer, or a related body corporate within the meaning of the Corporations Act 2001 of an employer, to an employee or former employee (whether or not it is provided to the employee or former employee with another person). However, for a credit provider that provides credit to which this Code applies in the course of a business of providing credit to which this Code applies to employees or former employees and to others, this subsection applies only to the provision of credit on terms that are more favourable to the debtor than the terms on which the credit provider provides credit to persons who are not employees or former employees of the credit provider or a related body corporate.

Margin loans

           (12)  This Code does not apply to the provision of credit by way of a margin loan (within the meaning of subsection 761EA(1) of the Corporations Act 2001).

Regulations may exclude credit

           (13)  The regulations may exclude, from the application of this Code, the provision of credit of a class specified in the regulations. In particular (but without limiting the generality of the foregoing), the regulations may so exclude the provision of credit if the amount of the credit exceeds or may exceed a specified amount or if the credit is provided by a credit provider of a specified class.

ASIC may exclude credit

           (14)  ASIC may exclude, from the application of this Code, a provision of credit specified by ASIC.

           (15)  Without limiting subsection (14), ASIC may exclude a provision of credit if:

                     (a)  the amount of the credit exceeds, or may exceed, a specified amount; or

                     (b)  the credit is provided by a specified credit provider.

           (16)  An exemption under subsection (14) is not a legislative instrument.

           (17)  ASIC may, by legislative instrument, exclude from the application of this Code, the provision of credit of a class specified in the instrument.

           (18)  Without limiting subsection (17), ASIC may exclude a provision of credit if:

                     (a)  the amount of the credit exceeds, or may exceed, a specified amount; or

                     (b)  the credit is provided by a specified credit provider, or a class of credit providers.

Definitions

           (19)  In this section:

fee or charge does not include a government fee, charge or duty of any kind.

security, of pawned or pledged goods, means security by way of bailment of the goods under which the title to the goods does not pass, conditionally or unconditionally, to the bailee.

7  Mortgages to which this Code applies

             (1)  This Code applies to a mortgage if:

                     (a)  it secures obligations under a credit contract or a related guarantee; and

                     (b)  the mortgagor is a natural person or a strata corporation.

             (2)  If any such mortgage also secures other obligations, this Code applies to the mortgage to the extent only that it secures obligations under the credit contract or related guarantee.

             (3)  The regulations may exclude, from the application of all or any provisions of this Code, a mortgage of a class specified in the regulations.

8  Guarantees to which this Code applies

             (1)  This Code applies to a guarantee if:

                     (a)  it guarantees obligations under a credit contract; and

                     (b)  the guarantor is a natural person or a strata corporation.

             (2)  If any such guarantee also guarantees other obligations, this Code applies to the guarantee to the extent only that it guarantees obligations under the credit contract.

             (3)  The regulations may exclude, from the application of all or any provisions of this Code, a guarantee of a class specified in the regulations.

9  Goods leases with option to purchase to be regarded as sale by instalments

             (1)  For the purposes of this Code, a contract for the hire of goods under which the hirer has a right or obligation to purchase the goods, is to be regarded as a sale of the goods by instalments if the charge that is or may be made for hiring the goods, together with any other amount payable under the contract (including an amount to purchase the goods or to exercise an option to do so) exceeds the cash price of the goods.

Note:          A contract includes a series of contracts, or contracts and arrangements (see Part 13).

             (2)  A debt is to be regarded as having been incurred, and credit provided, in such circumstances.

             (3)  Accordingly, if because of subsection 5(1) the contract is a credit contract, this Code (including Part 6) applies as if the contract had always been a sale of goods by instalments, and for that purpose:

                     (a)  the amounts payable under the contract are the instalments; and

                     (b)  the credit provider is the person who is to receive those payments; and

                     (c)  the debtor is the person who is to make those payments; and

                     (d)  the property of the supplier in the goods passes under the contract to the person to whom the goods are hired on delivery of the goods or the making of the contract, whichever occurs last; and

                     (e)  the charge for providing the credit is the amount by which the charge that is or may be made for hiring the goods, together with any other amount payable under the contract (including an amount to purchase the goods or to exercise an option to do so), exceeds the cash price of the goods; and

                      (f)  a mortgage containing the terms and conditions set out in the regulations is taken to have been entered into in writing between the person to whom the goods are hired under the contract and the supplier as security for payment to the supplier of the amount payable to the supplier by the person to whom the goods are hired under the contract; and

                     (g)  any provision in the contract for hiring by virtue of which the supplier is empowered to take possession, or dispose, of the goods to which the contract relates is void.

             (4)  For the purposes of this section, the amount payable under the contract includes any agreed or residual value of the goods at the end of the hire period or on termination of the contract, but does not include the following amounts:

                     (a)  any amount payable in respect of services that are incidental to the hire of goods under the contract;

                     (b)  any amount that ceases to be payable on the termination of the contract following the exercise of a right of cancellation by the hirer at the earliest opportunity.

Note:          Part 11 (Consumer leases) applies to the contracts specified in that Part for the hire of goods under which the hirer does not have a right or obligation to purchase the goods.

10  Deciding application of Code to particular contracts for the sale of land by instalments

             (1)  This section applies to an executory contract for the sale of land if:

                     (a)  under the contract, the purchaser:

                              (i)  is entitled to enter into possession of the land before becoming entitled to receive a conveyance or transfer of the land; and

                             (ii)  is bound to make a payment or payments (other than a deposit or rent payment) to, or in accordance with the instructions of, the vendor without becoming entitled to receive a conveyance or transfer of the land in exchange for the payment or payments; and

                     (b)  the amount payable to purchase the land under the contract exceeds the cash price of the land.

Note:          Cash price is defined in Part 13 in terms of goods or services. Services is defined in Part 13 to include rights in relation to, and interests in, real property.

             (2)  For the purpose of deciding whether the contract is a credit contract and, if it is a credit contract, of applying this Code (including Part 6) to it:

                     (a)  a debt is to be regarded as having been incurred, and credit provided, in the circumstances mentioned in subsection (1); and

                     (b)  the debtor is the purchaser under the contract; and

                     (c)  the credit provider is the vendor under the contract; and

                     (d)  the charge for providing the credit is the amount by which the amount payable to purchase the land, together with any other amount payable under the contract other than outgoings for the land, exceeds the cash price of the land.

             (3)  This section does not affect the application of this Code to a contract that is, apart from this section, a credit contract.

             (4)  In this section:

deposit, in relation to a contract, means an amount:

                     (a)  not exceeding 10% of the amount payable to purchase the land under the contract; and

                     (b)  paid or payable in one or more amounts; and

                     (c)  liable to be forfeited and retained by the vendor in the event of a breach of contract by the purchaser.

outgoings includes rates, water charges and house and contents insurance.

rent payment, under a contract, means a payment:

                     (a)  made by the purchaser to the vendor in exchange for possession of the land before becoming entitled to receive a conveyance or transfer of the land; and

                     (b)  that is not deductible from the amount payable to purchase the land.

11  Deciding application of Code to particular contracts for the sale of goods by instalments

             (1)  This section applies to a contract for the sale of goods if the amount payable to purchase the goods under the contract:

                     (a)  is payable by instalments; and

                     (b)  exceeds the cash price of the goods.

             (2)  This section does not apply to a contract for the hire of goods even if the hirer has a right or obligation to purchase the goods.

             (3)  For the purpose of deciding whether the contract is a credit contract and, if it is a credit contract, of applying this Code (including Part 6) to it:

                     (a)  a debt is to be regarded as having been incurred, and credit provided, in the circumstances mentioned in subsection (1); and

                     (b)  the debtor is the person who is to make the payments; and

                     (c)  the credit provider is the person who is to receive the payments; and

                     (d)  the charge for providing the credit is the amount by which the amount payable to purchase the goods, together with any other amount payable under the contract, exceeds the cash price of the goods.

             (4)  This section does not affect the application of this Code to a contract that is, apart from this section, a credit contract.

12  Deciding application of Code to particular contracts for the sale of goods by instalments under related contracts

             (1)  For the purpose of this section, a contract is a related contract to a contract for the sale of goods (the goods contract) if:

                     (a)  the sale of goods is financed, wholly or partly, by the provision of credit under the contract; and

                     (b)  the credit provider under the contract is:

                              (i)  the supplier of goods under the goods contract; or

                             (ii)  a related body corporate within the meaning of the Corporations Act 2001 of the supplier of the goods under the goods contract; and

                     (c)  the amount payable under the contract is payable by instalments.

             (2)  For the purpose of deciding whether a related contract to a goods contract is a credit contract and, if it is a credit contract, of applying this Code (including Part 6) to it, the charge for providing the credit is the amount by which the amount payable to purchase the goods, together with any other amount payable under the related contract, exceeds the cash price of the goods.

             (3)  This section does not affect the application of this Code to a contract that is, apart from this section, a credit contract.

13  Presumptions relating to application of Code

             (1)  In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established.

             (2)  It is presumed for the purposes of this Code that credit is not provided or intended to be provided under a contract wholly or predominantly for any or all of the following purposes (a Code purpose):

                     (a)  for personal, domestic or household purposes;

                     (b)  to purchase, renovate or improve residential property for investment purposes;

                     (c)  to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes;

if the debtor declares, before entering the contract, that the credit is to be applied wholly or predominantly for a purpose that is not a Code purpose, unless the contrary is established.

             (3)  However, the declaration is ineffective if, when the declaration was made, the credit provider or a person (the prescribed person) of a kind prescribed by the regulations:

                     (a)  knew, or had reason to believe; or

                     (b)  would have known, or had reason to believe, if the credit provider or prescribed person had made reasonable inquiries about the purpose for which the credit was provided, or intended to be provided, under the contract;

that the credit was in fact to be applied wholly or predominantly for a Code purpose.

             (4)  If the declaration is ineffective under subsection (3), paragraph 5(1)(b) is taken to be satisfied in relation to the contract.

             (5)  A declaration under this section is to be substantially in the form (if any) required by the regulations and is ineffective for the purposes of this section if it is not.

             (6)  A person commits an offence if:

                     (a)  the person engages in conduct; and

                     (b)  the conduct induces a debtor to make a declaration under this section that is false or misleading in a material particular; and

                     (c)  the declaration is false or misleading in a material particular.

Criminal penalty:    2 years imprisonment.

             (7)  Strict liability applies to paragraph (6)(c).

Note:          For strict liability, see section 6.1 of the Criminal Code.

13A  Reverse mortgages

             (1)  For the purposes of this Code, an arrangement is a reverse mortgage if the arrangement involves a credit contract, except a bridging finance contract, and a mortgage over a dwelling or land securing a debtor’s obligations under the contract and either:

                     (a)  the conditions in subsections (2) and (3) are met; or

                     (b)  the arrangement is of a kind declared by ASIC under subsection (4) and is made on or after the commencement of that declaration.

Conditions

             (2)  The first condition is that the debtor’s total liability under the credit contract or mortgage may exceed (to a limited or unlimited extent) the maximum amount of credit that may be provided under the contract without the debtor being obliged to reduce that liability to or below that maximum amount.

Note:          The debtor’s total liability can exceed the maximum amount of credit because interest and some other fees and charges are not included in an amount of credit: see subsection 3(2).

             (3)  The second condition is that, if the regulations prescribe any prerequisites for the arrangement to be a reverse mortgage, those prerequisites are met.

Declarations by ASIC

             (4)  ASIC may by legislative instrument declare specified kinds of arrangements involving a credit contract and a mortgage over a dwelling or land securing a debtor’s obligations under the contract to be reverse mortgages.

Part 2Credit contracts

Division 1Negotiating and making credit contracts

14  Credit contract to be in form of written contract document

             (1)  A credit contract must be in the form of:

                     (a)  a written contract document signed by the debtor and the credit provider; or

                     (b)  a written contract document signed by the credit provider and constituting an offer to the debtor that is accepted by the debtor in accordance with the terms of the offer.

             (2)  An offer may be accepted by the debtor for the purposes of paragraph (1)(b):

                     (a)  by the debtor or a person authorised by the debtor accessing or drawing down credit to incur a liability; or

                     (b)  by any other act of the debtor or of any such authorised person that satisfies the conditions of the offer and constitutes an acceptance of the offer at law.

             (3)  The credit provider, or a person associated with the credit provider, may not be authorised by the debtor for the purposes of subsection (2). However, this subsection does not prevent the debtor authorising the credit provider to debit the debtor’s account.

             (4)  In the case of a contract document consisting of more than one document, it is sufficient compliance with this section if one of the documents is duly signed and the other documents are referred to in the signed document.

15  Other forms of contract

             (1)  The regulations may authorise other ways of making a credit contract that do not involve a written document.

             (2)  In that case, the provisions of this Division apply with such modifications as are prescribed by the regulations.

16  Precontractual disclosure

             (1)  A credit provider must not enter into a credit contract unless the credit provider has given the debtor:

                     (a)  a precontractual statement setting out the matters required by section 17 to be included in the contract document; and

                     (b)  an information statement in the form required by the regulations of the debtor’s statutory rights and statutory obligations.

             (2)  Those statements must be given:

                     (a)  before the contract is entered into; or

                     (b)  before the debtor makes an offer to enter into the contract;

whichever first occurs.

             (3)  Before entering into a credit contract, the credit provider may inform the debtor of the comparison rate. If the credit provider does so, the comparison rate must be calculated as prescribed by the regulations and be accompanied by the warnings set out in the regulations.

             (4)  The precontractual statement must contain the financial information specified by the regulations in the form prescribed by the regulations.

             (5)  The precontractual statement may be the proposed contract document or be a separate document or documents.

             (6)  A document forming part of a precontractual statement consisting of more than one document when the precontractual statement is first given must indicate that it does not contain all of the required precontractual information.

             (7)  A precontractual statement may be varied, within the time referred to in subsection (2), by written notice containing particulars of the variation given to the debtor.

17  Matters that must be in contract document

             (1)  The contract document must contain the following matters.

Credit provider’s name

             (2)  The contract document must contain the credit provider’s name.

Amount of credit

             (3)  The contract document must contain:

                     (a)  if the amount of credit to be provided is ascertainable:

                              (i)  that amount; and

                             (ii)  the persons, bodies or agents (including the credit provider) to whom it is to be paid and the amounts payable to each of them, but only if both the person, body or agent and the amount are ascertainable; and

                     (b)  if the amount of the credit to be provided is not ascertainable—the maximum amount of credit agreed to be provided, or the credit limit under the contract, if any; and

                     (c)  if the credit is provided by the supplier for a sale of land or goods by instalments—a description of the land and its cash price or of the goods and their cash price.

The requirement under paragraph (c) is in addition to, and does not limit, the requirement under paragraph (a) or (b).

Note:          A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.

Annual percentage rate or rates

             (4)  In the case of a credit contract other than a small amount credit contract, the contract document must contain:

                     (a)  the annual percentage rate or rates under the contract; and

                     (b)  if there is more than one rate, how each rate applies; and

                     (c)  if an annual percentage rate under the contract is determined by referring to a reference rate:

                              (i)  the name of the rate or a description of it; and

                             (ii)  the margin or margins (if any) above or below the reference rate to be applied to determine the annual percentage rate or rates; and

                            (iii)  where and when the reference rate is published or, if it is not published, how the debtor may ascertain the rate; and

                            (iv)  the current annual percentage rate or rates.

Note:          A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.

Calculation of interest charges

             (5)  In the case of a credit contract other than a small amount credit contract, the contract document must contain the method of calculation of the interest charges payable under the contract and the frequency with which interest charges are to be debited under the contract.

Note:          A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.

Total amount of interest charges payable

             (6)  In the case of a credit contract other than a small amount credit contract, the contract document must contain the total amount of interest charges payable under the contract, if ascertainable (but only if the contract would, on the assumptions under sections 180 and 182, be paid out within 7 years of the date on which credit is first provided under the contract).

Note:          A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.

Repayments

             (7)  The contract document must contain:

                     (a)  if more than one repayment is to be made:

                              (i)  the amount of the repayments or the method of calculating the amount; and

                             (ii)  if ascertainable, the number of the repayments; and

                            (iii)  if ascertainable, the total amount of the repayments, but only if the contract would, on the assumptions under sections 180 and 182, be paid out within 7 years of the date on which credit is first provided under the contract; and

                            (iv)  when the first repayment is to be paid, if ascertainable, and the frequency of payment of repayments; and

                     (b)  if the contract provides for a minimum repayment, the amount of that repayment, if ascertainable, but, if not, the method of calculation of the minimum repayment.

Paragraph (a) does not apply to minimum repayments under a continuing credit contract.

Credit fees and charges

             (8)  The contract document must contain:

                     (a)  a statement of the credit fees and charges that are, or may become, payable under the contract, and when each such fee or charge is payable, if ascertainable; and

                     (b)  the amount of any such fee or charge if ascertainable, but, if not, the method of calculation of the fee or charge, if ascertainable; and

                     (c)  the total amount of credit fees and charges payable under the contract to the extent that it is ascertainable.

Note:          A penalty may be imposed for contravention of a key requirement in paragraph (a) or (b), but only in respect of retained credit fees and charges: see Part 6.

Changes affecting interest and credit fees and charges

             (9)  If the annual percentage rate or rates or the amount or frequency of payment of a credit fee or charge or instalment payable under the contract may be changed, or a new credit fee or charge may be imposed, the contract document must contain a statement or statements to that effect and of the means by which the debtor will be informed of the change or the new fee or charge.

Note:          A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.

Statements of account

           (10)  The contract document must contain the frequency with which statements of account are to be provided to the debtor (except in the case of a credit contract for which the annual percentage rate is fixed for the whole term of the contract and under which there is no provision for varying the rate).

Default rate

           (11)  The contract document must contain:

                     (a)  if the contract is a contract under which a default rate of interest may be charged when payments are in default—a statement to that effect and the default rate and how it is to be applied; and

                     (b)  if the default rate under the contract is determined by referring to a reference rate:

                              (i)  the name of the rate or a description of it; and

                             (ii)  the margin or margins (if any) above or below the reference rate to be applied to determine the default rate; and

                            (iii)  when and where the reference rate is published or, if it is not published, how the debtor may ascertain the rate; and

                            (iv)  the current default rate.

Note:          A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.

Enforcement expenses

           (12)  The contract document must contain a statement that enforcement expenses may become payable under the credit contract or mortgage (if any) in the event of a breach.

Mortgage or guarantee

           (13)  The contract document must contain:

                     (a)  if any mortgage or guarantee is to be or has been taken by the credit provider—a statement to that effect; and

                     (b)  in the case of a mortgage—a description of the property subject to, or proposed to be subject to, the mortgage, to the extent to which it is ascertainable.

Commission

           (14)  If a commission is to be paid by or to the credit provider for the introduction of credit business or business financed by the contract, the contract document must contain:

                     (a)  a statement of that fact; and

                     (b)  the person by whom the commission is payable; and

                     (c)  the person to whom the commission is payable; and

                     (d)  the amount if ascertainable.

Commission does not include fees payable by a supplier under a merchant service agreement with a credit provider, an amount payable in connection with a credit‑related insurance contract or commission paid to employees of the credit provider.

Insurance financed by contract

           (15)  If the credit provider knows that the debtor is to enter into a credit‑related insurance contract and that the insurance is to be financed under the credit contract, the contract document must contain:

                     (a)  the name of the insurer; and

                     (b)  the amount payable to the insurer or, if it is not ascertainable, how it is calculated; and

                     (c)  the kind of insurance and any other particulars that may be prescribed by the regulations; and

                     (d)  if the credit provider knows of any commission to be paid by the insurer for the introduction of the insurance business—a statement that it is to be paid and, if ascertainable, the amount of the commission expressed either as a monetary amount or as a proportion of the premium.

In the case of consumer credit insurance that includes a contract of general insurance within the meaning of the Insurance Contracts Act 1984:

                     (e)  it is sufficient compliance with paragraphs (a) and (b) if the contract document contains the name of the general insurer and the total amount payable to the insurers (or, if it is not ascertainable, how it is calculated); and

                      (f)  it is sufficient compliance with paragraph (d) relating to the amount of commission if the contract document contains the total amount of commission (expressed as a monetary amount or as a proportion of the premium) to be paid by the insurers.

Note:          A penalty may be imposed for contravention of a key requirement in paragraph (a) or (b): see Part 6.

Provisions for person other than debtor to occupy reverse mortgaged property

        (15A)  If the credit contract for a reverse mortgage is to make provision for a person other than the debtor to occupy the reverse mortgaged property, the contract document must contain provisions that have the following effect (whether or not the document also contains other provisions relating to such occupation by such a person):

                     (a)  the debtor may at any time (before, when or after the contract is made):

                              (i)  nominate to the credit provider a person who is to be allowed to occupy the property (whether alone or with other persons); and

                             (ii)  revoke such a nomination by notice given to the credit provider;

                     (b)  while a nomination described in paragraph (a) is in force, the nominated person has the same rights (against the credit provider) to occupy the property as the debtor has or would have apart from the death of the debtor or vacation of the property by the debtor.

Note:          Other provisions contained in the contract document may, for example, limit the kinds of persons whom the debtor may nominate to the credit provider as persons who are to be allowed to occupy the property.

Other information

           (16)  The contract document must contain any information or warning required by the regulations.

Note:          Sections 180 to 182 set out the tolerances and assumptions applicable to matters required to be disclosed.

18  Form and expression of contract document

                   The contract document must conform to the requirements of the regulations as to its form and the way it is expressed and, subject to any such requirements, may consist of one or more separate documents.

18A  Provisions that must not be included in credit contract for reverse mortgage

             (1)  A credit provider must not enter into a credit contract for a reverse mortgage that provides a basis for beginning enforcement proceedings relating to the contract for an event described in subsection (3).

             (2)  A credit provider must not agree to change, or unilaterally change, a credit contract for a reverse mortgage so that it provides a basis for beginning enforcement proceedings relating to the contract for an event described in subsection (3).

             (3)  For the purposes of subsections (1) and (2), the events are as follows:

                     (a)  the debtor failing to inform the credit provider that another person occupies the reverse mortgaged property;

                     (b)  the debtor failing, when the debtor occupies the reverse mortgaged property, to give the credit provider evidence that the debtor, or another person nominated by the debtor to the credit provider, occupies or occupied the reverse mortgaged property;

                     (c)  the debtor leaving the reverse mortgaged property unoccupied while it is the debtor’s principal place of residence;

                     (d)  the debtor failing to pay a cost to a person other than the credit provider within 3 years after the payment became due;

                     (e)  the debtor failing to comply with a provision of the credit contract if the contract does not make it clear how the debtor is to comply with the provision;

                      (f)  the debtor breaching another credit contract with the credit provider;

                     (g)  an event that involves an act or omission by the debtor and is prescribed by the regulations.

18B  Disclosure if credit contract for reverse mortgage does not protect tenancy of person other than debtor

             (1)  This section applies if a proposed credit contract for a reverse mortgage does not include a provision (a tenancy protection provision) for a person other than the debtor to have a right against the credit provider to occupy the reverse mortgaged property.

             (2)  A person must not provide a credit service relating to the contract unless the person has told the debtor, in writing in the form (if any) prescribed by the regulations, that the contract does not include a tenancy protection provision.

Criminal penalty:    50 penalty units.

             (3)  Subsection (2) does not apply if the person is or will be the credit provider under the contract.

             (4)  The credit provider must not enter into the contract unless the credit provider has told the debtor, in writing in the form (if any) prescribed by the regulations, that the contract does not include a tenancy protection provision.

Criminal penalty:    50 penalty units.

             (5)  An offence against subsection (2) or (4) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

18C  Independent legal advice before entry into credit contract for reverse mortgage

             (1)  The regulations may regulate or prohibit the entry by a credit provider into a credit contract for a reverse mortgage if the debtor has not obtained legal advice, in accordance with the regulations, about the contract or reverse mortgage.

             (2)  The regulations may provide for offences and civil penalties for contraventions of regulations made for the purposes of subsection (1).

             (3)  The penalties for offences described in subsection (2) must not be more than 50 penalty units for an individual or 500 penalty units for a body corporate.

             (4)  The civil penalty for a contravention of a regulation made for the purposes of subsection (1) by an individual is 5,000 penalty units. However, section 167B of the National Credit Act applies in the same way as it would apply if the regulation contravened were a civil penalty provision under that Act.

19  Alteration of contract document

             (1)  An alteration of (including an addition to) a new contract document by the credit provider after it is signed by the debtor is ineffective unless the debtor has agreed in writing to the alteration.

             (2)  This section does not apply to an alteration having the effect of reducing the debtor’s liabilities under the credit contract.

20  Copy of contract for debtor

             (1)  If a contract document is to be signed by the debtor and returned to the credit provider, the credit provider must give the debtor a copy to keep.

             (2)  A credit provider must, not later than 14 days after a credit contract is made, give a copy of the contract in the form in which it was made to the debtor.

             (3)  Subsection (2) does not apply if the credit provider has previously given the debtor a copy of the contract document to keep.

21  When debtor may terminate contract

             (1)  Although a credit contract has been made, the debtor may nevertheless, by written notice to the credit provider, terminate the contract unless:

                     (a)  any credit has been obtained under the contract; or

                     (b)  a card or other means of obtaining credit provided to the debtor by the credit provider has been used to acquire goods or services for which credit is to be advanced under the contract.

             (2)  Nothing in this section prevents the credit provider from retaining or requiring payment of fees or charges incurred before the termination and which would have been payable under the credit contract.

22  Offence for noncompliance

             (1)  A credit provider must not:

                     (a)  enter into a credit contract that contravenes a requirement of this Division; or

                     (b)  otherwise contravene a requirement of this Division.

Criminal penalty:    100 penalty units.

             (2)  Subsection (1) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (3)  Subsection (1) does not apply to a contravention of a requirement of section 18B.

Division 2Debtor’s monetary obligations

23  Prohibited monetary obligations—general

             (1)  A credit contract (other than a small amount credit contract) must not impose a monetary liability on the debtor:

                     (a)  in respect of a credit fee or charge prohibited by this Code; or

                     (b)  in respect of an amount of a fee or charge exceeding the amount that may be charged consistently with this Code; or

                     (c)  in respect of an interest charge under the contract exceeding the amount that may be charged consistently with this Code.

Note 1:       A penalty may be imposed for contravention of a key requirement in this subsection, but only at the time the credit contract is entered into: see Part 6.

Note 2:       This subsection also applies to liabilities imposed contrary to section 133BI of the National Credit Act: see subsection (7) of that section.

Civil effect

             (2)  Any provision of a credit contract that imposes a monetary liability prohibited by subsection (1) is void to the extent that it does so. If an amount that is prohibited by subsection (1) is paid, it may be recovered.

             (3)  A credit fee or charge cannot be charged in respect of a credit contract unless the contract authorises it to be charged.

Civil effect

             (4)  If an amount that is prohibited by subsection (3) is paid, it may be recovered.

23A  Prohibited monetary obligations—small amount credit contracts

             (1)  A small amount credit contract must not impose a monetary liability on the debtor:

                     (a)  in respect of an interest charge (including a default rate of interest) under the contract; or

                     (b)  in respect of a fee or charge prohibited by this Code; or

                     (c)  in respect of an amount of a fee or charge exceeding the amount that may be charged consistently with this Code.

             (2)  If a provision of a small amount credit contract imposes a monetary liability prohibited by subsection (1) then:

                     (a)  each provision (the void provisions) of the contract that imposes a monetary liability of a kind referred to in that subsection (whether or not the liability is imposed consistently with this Code) is void to the extent that the provision relates to the liability; and

                     (b)  the debtor may recover as a debt due to the debtor any amount paid to the credit provider under the void provisions to the extent that the amount relates to the liability.

24  Offences related to prohibited monetary obligations—credit providers

             (1)  A credit provider must not:

                     (a)  enter into a credit contract on terms imposing a monetary liability prohibited by subsection 23(1); or

                     (b)  require or accept payment of an amount in respect of a monetary liability that cannot be imposed consistently with this Code.

Civil penalty:          5,000 penalty units.

          (1A)  A credit provider must not:

                     (a)  enter into a small amount credit contract on terms imposing a monetary liability prohibited by subsection 23A(1); or

                     (b)  require or accept payment of an amount in respect of a monetary liability that cannot be imposed consistently with this Code.

Civil penalty:          5,000 penalty units.

Offence

             (2)  A person commits an offence of strict liability if:

                     (a)  the person is subject to a requirement under subsection (1) or (1A); and

                     (b)  the person engages in conduct; and

                     (c)  the conduct contravenes the requirement.

Criminal penalty:    100 penalty units.

24A  Offences related to prohibited monetary obligations—credit assistance providers

             (1)  A person must not provide credit assistance to a consumer by:

                     (a)  suggesting that the consumer apply for a particular small amount credit contract with a particular credit provider; or

                     (b)  assisting the consumer to apply for a particular small amount credit contract with a particular credit provider;

if the person knows, or is reckless as to whether, the contract will contravene subsection 23A(1).

Criminal penalty:    50 penalty units.

             (2)  If a person provides credit assistance to a consumer that is prohibited by subsection (1):

                     (a)  the consumer is not liable (and is taken never to have been liable) to pay any fees or charges to the person in relation to:

                              (i)  the credit assistance; or

                             (ii)  any other services provided by the person in connection with the credit assistance; and

                     (b)  the consumer may recover as a debt due to the consumer the amount of any such fees or charges paid by the consumer to the person.

25  Loan to be in money or equivalent

             (1)  A credit provider must not under a credit contract pay an amount to or in accordance with the instructions of the debtor unless the payment is in cash or money’s worth and is made in full without deducting an amount for interest charges under the contract.

Criminal penalty:    100 penalty units.

             (2)  Subsection (1) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (3)  The regulations may provide that subsection (1) does not apply to the deduction of an amount for the first payment of interest charges under the contract.

26  Early payments and crediting of payments

             (1)  A credit provider must accept any payment under a credit contract that is made before it is payable under the contract unless the contract prohibits its early payment.

Criminal penalty:    100 penalty units.

             (2)  A credit provider must credit each payment made under a credit contract to the debtor as soon as practicable after receipt of the payment.

Criminal penalty:    100 penalty units.

             (3)  Subsections (1) and (2) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (4)  Despite subsection (2), a credit provider is not required to credit a payment under a credit contract before it is payable under the contract if the contract prohibits its early payment and:

                     (a)  the credit provider informs the debtor, as soon as practicable after the credit provider becomes aware of the payment, that it will not be credited to the debtor (or that any credit will be reversed) until it becomes payable under the contract, and the debtor elects to leave the payment with the credit provider; or

                     (b)  the credit provider informs the debtor, before accepting the payment, that it will not be credited to the debtor until it becomes payable under the contract; or

                     (c)  the credit provider refunds the payment to the debtor.

             (5)  A credit contract may not, under this section, prohibit the paying out of the contract at any time under section 82.

             (6)  A credit contract for a reverse mortgage may not prohibit an early payment that:

                     (a)  is made in the circumstances described in paragraph 86A(1)(a); and

                     (b)  is of the amount described in paragraph 86A(1)(b).

26A  Regulations about residential investment property

                   The regulations may provide that section 25 or 26 applies in relation to a provision of credit covered by subparagraph 5(1)(b)(ii) or (iii) as if specified provisions were omitted, modified or varied as specified in the regulations.

Division 3Interest charges

27  Definitions relating to interest

             (1)  In this Code:

annual percentage rate under a credit contract means a rate specified in the contract as an annual percentage rate.

daily percentage rate means the rate determined by dividing the annual percentage rate by 365.

default rate means a higher annual percentage rate permitted by section 30.

unpaid balance under a credit contract at any time means the difference between all amounts credited and all amounts debited to the debtor under the contract at that time.

unpaid daily balance for a day under a credit contract means the unpaid balance under the contract at the end of that day.

             (2)  A credit contract may specify, for the purposes of payments or any other purposes under the contract, when a day ends. Different times of the day may be specified for different purposes.

27A  Application of this Division

                   This Division does not apply to a small amount credit contract.

28  Limit on interest charges

             (1)  The maximum amount of an interest charge that may be imposed or provided for under a credit contract is:

                     (a)  where only one annual percentage rate applies to the unpaid balances under the contract—the amount determined by applying the daily percentage rate to the unpaid daily balances; or

                     (b)  in any other case—the sum of each of the amounts determined by applying each daily percentage rate to that part of the unpaid daily balances to which it applies under the contract.

             (2)  However, an interest charge under a credit contract for a month, a quarter or half a year may be determined by applying the annual percentage rate or rates, divided by 12 (for a month), by 4 (for a quarter) or by 2 (for half a year), to the whole or that part of the average unpaid daily balances to which it applies. The regulations may provide for the calculation of unpaid daily balances in these circumstances.

             (3)  This section does not prevent the imposition of a default rate of interest permitted by section 30.

29  Early debit or payment of interest charges prohibited

             (1)  A credit provider must not, at any time before the end of a day to which an interest charge applies, require payment of or debit the interest charge.

             (2)  A credit contract may provide for an interest charge to become payable or be debited at any time after the day to which it applies.

             (3)  The regulations may provide that subsection (1) does not apply to the first payment of interest charges under a credit contract.

             (4)  This section does not apply to the debit of an interest charge under a credit contract before the end of the period to which the charge applies if:

                     (a)  the charge is debited on the last day of the period; and

                     (b)  the amount debited is not treated by the credit provider as part of the unpaid daily balance for that day for the purpose of calculating interest charges under the contract.

30  Default interest

             (1)  A credit contract may not provide that an annual percentage rate applicable under a credit contract to any part of the unpaid balance will differ according to whether the debtor is in default under the contract.

             (2)  However, a credit contract may provide for such a differential rate if the higher rate is imposed only in the event of default in payment, in respect of the amount in default and while the default continues.

30A  Regulations about residential investment property

                   The regulations may provide that this Division applies in relation to a provision of credit covered by subparagraph 5(1)(b)(ii) or (iii) as if specified provisions were omitted, modified or varied as specified in the regulations.

30B  Regulations about credit card contracts

             (1)  The regulations may make provision in relation to any of the following matters relating to interest charges under credit card contracts:

                     (a)  the day from which a daily percentage rate may be applied, and the balance (or the part of a balance) to which it may be applied;

                     (b)  how matters relating to interest charges may be described in:

                              (i)  credit card contracts; and

                             (ii)  other documents or advertisements published or broadcast by or on behalf of licensees who are credit providers under credit card contracts.

             (2)  Regulations made for the purpose of subsection (1) may:

                     (a)  provide for offences against the regulations; and

                     (b)  provide for civil penalties for contraventions of the regulations.

             (3)  The penalties for offences referred to in paragraph (2)(a) must not be more than 50 penalty units for an individual or 500 penalty units for a body corporate.

             (4)  The civil penalty for a contravention of a regulation made for the purposes of subsection (1) by an individual is 5,000 penalty units. However, section 167B of the National Credit Act applies in the same way as it would apply if the regulation contravened were a civil penalty provision under that Act.

             (5)  This Division has effect subject to regulations made for the purpose of subsection (1).

Division 4Fees and charges

31  Prohibited credit fees or charges

             (1)  The regulations may specify credit fees or charges or classes of credit fees or charges that are prohibited for the purposes of this Code.

             (2)  Subsection (1) does not apply to a small amount credit contract.

31A  Restrictions on fees and charges for small amount credit contracts

             (1)  A small amount credit contract must not impose or provide for fees and charges if the fees and charges are not of the following kind:

                     (a)  a permitted establishment fee;

                     (b)  a fee or charge (a permitted monthly fee) that is payable on a monthly basis starting on the day the contract is entered into;

                     (c)  a fee or charge that is payable in the event of a default in payment under the contract;

                     (d)  a government fee, charge or duty payable in relation to the contract.

Note:          See section 39B for the maximum amount that may be recovered by the credit provider if there is a default in payment under the contract.

          (1A)  Despite subsection (1), a small amount credit contract must not impose or provide for a permitted establishment fee if any of the amount of credit to be provided under the contract is to refinance any of the amount of credit provided to the debtor under another small amount credit contract.

Permitted establishment fee

             (2)  A permitted establishment fee is a fee or charge the amount of which must not exceed 20% of the adjusted credit amount in relation to the small amount credit contract.

Maximum amount of permitted monthly fee

             (3)  The amount of a permitted monthly fee that may be imposed or provided for under a small amount credit contract must not exceed 4% of the adjusted credit amount in relation to the contract.

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.

             (1)  A credit provider, or a person prescribed by the regulations, must not require or accept payment by the debtor of a fee or charge in relation to:

                     (a)  a small amount credit contract; or

                     (b)  the provision of the amount of credit under a small amount credit contract; or

                     (c)  a thing that is connected with a small amount credit contract or the provision of the amount of credit under such a contract.

Criminal penalty:    100 penalty units.

             (2)  Subsection (1) does not apply if the fee or charge is:

                     (a)  a fee or charge that may be imposed or provided for by the small amount credit contract under section 31A; or

                     (b)  a fee or charge prescribed by the regulations.

             (3)  If a credit provider or person contravenes subsection (1):

                     (a)  the debtor is not liable (and is taken never to have been liable) to make the payment to the credit provider or person; and

                     (b)  the debtor may recover as a debt due to the debtor the amount of any payment made by the debtor to the credit provider or person.

32  Fees or charges in relation to third parties

When this section applies

             (1)  This section applies if a fee or charge is payable by a debtor to the credit provider for an amount (the third party amount) payable or paid by the credit provider to another person, body or agency.

Third party amount ascertainable at time of debtor payment

             (2)  If, when the fee or charge is paid by the debtor to the credit provider, the third party amount is ascertainable, then the amount of the fee or charge must not exceed the third party amount.

Third party amount not ascertainable at time of debtor payment

             (3)  If:

                     (a)  when the fee or charge is paid by the debtor to the credit provider, the third party amount is not ascertainable; and

                     (b)  after the fee or charge is paid, the credit provider ascertains the third party amount; and

                     (c)  the third party amount is less than the amount of the fee or charge paid;

then the credit provider must refund or credit the difference to the debtor.

Determining third party amount

             (4)  The third party amount is to be determined by:

                     (a)  taking into account any discount, rebate or other allowance that is received or receivable by the credit provider or a related body corporate (within the meaning of the Corporations Act 2001); and

                     (b)  disregarding any rebate on tax payable by the credit provider or a related body corporate (within the meaning of that Act).

Division 4AAnnual cost rate of certain credit contracts

32A  Prohibitions relating to credit contracts if the annual cost rate exceeds 48%

Entering into a credit contract

             (1)  A credit provider must not enter into a credit contract if the annual cost rate of the contract exceeds 48%.

Criminal penalty:    50 penalty units.

Provision of credit assistance

             (2)  A person must not provide credit assistance to a consumer by suggesting that the consumer apply, or assisting the consumer to apply, for a particular credit contract with a particular credit provider if the person knows, or is reckless as to whether, the annual cost rate of the contract exceeds 48%.

Criminal penalty:    50 penalty units.

             (3)  If a person provides credit assistance to a consumer that is prohibited by subsection (2):

                     (a)  the consumer is not liable (and is taken never to have been liable) to pay any fees or charges to the person in relation to:

                              (i)  the credit assistance; or

                             (ii)  any other services provided by the person in connection with the credit assistance; and

                     (b)  the consumer may recover as a debt due to the consumer the amount of any such fees or charges paid by the consumer to the person.

Application

             (4)  This section does not apply if:

                     (a)  the credit provider is an ADI; or

                     (b)  the credit contract is a small amount credit contract or bridging finance contract.

32AA  Prohibition relating to the annual cost rate of credit contracts—later increases of the annual percentage rate etc.

             (1)  If:

                     (a)  a credit provider is a party to a credit contract (other than a small amount credit contract or bridging finance contract); and

                     (b)  the credit provider is not an ADI; and

                     (c)  either or both of the following things (the varied matters) occur after the contract is entered into:

                              (i)  the annual percentage rate under the contract increases;

                             (ii)  an amount referred to in subsection 32B(3) that is prescribed by the regulations increases;

the credit provider contravenes this subsection if the annual cost rate of the contract would have exceeded 48% at the time the contract was entered into if that or those varied matters had been taken into account at that time for the purposes of calculating the annual cost rate of the contract.

             (2)  A credit provider must not contravene subsection (1).

Criminal penalty:    50 penalty units.

32B  Calculation of annual cost rate

             (1)  The annual cost rate of a credit contract must be calculated as a nominal rate per annum, together with the compounding frequency, using the formula:

Start formula n times r times 100% end formula

where:

n is the number of repayments per annum to be made under the credit contract (annualised if the term of the contract is less than 12 months), except that:

                     (a)  if repayments are to be made weekly—n is 52.18; and

                     (b)  if repayments are to be made fortnightly—n is 26.09; and

                     (c)  if the contract does not provide for a constant interval between repayments—n is to be derived from the interval selected for the purposes of the definition of j in subsection (2).

r is the solution of the equation specified in subsection (2).

             (2)  The equation for the purposes of the definition of r in subsection (1) is:

Equation for the purposes of the definition of r in subsection (1)

where:

Aj is the amount of credit to be provided under the credit contract at time j (the value of j for the provision of the first amount of credit is taken to be zero).

Cj is the credit cost amount (if any) for the credit contract that is payable by the debtor at time j in addition to the repayments Rj.

F is:

                     (a)  if the credit contract is a medium amount credit contract—$400 (or such other amount as is prescribed by the regulations); or

                     (b)  if the credit contract is not a medium amount credit contract and an amount is prescribed by the regulations in relation to the contract—that amount; or

                     (c)  otherwise—$0.

j is the time, measured as a multiple (not necessarily integral) of:

                     (a)  if the credit contract does not provide for a constant interval between contractual repayments—an interval of any kind selected by the credit provider as the unit of time; or

                     (b)  otherwise—the interval between contractual repayments that will have elapsed since the first amount of credit is provided under the credit contract.

Rj is the repayment to be made at time j.

t is the time, measured as a multiple of the interval between contractual repayments (or other interval so selected), that will elapse between:

                     (a)  the time when the first amount of credit is provided under the credit contract; and

                     (b)  the time when the last repayment is to be made under the contract.

Credit cost amount

             (3)  The credit cost amount for the credit contract is the sum of the following amounts if they are ascertainable:

                     (a)  the amount of credit fees and charges payable in relation to the contract;

                     (b)  the amount of a fee or charge payable by the debtor (whether or not payable under the contract) to:

                              (i)  any person (whether or not associated with the credit provider) for an introduction to the credit provider; or

                             (ii)  any person (whether or not associated with the credit provider) for any service if the person has been introduced to the debtor by the credit provider; or

                            (iii)  the credit provider for any service relating to the provision of credit, other than a service referred to in subparagraph (ii);

                     (c)  any other amount prescribed by the regulations.

             (4)  For the purposes of subsection (3), the amounts referred to in that subsection:

                     (a)  include an amount that is payable even if the credit is not provided; but

                     (b)  do not include an amount of a government fee, charge or duty payable in relation to the credit contract.

          (4A)  Despite subsection (3), the regulations may provide that a specified amount, or an amount included in a specified class, is not an amount referred to in paragraph (3)(a) or (b).

Tolerances and assumptions etc.

             (5)  The annual cost rate must be correct to at least the nearest one hundredth of 1% per annum.

             (6)  In calculating the annual cost rate, reasonable approximations may be made if it would be impractical or unreasonably onerous to make a precise calculation.

Example:    If repayments are to be made on a fixed day each month, it may be assumed that repayments will be made on that day each month even though the credit contract provides for payment on the preceding or succeeding business day when the due date is not a business day.

             (7)  The tolerances and assumptions under sections 180 to 182 apply to the calculation of the annual cost rate.

Continuing credit contracts

             (8)  If the credit contract is a continuing credit contract, the following assumptions also apply to the calculation of the annual cost rate of the contract:

                     (a)  that the debtor has drawn down the maximum amount of credit that the credit provider has agreed to provide under the contract;

                     (b)  that the debtor will pay the minimum repayments specified in the contract;

                     (c)  if credit is provided in respect of payment by the credit provider to a third person in relation to goods or services or cash supplied by that third person to the debtor from time to time—that the debtor will not be supplied with any further goods or services or cash;

                     (d)  if credit is provided in respect of cash supplied by the credit provider to the debtor from time to time—that the debtor will not be supplied with any further cash.

Division 5Credit provider’s obligation to account

33  Statements of account

             (1)  A credit provider that provides credit must give to the debtor, or arrange for the debtor to be given, periodic statements of account in accordance with this Division.

Criminal penalty:    100 penalty units.

             (2)  The maximum period for a statement of account is:

                     (a)  in the case of a credit card contract—40 days; or

                    (aa)  in the case of a continuing credit contract for a reverse mortgage—12 months; or

                     (b)  in the case of any other continuing credit contract—40 days or such longer period, not exceeding 3 months, as is agreed by the credit provider and the debtor; or

                   (ba)  in the case of a reverse mortgage not involving a continuing credit contract—12 months; or

                     (c)  in any other case—6 months.

             (3)  A statement of account need not be given if:

                     (a)  the credit is provided under a credit contract for which the annual percentage rate is fixed for the whole term of the contract and under which there is no provision for varying the rate; or

                     (b)  no amount has been debited or credited to the account during the statement period (other than debits for government charges, or duties, on receipts or withdrawals) and the amount outstanding is zero or below a level fixed by the regulations; or

                     (c)  the credit provider wrote off the debt of the debtor under the credit contract during the statement period and no further amount has been debited or credited to the account during the statement period; or

                     (d)  the debtor was in default under the credit contract (not being a continuing credit contract) during the statement period and the credit provider has commenced enforcement proceedings; or

                     (e)  the debtor was in default under a continuing credit contract during the preceding 120 days, or during the statement period and the 2 immediately preceding statement periods, whichever is the shorter time, and the credit provider has, before the commencement of the statement period, exercised a right not to provide further credit under the contract and has not provided further credit during the period; or

                      (f)  the debtor has died or is insolvent and the debtor’s personal representative or trustee in bankruptcy has not requested a statement of account.

             (4)  A separate statement of account may, but need not, be given in respect of each or any number of the credit facilities provided under a credit contract.

             (5)  Subsection (1) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

34  Information to be contained in statements of account

             (1)  A statement of account must contain the following matters.

Statement period

             (2)  A statement of account must contain the dates on which the statement period begins and ends.

Balances

             (3)  A statement of account must contain the opening and closing balances (indicating the amount owed by the debtor at the beginning and at the end of the statement period).

Credit provided

             (4)  A statement of account must contain particulars of each amount of credit provided by the credit provider to the debtor during the statement period.

Identity of supplier

             (5)  In the case of a credit card contract, a statement of account must contain the identity of the supplier if the credit was provided for any cash, goods or services supplied by another person.

Interest charges

             (6)  In the case of a credit contract other than a small amount credit contract, a statement of account must contain:

                     (a)  the amount of the interest charge debited to the debtor’s account during the statement period and when the interest was debited; and

                     (b)  the annual percentage rate or rates and, if required by Part 4, details of any change since the last statement period.

Note:          A penalty may be imposed for contravention of a key requirement in this subsection: see Part 6.

Fees and charges

             (7)  A statement of account must contain particulars of any fees and charges debited to the debtor’s account during the statement period.

Payments to or from account

             (8)  A statement of account must contain:

                     (a)  particulars of each amount paid by the debtor to the credit provider, or credited to the debtor, during the statement period; and

                     (b)  particulars of any amount transferred to or from the account to which the statement relates or to or from any other account maintained under or for the purposes of the credit contract.

Amounts payable by debtor

             (9)  If a minimum amount is payable by the debtor under a continuing credit contract, a statement of account must contain a statement of the amount and the date by which it is due.

Insurance payments

           (10)  If payment to an insurer is made during the statement period under a credit‑related insurance contract that is agreed to be financed under the credit contract, a statement of account must contain:

                     (a)  the name of the insurer, the amount paid to the insurer and the kind of insurance; and

                     (b)  if the credit provider is aware of any commission to be paid by the insurer in relation to the insurance contract—the amount of the commission expressed either as a monetary amount or as a proportion of the premium, if ascertainable when the statement is given;

(if not previously disclosed in accordance with this Code).

In the case of consumer credit insurance that includes a contract of general insurance within the meaning of the Insurance Contracts Act 1984:

                     (c)  it is sufficient compliance with paragraph (a) if the statement of account contains the name of the general insurer, the total amount payable to the insurers and the kind of insurance; and

                     (d)  it is sufficient compliance with paragraph (b) if the statement of account contains the total amount of commission (expressed as a monetary amount or as a proportion of the premium) to be paid by the insurers.

Alterations

           (11)  A statement of account must contain any correction of information in a previous statement of account.

Other

           (12)  A statement of account must contain any other information required by the regulations.

Note:          Sections 180 to 182 set out the tolerances and assumptions applicable to matters required to be included in statements of accounts.

35  Opening balance must not exceed closing balance of previous statement

             (1)  The opening balance shown in each successive statement of account must not exceed the closing balance shown in the last statement of account.

Note:          A penalty may be imposed for contravention of a key requirement in this section: see Part 6.

             (2)  However, if no statement of account was given for the previous period, the next statement of account required to be given by this Code may have an opening balance that exceeds the closing balance for the previous statement and must provide the particulars referred to in subsections 34(4) to (12) in relation to any immediately preceding periods for which statements were not given.

36  Statement of amount owing and other matters

             (1)  A credit provider must, at the request of a debtor or guarantor and within the time specified by this section, provide a statement of all or any of the following:

                     (a)  the current balance of the debtor’s account;

                     (b)  any amounts credited or debited during a period specified in the request;

                     (c)  any amounts currently overdue and the dates they became due;

                     (d)  any amount currently payable and the date it becomes due.

Criminal penalty:    100 penalty units.

             (2)  The statement must be given:

                     (a)  within 14 days, if all information requested relates to a period 1 year or less before the request is given; or

                     (b)  within 30 days, if any information requested relates to a period more than 1 year before the request is given.

             (3)  A statement under this section may be given orally but if the request for the statement is made in writing the statement must be given in writing.

             (4)  In the case of joint debtors or guarantors, the statement under this section need only be given to a debtor or guarantor who requests the statement and not, despite section 194, to each joint debtor or guarantor.

             (5)  A credit provider is not required to provide a further written statement under this section if it has, within the 3 months before the request is given, given such a statement to the person requesting it.

             (6)  Except where otherwise ordered by the court on the application of the debtor or guarantor, a credit provider is not required to provide information in a statement under this section about amounts credited or debited, or which were overdue or payable, more than 7 years before the request is given unless those amounts are currently overdue and payable.

             (7)  Subsection (1) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

37  Court may order statement to be provided

                   If a statement is not provided within the time required by this Division, the court may, on the application of the debtor or guarantor, order the credit provider to provide the statement or itself determine the amounts in relation to which the statement was sought.

38  Disputed accounts

             (1)  If a debtor, by written notice to a credit provider, disputes a particular liability entered against the debtor under a credit contract, the credit provider must give the debtor a written notice explaining in reasonable detail how the liability arises.

             (2)  A written notice need not be given if the credit provider agrees with the debtor as to the disputed amount and gives the debtor a written notice advising of the agreed liability.

             (3)  If in the case of a continuing credit contract the disputed entry appears in a statement of account in which a date for payment of the amount of the account, or part of that amount, is shown, the notice of dispute must be given to the credit provider on or before that date.

             (4)  In the case of any other credit contract for which a statement of account is given, the notice of dispute must be given to the credit provider within 30 days after the day the debtor receives the statement of account in which the amount, or part of that amount, is first shown.

             (5)  In the case of a credit contract in respect of which a statement of account need not be and is not given for the period to which the disputed liability relates, the notice of dispute must be given to the credit provider not later than 3 months after the day the contract ends.

             (6)  The credit provider must not begin enforcement proceedings on the basis of a default arising from the disputed liability until the period of 30 days, starting on the day the credit provider gives the written explanation or advice as to agreement, has expired.

Criminal penalty:    50 penalty units.

             (7)  A debtor or credit provider may apply to the court to have the court determine a disputed liability and, if satisfied that a liability is genuinely disputed, the court may determine the matters in dispute and make such consequential orders as it thinks just.

             (8)  If an application is made to the court under this section within 30 days after the explanation is given, the credit provider must not, without leave of the court, begin enforcement proceedings on the basis of a default arising from the disputed liability.

Criminal penalty:    50 penalty units.

             (9)  Subsections (6) and (8) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

           (10)  This section does not affect a dispute not dealt with, or not arising, under this section.

39  Dating and adjustment of debits and credits in accounts

             (1)  For the purposes of this Code and the credit contract, a debit or a credit made by a credit provider to a debtor’s account is taken to have been made, and has effect, on the date assigned to the debit or credit, not on the date on which it is processed.

             (2)  A credit provider may subsequently adjust debits or credits to a debtor’s account, and the account balances, so as to accurately reflect the legal obligations of the debtor and the credit provider.

             (3)  However, subsections (1) and (2) do not permit a debit or a credit to be assigned a date other than the date on which it is processed, or the subsequent adjustment of a debit or a credit or account balance, if:

                     (a)  the assignment or adjustment is not consistent with the credit contract; or

                     (b)  the adjustment results in an interest charge that is more than the maximum amount permitted by the Code, as calculated on the basis of debits or credits to a debtor’s account consistent with the credit contract; or

                     (c)  the assignment or adjustment results in a contravention of section 26; or

                     (d)  the assignment of the date on which an interest charge is taken to be debited results in a debit being taken to be done before a time permitted under this Code.

             (4)  An adjustment by a credit provider under subsection (2) does not affect any liability of a credit provider under Part 6.

Division 5AAdditional rules relating to small amount credit contracts

39A  Limit on the application of amount of credit provided under a small amount credit contract

             (1)  No part of the amount of credit provided under a small amount credit contract may be applied to pay an amount (the prohibited credit amount) to:

                     (a)  the credit provider; or

                     (b)  a person prescribed by the regulations.

             (2)  Subsection (1) does not apply to:

                     (a)  an amount of a permitted establishment fee, or a permitted monthly fee, payable in relation to the small amount credit contract; or

                     (b)  an amount of a government fee, charge or duty payable in relation to the small amount credit contract; or

                   (ba)  if some or all of the amount of credit (the refinanced amount) is to refinance some or all of the amount of credit provided by the credit provider to the debtor under another small amount credit contract—the refinanced amount; or

                     (c)  an amount prescribed by the regulations.

             (3)  If subsection (1) is contravened in relation to a small amount credit contract:

                     (a)  the debtor is not liable (and is taken never to have been liable) to repay the prohibited credit amount to the credit provider; and

                     (b)  the debtor may recover as a debt due to the debtor any amount paid to the credit provider to the extent that it relates to the prohibited credit amount.

39B  Limit on amount that may be recovered if there is default under a small amount credit contract

             (1)  If there is a default in payment under a small amount credit contract, the credit provider in relation to the contract must not (whether by repayments under the contract or otherwise) recover more than twice the adjusted credit amount in relation to the contract.

Civil penalty:          5,000 penalty units.

             (2)  Any provision of the small amount credit contract 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.

39C  Credit provider must do prescribed things if a default in payment by direct debit occurs

             (1)  If:

                     (a)  the amount of repayments under a small amount credit contract are to be paid by way of direct debit; and

                     (b)  the direct debit has been authorised by the debtor; and

                     (c)  a default in the payment of an amount of a repayment occurs;

the credit provider must do the things prescribed by the regulations.

Criminal penalty:    50 penalty units.

             (2)  In this section, direct debit has the same meaning as in section 87.

Division 6Certain transactions not to be treated as new contracts

40  Changes etc. under contracts

                   If:

                     (a)  there is:

                              (i)  a change to an existing credit contract that results in further credit being provided; or

                             (ii)  a deferral or waiver of an amount under an existing credit contract; or

                            (iii)  a postponement relating to an existing credit contract; and

                     (b)  the change, deferral, waiver or postponement is made in accordance with this Code or the existing credit contract;

then the change, deferral, waiver or postponement is not to be treated as creating a new credit contract for the purposes of this Code.

Part 3Related mortgages and guarantees

Division 1Mortgages

41  Application of Division

                   This Division applies to a mortgage (under which the mortgagor is a natural person or a strata corporation) which secures obligations under a credit contract or related guarantee, whether or not it also secures other obligations (see section 7).

42  Form of mortgage

             (1)  A mortgage must be in the form of a written mortgage document that is signed by the mortgagor.

             (2)  It is sufficient compliance with subsection (1) if:

                     (a)  the mortgage is contained in a credit contract signed by the mortgagor; or

                     (b)  one of the documents comprising the mortgage document is signed by the mortgagor (and the other documents are referred to in the signed document).

             (3)  However, a goods mortgage need not be in the form of a written mortgage document if the credit provider lawfully had possession of the goods that are subject to the mortgage before the mortgage was entered into, otherwise than because the credit provider supplied the goods (for example, the goods were held by way of security).

             (4)  A mortgage is not enforceable unless it complies with this section.

43  Copy of mortgage for mortgagor

             (1)  If a mortgage is in the form of a written mortgage document and is not part of a credit contract, the credit provider must give the mortgagor a copy to keep, in the form in which it was made, within 14 days after it is made.

             (2)  This section does not apply if the credit provider has previously given the mortgagor a copy of the mortgage document to keep.

44  Mortgages over all property void

             (1)  A mortgage that does not describe or identify the property which is subject to the mortgage is void.

             (2)  Without limiting subsection (1), a provision in a mortgage that charges all the property of the mortgagor is void.

45  Restriction on mortgage of future property

             (1)  A provision in a mortgage to the effect that the mortgagor creates or agrees to create a mortgage over or in respect of property or a class of property that is to be, or may be, acquired by the mortgagor after the mortgage is entered into is void.

             (2)  However, this section does not apply:

                     (a)  to a provision in a mortgage of property that is to be acquired wholly or partly with the credit provided under the credit contract secured by the mortgage; or

                     (b)  to a provision in a mortgage relating to property or a class of property (whether or not ascertained) described or identified in the mortgage; or

                     (c)  to a provision in a mortgage relating to goods acquired in replacement for, or as additions or accessories to, other goods subject to the mortgage; or

                     (d)  to any other provision specified by the regulations.

46  Mortgages and continuing credit contracts

             (1)  A provision in a mortgage to the effect that goods supplied from time to time under a continuing credit contract are subject to the mortgage is void.

             (2)  However, this section does not apply to a provision in a mortgage relating to specified goods securing payment of a debt under a continuing credit contract.

47  All accounts mortgages

             (1)  In addition to securing credit provided by the credit contract or proposed credit contract, or securing obligations under a related guarantee or proposed related guarantee, to which a mortgage initially applies, the mortgage may contain a provision that secures credit provided under another future credit contract or future related guarantee.

             (2)  Any such mortgage is unenforceable in relation to such a future credit contract or future related guarantee unless the credit provider has:

                     (a)  given the mortgagor a copy of the contract document of the credit contract or proposed credit contract or a copy of the guarantee or proposed guarantee to which the mortgage is to relate; and

                     (b)  subsequently obtained from the mortgagor a written acceptance of the extension of the mortgage or obtained acceptance in some other form provided for by the regulations.

             (3)  Section 42 (Form of mortgage) does not apply to an extension of a mortgage under this section.

48  Third party mortgages prohibited

             (1)  A credit provider must not enter into a mortgage to secure obligations under a credit contract unless each mortgagor is a debtor under the contract or a guarantor under a related guarantee.

             (2)  A credit provider must not enter into a mortgage to secure obligations under a guarantee unless each mortgagor is a guarantor under the guarantee or a debtor under the related credit contract.

             (3)  A mortgage which does not comply with this section is unenforceable.

             (4)  The court may, on the application of a party to a mortgage that is unenforceable because of this section, order that the credit provider takes such steps as are necessary to discharge the mortgage.

             (5)  In this section, a reference to a credit contract or guarantee includes a reference to a proposed credit contract or proposed guarantee.

49  Maximum amount which may be secured

             (1)  A mortgage is void to the extent that it secures an amount, in relation to any credit contract which it secures, that exceeds the sum of the amount of the liabilities of the debtor under the credit contract and the reasonable enforcement expenses of enforcing the mortgage.

             (2)  A mortgage is void to the extent that it secures an amount, in relation to any guarantee which it secures, that exceeds the limit of the guarantor’s liability under the guarantee and the reasonable enforcement expenses of enforcing the mortgage.

             (3)  This section does not affect a provision of a mortgage permitted by section 47.

50  Prohibited securities

             (1)  A mortgage cannot be created over employees’ remuneration or employment benefits or benefits under a superannuation scheme unless the regulations permit it to do so.

             (2)  A mortgage cannot be created over goods that are essential household property unless:

                     (a)  the mortgagee supplied the goods to the mortgagor as part of a business carried on by the mortgagee of supplying goods and the mortgagor has not, as a previous owner of the goods, sold them to the mortgagee for the purposes of the supply; or

                     (b)  the mortgagee is a linked credit provider of the person who supplied the goods to the mortgagor.

             (3)  For the purposes of subsection (2), essential household property includes goods of a type prescribed under the regulations.

             (4)  A type of goods may be prescribed under subsection (3) only if the type is similar to a type of household property mentioned in regulations made under subparagraph 116(2)(b)(i) of the Bankruptcy Act 1966.

             (5)  A mortgage cannot be created over goods that are property used by the mortgagor in earning income by personal exertion if the goods do not have a total value greater than the relevant limit.

             (6)  An obligation under a credit contract cannot be secured by a cheque, or bill of exchange or promissory note, endorsed or issued by the debtor or guarantor.

             (7)  A mortgage or security is void to the extent that it contravenes this section.

             (8)  In this section:

antique item means an item of household property the market value of which is substantially attributable to its age or historical significance.

essential household property means household property as prescribed under regulations made under subparagraph 116(2)(b)(i) of the Bankruptcy Act 1966.

goods does not include antique items.

relevant limit, in relation to goods, means the limit prescribed from time to time under regulations made under the Bankruptcy Act 1966 for the purposes of subparagraph 116(2)(c)(i) of that Act for goods of that type.

51  Assignment or disposal of mortgaged property by mortgagor

             (1)  A mortgagor must not assign or dispose of property that is subject to a mortgage without the credit provider’s consent or the authority of the court under subsection (3).

Criminal penalty:    50 penalty units.

             (2)  The credit provider must not unreasonably withhold consent or attach unreasonable conditions to the consent (but a condition requiring security over property of an equivalent kind and value is not to be regarded as unreasonable).

             (3)  The court may, on application by a mortgagor, authorise the mortgagor to dispose of mortgaged property on conditions determined by the court if:

                     (a)  the credit provider fails within a reasonable time to reply to a request for consent to do so by the mortgagor; or

                     (b)  consent is unreasonably withheld, or unreasonable conditions are attached to the consent.

             (4)  Subsection (1) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

52  Conditions on consent to assignment or disposal of property subject to mortgage

             (1)  As a condition of granting consent to an assignment or disposal of property subject to a mortgage, the credit provider may make any or all of the requirements set out in this section. This section does not limit any other requirements that may be made by the credit provider.

             (2)  The credit provider may require any breaches of the credit contract to which the mortgage relates and of the mortgage to be remedied.

             (3)  The credit provider may require the mortgagor and the assignee or person to whom the property is disposed to execute and deliver to the credit provider an agreement relating to the assignment or disposal in a form approved by the credit provider under which, without prejudicing or affecting the liability of the mortgagor, the assignee or person to whom the property is disposed agrees with the credit provider:

                     (a)  to be personally liable to pay the amounts due or that become due under the mortgage; and

                     (b)  to perform and observe all other requirements and conditions of the mortgage.

             (4)  The credit provider may require the mortgagor and the assignee or person to whom the property is disposed to pay the reasonable costs (if any) incurred by the credit provider for:

                     (a)  stamp duty in respect of the assignment or disposal agreement, or any other document the credit provider reasonably requires to be executed in connection with the assignment or disposal; and

                     (b)  fees payable to a duly qualified lawyer.

53  Offence for noncompliance

             (1)  A credit provider must not:

                     (a)  enter into a mortgage that contravenes a requirement of this Division; or

                     (b)  otherwise contravene a requirement of this Division.

Criminal penalty:    50 penalty units.

             (2)  A credit provider must not enter into a mortgage that is void or unenforceable, or that includes a provision that is void or unenforceable, because of this Division.

Criminal penalty:    50 penalty units.

             (3)  Subsections (1) and (2) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

Division 2Guarantees

54  Application of Division

                   This Division applies to a guarantee (under which the guarantor is a natural person or a strata corporation) to the extent to which it guarantees obligations under a credit contract, whether or not it also guarantees other obligations (see section 8).

55  Form of guarantee

             (1)  A guarantee must be in writing signed by the guarantor.

             (2)  It is sufficient compliance with subsection (1) if the guarantee is contained in a mortgage signed by the guarantor.

             (3)  The regulations may make provision for or with respect to the content of guarantees and the way they are expressed.

             (4)  A guarantee is not enforceable unless it complies with this section and regulations made under this section.

56  Disclosure

             (1)  Before a guarantee is signed by the guarantor, the credit provider must give to the prospective guarantor:

                     (a)  a copy of the contract document of the credit contract or proposed credit contract; and

                     (b)  a document in the form prescribed by the regulations explaining the rights and obligations of a guarantor.

             (2)  A guarantee is not enforceable unless paragraph (1)(a) is complied with.

57  Copies of documents for guarantor

             (1)  A credit provider must, not later than 14 days after a guarantee is signed and given to the credit provider, give the guarantor:

                     (a)  a copy of the guarantee signed by the guarantor; and

                     (b)  a copy of the credit contract or proposed credit contract.

             (2)  Paragraph (1)(a) does not apply if the credit provider has previously given the guarantor a copy of the guarantee document to keep and paragraph (1)(b) does not apply if the credit provider has previously given the guarantor a copy of the credit contract or proposed credit contract to keep.

58  Guarantor may withdraw before credit is provided

             (1)  Although a guarantee has been made, the guarantor may nevertheless, by written notice to the credit provider:

                     (a)  withdraw from the guarantee at any time before credit is first provided under the credit contact; or

                     (b)  withdraw from the guarantee after credit is first provided under the contract if the credit contract made differs in some material respect from the proposed credit contract given to the guarantor before the guarantee is signed.

             (2)  The guarantor may withdraw from a guarantee under this section to the extent only that it guarantees obligations under the credit contract.

             (3)  This section is subject to section 61.

59  Extension of guarantee

             (1)  In addition to guaranteeing obligations under a credit contract or proposed credit contract to which a guarantee initially applies, a guarantee may contain a provision that makes credit provided under another future credit contract subject to the guarantee.

             (2)  Any such guarantee is unenforceable in relation to such a future credit contract unless the credit provider has:

                     (a)  given the guarantor a copy of the contract document of that future credit contract; and

                     (b)  subsequently obtained from the guarantor a written acceptance of the extension of the guarantee or obtained acceptance in some other form provided for by the regulations.

             (3)  Section 55 (Form of guarantee) and section 56 (Disclosure) do not apply to an extension of a guarantee under this section.

60  Limitation of guarantor’s liability

Total amount for which guarantor can be liable

             (1)  A guarantee is void to the extent that it secures an amount, in relation to a credit contract to which this Code applies, that exceeds the sum of the amount of the liabilities of the debtor under the credit contract and the reasonable expenses of enforcing the guarantee, or any lesser amount agreed between the credit provider and the guarantor.

Unenforceable contracts

             (2)  Nothing in subsection (1) prevents a credit provider from enforcing a guarantee relating to liabilities under a credit contract that is unenforceable solely because of the debtor’s death, insolvency or incapacity.

Debtors under 18 years of age

             (3)  A guarantee which guarantees the liability of a debtor who was under 18 years of age when the liability was incurred cannot be enforced against the guarantor unless it contains a prominent statement to the effect that the guarantor may not be entitled to an indemnity against the debtor.

Guarantor may limit liabilities under continuing credit contract

             (4)  In the case of a continuing credit contract, a guarantor may, by notice to the credit provider, limit the guarantee so that it applies only to liabilities related to credit previously provided to the debtor under the credit contract (including any liabilities not yet debited to the debtor’s account) and such further amount (if any) as the guarantor agrees to guarantee.

Guarantee must not limit indemnity

             (5)  A guarantee is void to the extent that it limits the guarantor’s right to indemnity from the person whose liability the guarantor has guaranteed or it postpones or otherwise purports to limit the guarantor’s right to enforce the indemnity against the person.

Effect of section

             (6)  This section does not affect a provision of a guarantee permitted by section 59.

61  Increase in guarantor’s liabilities

             (1)  If the terms of a credit contract are changed to increase or allow for an increase in liabilities, the liabilities of a guarantor under a guarantee that secures those liabilities are not increased unless:

                     (a)  the credit provider gives to the guarantor a written notice setting out particulars of the change in the terms of the credit contract; and

                     (b)  the credit provider has subsequently obtained from the guarantor a written acceptance of the extension of the guarantee to those increased liabilities or obtained acceptance in some other form provided for by the regulations.

             (2)  This section does not apply to an increase in liabilities resulting from:

                     (a)  a change of a kind referred to in paragraph 63(2)(a) or (b); or

                     (b)  a change of which notice is required to be given under Division 1 of Part 4 (not being a change referred to in subsection 67(4) or section 68); or

                     (c)  a change under subsection 74(2) or a postponement under subsection 96(2); or

                     (d)  a deferral or waiver of a debtor’s obligations for a period not exceeding 90 days.

62  Offence for noncompliance

             (1)  A credit provider must not:

                     (a)  enter into a guarantee that contravenes a requirement of this Division; or

                     (b)  otherwise contravene a requirement of this Division.

             (2)  A credit provider must not enter into a guarantee that is void or unenforceable, or that contains a provision that is void or unenforceable, because of this Division.

Criminal penalty:    50 penalty units.

             (3)  Subsections (1) and (2) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

Part 4Changes to obligations under credit contracts, mortgages and guarantees

Division 1Unilateral changes by credit provider

63  Application of Division

             (1)  This Division applies only to changes made unilaterally by a credit provider under a credit contract, mortgage or guarantee.

             (2)  This Division does not apply to the following changes under a credit contract:

                     (a)  a change to a new annual percentage rate payable under the contract (not being a rate determined by referring to a reference rate), if both the new rate and when it takes effect are ascertainable from the contract;

                     (b)  an increase in the amount of repayments, if the increase occurs automatically, as specified by the contract, and both the amount of the increase and when it takes effect are ascertainable from the contract;

                     (c)  an increase in the term of a credit contract, if the increase occurs only because of an increase in the annual percentage rate or rates payable under the contract;

                     (d)  a change made under Division 3.

             (3)  Nothing in this Division confers on a credit provider or a debtor any power or right to change the credit contract or its terms in addition to those conferred by the contract.

64  Interest rate changes

Notification of interest rate changes

             (1)  A credit provider must, not later than the day on which a change in the annual percentage rate or rates payable under a credit contract takes effect, give to the debtor written notice setting out:

                     (a)  the new rate or rates or, if a rate is determined by referring to a reference rate, the new reference rate; and

                     (b)  any information required by the regulations.

Criminal penalty:    100 penalty units.

Notification by publication

             (2)  Notice under subsection (1) may be given by publishing the notice in a newspaper circulating throughout each State and Territory. A credit provider that gives notice in accordance with this subsection must give to the debtor particulars of the change before or when the next statement of account is sent to the debtor after the change takes effect.

Criminal penalty:    100 penalty units.

Changes in reference rates

             (3)  Subsection (1) does not apply to a change in a rate that is determined by referring to a reference rate if the changed reference rate is notified (whether or not by the credit provider) in a newspaper circulating throughout each State and Territory not later than the date the change takes effect.

Notification of other interest changes

             (4)  A credit provider must, not later than 20 days before a change in the manner in which interest is calculated or applied under a credit contract (including a change in or abolition of any interest free period under the contract) takes effect, give to the debtor written notice setting out:

                     (a)  particulars of the change; and

                     (b)  any information required by the regulations.

Criminal penalty:    100 penalty units.

Interest rate reductions

             (5)  Subsections (1) and (4) do not apply to a change that reduces the obligations of the debtor under the credit contract.

Strict liability offences

             (6)  Subsections (1), (2) and (4) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

Application

             (7)  This section applies whether or not the change is a change to the terms of the contract.

65  Repayment changes

Notification of repayment changes

             (1)  A credit provider must, not later than 20 days before a change in the amount or frequency or time for payment of, or a change in the method of calculation of, instalments or minimum repayments, under a credit contract takes effect, give to the debtor written notice setting out:

                     (a)  particulars of the change; and

                     (b)  any information required by the regulations.

Criminal penalty:    100 penalty units.

Repayment reductions

             (2)  Subsection (1) does not apply to a change that reduces the obligations of the debtor, or extends the time for payment, under the credit contract. The credit provider must, however, give particulars of any such change before or when the next statement of account is sent to the debtor after the change takes effect.

Criminal penalty:    100 penalty units.

             (3)  If the amount or frequency or time for payment of instalments or minimum repayments is not specified in the credit contract but is determined by a method of calculation so specified, this section requires the credit provider to give particulars only of any change in that method of calculation.

Strict liability offences

             (4)  Subsections (1) and (2) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

Application

             (5)  This section does not apply to a change that occurs while the credit contract does not require any repayment of the amount of credit provided.

             (6)  This section applies whether or not the change is a change to the terms of the contract.

66  Credit fees and charges changes

Notification of credit fees and charges changes

             (1)  A credit provider must, not later than 20 days before a change in the amount of a credit fee or charge (including a new credit fee or charge), or a change in the frequency or time for payment of a credit fee or charge, under a credit contract takes effect, give to the debtor written notice setting out:

                     (a)  particulars of the change; and

                     (b)  any information required by the regulations.

Criminal penalty:    100 penalty units.

Notification by publication

             (2)  Notice relating to a change in the amount of a credit fee or charge (including a new credit fee or charge) may be given by publishing the notice in a newspaper circulating throughout each State and Territory. A credit provider that gives notice in accordance with this subsection must give particulars of the change before or when the next statement of account is sent to the debtor after the change takes effect.

Criminal penalty:    100 penalty units.

Credit fee or charge reductions

             (3)  Subsection (1) does not apply to a change that reduces the obligations of the debtor, or extends the time for payment, under the credit contract. The credit provider must, however, give particulars of any such change before or when the next statement of account is sent to the debtor after the change takes effect.

Criminal penalty:    100 penalty units.

Strict liability offences

             (4)  Subsections (1), (2) and (3) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

Application

             (5)  This section applies whether or not the change is a change to the terms of the contract.

67  Changes to credit limits etc. in continuing credit contracts

Changes merely because financial hardship information exists

          (1A)  A provision of a continuing credit contract has no effect to the extent that a credit provider purports to rely on the provision to:

                     (a)  refuse to provide any further credit to the debtor; or

                     (b)  reduce the debtor’s credit limit;

merely because financial hardship information (within the meaning of the Privacy Act 1988) about the debtor exists.

Credit contracts continue for any credit previously provided

             (1)  If a credit provider decides not to provide any further credit under a continuing credit contract, the credit contract continues in force in relation to any credit previously provided under the contract. However, this subsection does not prevent the termination of the contract if otherwise permitted by this Code or the contract.

Giving notice of decision not to provide further credit or of decision to reduce credit limit

             (2)  A credit provider must, unless the debtor is in default under the contract, as soon as practicable after deciding not to provide any further credit or to reduce the credit limit, give to the debtor a written notice to that effect if such notice has not previously been given.

Criminal penalty:    100 penalty units.

             (3)  Subsection (2) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

Credit limits may only be increased at request or with consent

             (4)  A credit provider may increase the credit limit under a continuing credit contract only at the request of the debtor or with the written consent of the debtor.

67A  Changes to tenancy protection in credit contracts for reverse mortgages

                   A purported change to a credit contract for a reverse mortgage that makes provision for a person other than the debtor to occupy the reverse mortgaged property is void so far as the change purports to:

                     (a)  remove a provision required by subsection 17(15A) to be contained in the contract document; or

                     (b)  vary the contract so as to limit:

                              (i)  the ability of the debtor to nominate to the credit provider a person who is to be allowed to occupy the reverse mortgaged property (whether alone or with other persons); or

                             (ii)  the rights of a person nominated by the debtor to the credit provider to occupy the property.

68  Other unilateral changes by credit provider

             (1)  A credit provider must not exercise a power under a credit contract, mortgage or guarantee to unilaterally change its terms without giving to the other party, not less than 20 days before the change takes effect, written notice setting out:

                     (a)  particulars of the change in the terms of the credit contract, mortgage or guarantee; and

                     (b)  any information required by the regulations.

Criminal penalty:    100 penalty units.

             (2)  Subsection (1) does not apply to a change that reduces the obligations of the debtor, or extends the time for payment, under the credit contract. The credit provider must, however, give particulars of any such change before or when the next statement of account is sent to the debtor after the change takes effect.

Criminal penalty:    100 penalty units.

             (3)  Subsections (1) and (2) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (4)  This section does not apply to a change of which notice is required to be given under section 64, 65, 66 or 67 (or which would be required to be so given but for an exception provided in any such section) or which is referred to in subsection 67(4).

69  Particulars of matters as changed only required to be given under this Division in certain cases

                   The credit provider may, under section 64, 65, 66 or 68, give a person particulars only of a matter as changed instead of particulars of the change, but only if the credit provider:

                     (a)  makes it clear to the person that the matter has changed; or

                     (b)  issues to the person a new set of terms and conditions relating to the credit contract, mortgage or guarantee.

70  Prohibited increases in liabilities

             (1)  If the annual percentage rate under a credit contract is currently fixed for a specified term (including the whole term) of the contract, the contract cannot be changed unilaterally by a credit provider so as to increase, or change the method of calculation of a fee or charge so as to increase, a fee or charge:

                     (a)  payable by the debtor on early termination of the credit contract; or

                     (b)  payable on prepayment of an amount under the credit contract.

             (2)  The regulations may prescribe circumstances in which such a change is permitted.

Division 2Changes by agreement of parties

71  Changes by agreement

             (1)  If the parties under an existing credit contract, mortgage or guarantee agree to change its terms, the credit provider must, not later than 30 days after the date of the agreement, give to the other party under the agreement a written notice setting out:

                     (a)  particulars of the change in the terms of the credit contract, mortgage or guarantee; and

                     (b)  any information required by the regulations.

Criminal penalty:    100 penalty units.

             (2)  Subsection (1) does not apply to a change which defers or otherwise reduces the obligations of the debtor for a period not exceeding 90 days or to an agreement to increase the amount of credit under a credit contract.

             (3)  If the parties under a credit contract (other than a continuing credit contract) propose to increase the amount of credit under the contract by agreement, the credit provider must also, before the agreement is made, give to the debtor a written notice containing the information required by the regulations.

Criminal penalty:    100 penalty units.

             (4)  This section does not apply to a change made under Division 3.

             (5)  The credit provider may, under subsection (1), give a person particulars only of a matter as changed instead of particulars of the change, but only if the credit provider:

                     (a)  makes it clear to the person that the matter has changed; or

                     (b)  issues to the person a new set of terms and conditions relating to the credit contract, mortgage or guarantee.

             (6)  Subsections (1) and (3) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

Division 3Changes on grounds of hardship and unjust transactions

72  Changes on grounds of hardship

Hardship notice

             (1)  If a debtor considers that he or she is or will be unable to meet his or her obligations under a credit contract, the debtor may give the credit provider notice (a hardship notice), orally or in writing, of the debtor’s inability to meet the obligations.

Note:          If the debtor gives the credit provider a hardship notice, there may be requirements (beyond those in section 88) that the credit provider must comply with before beginning enforcement proceedings—see section 89A.

Further information

             (2)  Within 21 days after the day of receiving the debtor’s hardship notice, the credit provider may give the debtor notice, orally or in writing, requiring the debtor to give the credit provider specified information within 21 days of the date of the notice stated in the notice. The information specified must be relevant to deciding:

                     (a)  whether the debtor is or will be unable to meet the debtor’s obligations under the contract; or

                     (b)  how to change the contract if the debtor is or will be unable to meet those obligations.

             (3)  The debtor must comply with the requirement.

Note:          The credit provider need not agree to change the credit contract, especially if the credit provider:

(a)    does not believe there is a reasonable cause (such as illness or unemployment) for the debtor’s inability to meet his or her obligations; or

(b)    reasonably believes the debtor would not be able to meet his or her obligations under the contract even if it were changed.

Notice of decision on changing credit contract

             (4)  The credit provider must, before the end of the period identified under subsection (5), give the debtor a notice:

                     (a)  that is in the form (if any) prescribed by the regulations and records the fact that the credit provider and the debtor have agreed to change the credit contract; or

                     (b)  that is in the form (if any) prescribed by the regulations and states:

                              (i)  the credit provider and the debtor have not agreed to change the credit contract; and

                             (ii)  the reasons why they have not agreed; and

                            (iii)  the name and contact details of the AFCA scheme; and

                            (iv)  the debtor’s rights under that scheme.

Civil penalty:          5,000 penalty units.

             (5)  The credit provider must give the notice before the end of the period identified using the table.

Period for giving notice

 

If:

The period is:

1

The credit provider does not require information under subsection (2)

21 days after the day of receiving the hardship notice

2

The credit provider requires information under subsection (2) but does not receive any information in compliance with the requirement

28 days after the stated date of the notice under subsection (2)

3

The credit provider requires information under subsection (2) and receives information in compliance with the requirement

21 days after the day of receiving the information

Regulations may prescribe shorter periods for credit contracts

             (6)  The regulations may provide for subsections (2), (3), (4) and (5) to have effect in relation to credit contracts prescribed by the regulations as if a particular reference in subsection (2) or (5) to a number of days were a reference to a lesser number of days prescribed by the regulations.

73  Notice of change

             (1)  A credit provider that enters into an agreement with the debtor to change the credit contract as a result of a hardship notice by the debtor must, not later than 30 days after the date of the agreement, give to the debtor, and any guarantor under a guarantee related to the contract, a written notice setting out:

                     (a)  particulars of the change in the terms of the credit contract; and

                     (b)  any information required by the regulations.

Criminal penalty:    50 penalty units.

             (2)  The credit provider may, under subsection (1), give a person particulars only of a matter as changed instead of particulars of the change, but only if the credit provider:

                     (a)  makes it clear to the person that the matter has changed; or

                     (b)  issues to the person a new set of terms and conditions relating to the credit contract.

             (3)  Subsection (1) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

74  Changes by court

             (1)  If the credit provider does not change the credit contract as a result of a hardship notice by the debtor, the debtor may apply to the court to change the terms of the credit contract.

             (2)  The court may, after allowing the applicant, the credit provider and any guarantor a reasonable opportunity to be heard:

                     (a)  by order change the credit contract (but not so as to reduce the amount ultimately payable by the debtor to the credit provider under the contract), and make such other orders as it thinks fit; or

                     (b)  refuse to change the credit contract.

             (3)  The court may, if it thinks it appropriate in the circumstances, stay any enforcement proceedings under the credit contract, and make such other orders as it thinks fit, until the application has been determined.

75  Credit provider may apply for variation of change

             (1)  A credit provider under a credit contract that has been changed by an order under subsection 74(2) may apply to the court for an order varying or revoking the order.

             (2)  A credit provider subject to a stay of enforcement proceedings or other order under subsection 74(3) may apply to the court for an order varying or revoking the stay or order.

             (3)  On an application under this section, the court may vary or revoke the order or stay to which the application relates as it thinks fit, or may refuse the application.

76  Court may reopen unjust transactions

Power to reopen unjust transactions

             (1)  The court may, if satisfied on the application of a debtor, mortgagor or guarantor that, in the circumstances relating to the relevant credit contract, mortgage or guarantee at the time it was entered into or changed (whether or not by agreement), the contract, mortgage or guarantee or change was unjust, reopen the transaction that gave rise to the contract, mortgage or guarantee or change.

Matters to be considered by court

             (2)  In determining whether a term of a particular credit contract, mortgage or guarantee is unjust in the circumstances relating to it at the time it was entered into or changed, the court is to have regard to the public interest and to all the circumstances of the case and may have regard to the following:

                     (a)  the consequences of compliance, or noncompliance, with all or any of the provisions of the contract, mortgage or guarantee;

                     (b)  the relative bargaining power of the parties;

                     (c)  whether or not, at the time the contract, mortgage or guarantee was entered into or changed, its provisions were the subject of negotiation;

                     (d)  whether or not it was reasonably practicable for the applicant to negotiate for the alteration of, or to reject, any of the provisions of the contract, mortgage or guarantee or the change;

                     (e)  whether or not any of the provisions of the contract, mortgage or guarantee impose conditions that are unreasonably difficult to comply with, or not reasonably necessary for the protection of the legitimate interests of a party to the contract, mortgage or guarantee;

                      (f)  whether or not the debtor, mortgagor or guarantor, or a person who represented the debtor, mortgagor or guarantor, was reasonably able to protect the interests of the debtor, mortgagor or guarantor because of his or her age or physical or mental condition;

                     (g)  the form of the contract, mortgage or guarantee and the intelligibility of the language in which it is expressed;

                     (h)  whether or not, and if so when, independent legal or other expert advice was obtained by the debtor, mortgagor or guarantor;

                      (i)  the extent to which the provisions of the contract, mortgage or guarantee or change and their legal and practical effect were accurately explained to the debtor, mortgagor or guarantor and whether or not the debtor, mortgagor or guarantor understood those provisions and their effect;

                      (j)  whether the credit provider or any other person exerted or used unfair pressure, undue influence or unfair tactics on the debtor, mortgagor or guarantor and, if so, the nature and extent of that unfair pressure, undue influence or unfair tactics;

                     (k)  whether the credit provider took measures to ensure that the debtor, mortgagor or guarantor understood the nature and implications of the transaction and, if so, the adequacy of those measures;

                      (l)  whether at the time the contract, mortgage or guarantee was entered into or changed, the credit provider knew, or could have ascertained by reasonable inquiry at the time, that the debtor could not pay in accordance with its terms or not without substantial hardship;

                    (m)  whether the terms of the transaction or the conduct of the credit provider is justified in the light of the risks undertaken by the credit provider;

                     (n)  for a mortgage—any relevant purported provision of the mortgage that is void under section 50;

                     (o)  the terms of other comparable transactions involving other credit providers and, if the injustice is alleged to result from excessive interest charges, the annual percentage rate or rates payable in comparable cases;

                     (p)  any other relevant factor.

Representing debtor, mortgagor or guarantor

             (3)  For the purposes of paragraph (2)(f), a person is taken to have represented a debtor, mortgagor or guarantor if the person represented the debtor, mortgagor or guarantor, or assisted the debtor, mortgagor or guarantor to a significant degree, in the negotiations process prior to, or at, the time the credit contract, mortgage or guarantee was entered into or changed.

Unforeseen circumstances

             (4)  In determining whether a credit contract, mortgage or guarantee is unjust, the court is not to have regard to any injustice arising from circumstances that were not reasonably foreseeable when the contract, mortgage or guarantee was entered into or changed.

Conduct

             (5)  In determining whether to grant relief in respect of a credit contract, mortgage or guarantee that it finds to be unjust, the court may have regard to the conduct of the parties to the proceedings in relation to the contract, mortgage or guarantee since it was entered into or changed.

Application

             (6)  This section does not apply:

                     (a)  to a matter or thing in relation to which an application may be made under subsection 78(1); or

                     (b)  to a change to a contract under this Division.

             (7)  This section does apply in relation to a mortgage, and a mortgagor may make an application under this section, even though all or part of the mortgage is void under subsection 50(3).

77  Orders on reopening of transactions

                   The court may, if it reopens a transaction under this Division, do any one or more of the following, despite any settlement of accounts or any agreement purporting to close previous dealings and create a new obligation:

                     (a)  reopen an account already taken between the parties to the transaction;

                     (b)  relieve the debtor and any guarantor from payment of any amount in excess of such amount as the court, having regard to the risk involved and all other circumstances, considers to be reasonably payable;

                     (c)  set aside either wholly or in part or revise or alter an agreement made or mortgage given in connection with the transaction;

                     (d)  order that the mortgagee takes such steps as are necessary to discharge the mortgage;

                     (e)  give judgment for or make an order in favour of a party to the transaction of such amount as, having regard to the relief (if any) which the court thinks fit to grant, is justly due to that party under the contract, mortgage or guarantee;

                      (f)  give judgment or make an order against a person for delivery of goods to which the contract, mortgage or guarantee relates and which are in the possession of that person;

                     (g)  make ancillary or consequential orders.

78  Court may review unconscionable interest and other charges

             (1)  The court may, if satisfied on the application of a debtor or guarantor that:

                     (a)  a change in the annual percentage rate or rates under a credit contract to which subsection 64(1) or (4) applies; or

                     (b)  an establishment fee or charge; or

                     (c)  a fee or charge payable on early termination of a credit contract; or

                     (d)  a fee or charge for a prepayment of an amount under a credit contract;

is unconscionable, annul or reduce the change or fee or charge and may make ancillary or consequential orders.

             (2)  For the purposes of this section, a change to the annual percentage rate or rates is unconscionable if and only if it appears to the court that:

                     (a)  it changes the annual percentage rate or rates in a manner that is unreasonable, having regard to any advertised rate or other representations made by the credit provider before or at the time the contract was entered into, the period of time since the contract was entered into and any other consideration the court thinks relevant; or

                     (b)  the change is a measure that discriminates unjustifiably against the debtor when the debtor is compared to other debtors of the credit provider under similar contracts.

             (3)  In determining whether an establishment fee or charge is unconscionable, the court is to have regard to whether the amount of the fee or charge is equal to the credit provider’s reasonable costs of determining an application for credit and the initial administrative costs of providing the credit or is equal to the credit provider’s average reasonable costs of those things in respect of that class of contract.

             (4)  For the purposes of this section, a fee or charge payable on early termination of the contract or a prepayment of an amount under the credit contract is unconscionable if and only if it appears to the court that it exceeds a reasonable estimate of the credit provider’s loss arising from the early termination or prepayment, including the credit provider’s average reasonable administrative costs in respect of such a termination or prepayment.

79  Applications by ASIC

             (1)  This section applies if ASIC considers that it is in the public interest to make an application under this Division.

             (2)  ASIC may make an application under this Division and has standing to represent the public interest.

             (3)  The application:

                     (a)  may apply to any one or more credit contracts; and

                     (b)  may apply to all or any class of credit contracts entered into by a credit provider during a specified period (for example, all credit contracts entered into during a specified period that are affected by a specified matter for which relief is sought).

80  Time limit

             (1)  An application (other than an application under section 78) may not be brought under this Division more than 2 years after the relevant credit contract is rescinded or discharged or otherwise comes to an end.

             (2)  An application under section 78 may not be brought more than 2 years after the relevant change takes effect or fee or charge is charged under the credit contract or the credit contract is rescinded or discharged or otherwise comes to an end.

81  Joinder of parties

             (1)  If it appears to the court that a person other than a credit provider or a mortgagee (a third party) has shared in the profits of, or has a beneficial interest prospectively or otherwise in, a credit contract or mortgage that the court holds to be unjust, the court may make an order about the third party that the court considers appropriate.

             (2)  However, before making an order about the third party, the court must:

                     (a)  join the third party as a party to the proceedings; and

                     (b)  give the third party an opportunity to appear and be heard in the proceedings.

Part 5Ending and enforcing credit contracts, mortgages and guarantees

Division 1Ending of credit contract by debtor etc.

Subdivision APaying out contract etc.

82  Debtor’s or guarantor’s right to pay out contract

             (1)  A debtor or guarantor is entitled to pay out the credit contract at any time.

             (2)  The amount required to pay out a credit contract (other than a continuing credit contract) is the total of the following amounts:

                     (a)  the amount of credit;

                     (b)  the interest charges and all other fees and charges payable by the debtor to the credit provider up to the date of termination;

                     (c)  reasonable enforcement expenses;

                     (d)  early termination charges, if provided for in the contract;

less any payments made under the contract and any rebate of premium under section 148.

83  Statement of pay out figure

             (1)  A credit provider must, at the written request of a debtor or guarantor, provide a written statement of the amount required to pay out a credit contract (other than a continuing credit contract) as at such date as the debtor or guarantor specifies. If so requested, the credit provider must also provide details of the items which make up that amount.

             (2)  The statement must also contain a statement to the effect that the amount required to pay out the credit contract may change according to the date on which it is paid.

             (3)  A credit provider must give a statement, complying with this section, within 7 days after the day the request is given to the credit provider.

Criminal penalty:    50 penalty units.

             (4)  In the case of joint debtors or guarantors, the statement under this section need only be given to a debtor or guarantor who requests the statement and not, despite section 194, to each joint debtor or guarantor.

             (5)  Subsection (3) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

84  Court may determine pay out figure if credit provider does not provide a pay out figure

             (1)  If the credit provider does not provide a statement of the amount required to pay out a credit contract (other than a continuing credit contract) in accordance with this Part after a request is duly made by a debtor or guarantor, the court may, on the application of the debtor or guarantor, determine the amount payable on the date of determination, the amount by which it increases daily and the period for which the determination is applicable.

             (2)  The credit contract is discharged if an amount calculated in accordance with the determination is tendered to the credit provider within the applicable period.

85  Surrender of mortgaged goods and goods subject to sale by instalments

General principle

             (1)  If:

                     (a)  a credit contract takes the form of a sale of goods by instalments and title in the goods does not pass until all instalments are paid; or

                     (b)  the credit provider has a mortgage over goods of the debtor or guarantor;

the debtor or mortgagor may give written notice of an intention to return the goods to the credit provider or, if the goods are in the credit provider’s possession, require the credit provider in writing to sell the goods.

Delivery of goods

             (2)  A debtor or mortgagor may return the goods to the credit provider at the credit provider’s place of business during ordinary business hours within 7 days of the date of the notice or within such other period or at such other time or place as may be agreed with the credit provider.

Notice of value

             (3)  The credit provider must, within 14 days after a debtor or mortgagor returns the goods or requires the credit provider to sell the goods, give the debtor or mortgagor a written notice containing the estimated value of the goods and any other information required by the regulations.

Return or sale of goods

             (4)  If the debtor or mortgagor, within 21 days after the notice under subsection (3) is given, requests by written notice return of the goods to the debtor or mortgagor or withdraws the requirement to sell the goods (and the debtor is not in default under the terms of the credit contract), the credit provider must return to the debtor or mortgagor any goods returned by the debtor or mortgagor and must not comply with the requirement.

Nominated purchaser

             (5)  The debtor or mortgagor may, within 21 days after the notice under subsection (3) is given, nominate in writing a person who is prepared to purchase the goods from the credit provider at the estimated value or at any greater amount for which the credit provider has obtained a written offer to buy the goods. The credit provider must offer to sell the goods to that person for the estimated value or, if there is a written offer to buy the goods for a greater amount, that amount.

Sale of goods by credit provider

             (6)  The credit provider must, if the goods are not required to be returned under subsection (4), as soon as reasonably practicable (or at such other time as the credit provider and the debtor or mortgagor agree) sell the goods in accordance with subsection (5) or, if no buyer is nominated or the nominated buyer under that subsection does not buy the goods, for the best price reasonably obtainable.

Amount to be credited to debtor or mortgagor

             (7)  The credit provider must credit the debtor or mortgagor with a payment equivalent to the proceeds of the sale less any amounts which the credit provider is entitled to deduct from those proceeds. On the sale of the goods, the amount required to pay out the contract becomes due.

Deductions from proceeds

             (8)  A credit provider that sells mortgaged goods under this section is entitled to deduct from the proceeds of that sale only the following amounts:

                     (a)  the amount currently secured by the mortgage in relation to the credit contract or guarantee, not being more than the amount required to discharge the contract or guarantee;

                     (b)  the amount payable to discharge any prior mortgage to which the goods were subject;

                     (c)  the amounts payable in successive discharge of any subsequent mortgages to which the goods were subject and of which the credit provider had notice;

                     (d)  the credit provider’s reasonable enforcement expenses;

                     (e)  the expenses reasonably incurred by the credit provider in connection with the possession and sale of the mortgaged goods.

Notice of amount credited and other matters

             (9)  The credit provider must give the debtor or mortgagor a written notice stating the gross amount realised on the sale, the net proceeds of the sale, the amount credited to the debtor or mortgagor and the amount required to pay out the credit contract or the amount due under the guarantee.

Offence—credit provider

           (10)  A credit provider that contravenes a requirement of this section commits an offence.

Criminal penalty:    50 penalty units.

Strict liability offence

           (11)  Subsection (10) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

86  Compensation to debtor or mortgagor

             (1)  The court, on application by the debtor or mortgagor, may order a credit provider to credit the debtor or mortgagor with a payment, fixed by the court, exceeding the net proceeds of sale if it is not satisfied that the credit provider sold the goods as soon as reasonably practicable (or at such other time as the credit provider and debtor or mortgagor agreed) for the best price reasonably obtainable.

             (2)  On application by the debtor or mortgagor, the mortgagee under any prior mortgage to which the goods are subject or the mortgagee under any subsequent mortgage of which the credit provider has notice, the court, if not satisfied that the credit provider complied with section 85, may make an order requiring the credit provider to compensate the debtor or mortgagor or the relevant mortgagee for any loss suffered as a result.

             (3)  The onus of proving that section 85 was complied with is on the credit provider.

Subdivision BEnding of reverse mortgage by credit provider receiving value of reverse mortgaged property

86A  Application of this Subdivision

             (1)  This Subdivision applies in relation to a credit contract for a reverse mortgage and a mortgage securing the debtor’s obligations under the contract if:

                     (a)  the debtor’s accrued liability (whether or not due and payable) under the contract is more than the amount (the adjusted market value) worked out under subsection (2) for the reverse mortgaged property; and

                     (b)  the credit provider receives an amount at least equal to the adjusted market value for the reverse mortgaged property either:

                              (i)  as a payment accepted from the debtor under the credit contract; or

                             (ii)  as proceeds of the sale by the credit provider of the reverse mortgaged property.

             (2)  The adjusted market value for the reverse mortgaged property is the amount worked out by:

                     (a)  working out the market value of the property in accordance with the regulations (if any); and

                     (b)  adjusting that value in accordance with the regulations (if any).

Regulations for the purposes of paragraph (b) may prescribe different adjustments to be made in different circumstances.

86B  Discharge of debtor’s obligations under credit contract and discharge of mortgage

             (1)  The debtor’s obligations under the credit contract are discharged by force of this subsection.

             (2)  The mortgage securing those obligations is discharged by force of this subsection.

Note:          This section does not apply in some cases: see section 86E.

86C  Credit provider must pay debtor excess of receipt over adjusted market value for reverse mortgaged property

                   If the amount received by the credit provider exceeds the adjusted market value for the reverse mortgaged property, the credit provider must pay the excess to the debtor.

Note 1:       If the credit provider contravenes this requirement, the court may order the credit provider to compensate anyone affected by the contravention: see section 124.

Note 2:       This section does not apply in some cases: see section 86E.

86D  Credit provider must not demand or accept further payments

             (1)  The credit provider must not:

                     (a)  purport to require payment under the credit contract; or

                     (b)  accept a payment purportedly under the credit contract.

Note 1:       If the credit provider contravenes this requirement, the court may order the credit provider to compensate anyone affected by the contravention: see section 124.

Note 2:       This section does not apply in some cases: see section 86E.

             (2)  To avoid doubt, subsection (1) does not apply to the payment (if any) that is described in subparagraph 86A(1)(b)(i) and caused this Subdivision to apply.

86E  Cases in which sections 86B, 86C and 86D do not apply

                   Sections 86B, 86C and 86D do not apply if:

                     (b)  the debtor engaged in fraud, or made a misrepresentation, relating to the reverse mortgage before, at or after the time the credit contract was made; or

                     (c)  circumstances prescribed by the regulations exist.

86F  Relationship between this Subdivision and other provisions

                   This Subdivision does not limit any of the other provisions of this Division.

Subdivision CNotice of first direct debit default

87  One‑off notice to be given the first time a direct debit default occurs

             (1)  This section applies if:

                     (a)  a debtor authorises payment of an amount for a credit contract by direct debit; and

                     (b)  default occurs; and

                     (c)  it is the first occasion the default occurs.

             (2)  The credit provider must give the debtor, and any guarantor, a notice, complying with this section, within 14 days of the default occurring.

Criminal penalty:    50 penalty units.

             (3)  The notice must contain the information prescribed under the regulations.

             (4)  Subsection (2) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (5)  This section does not affect any other requirement under this Code to give a notice.

Division 2Enforcement of credit contracts, mortgages and guarantees

88  Requirements to be met before credit provider can enforce credit contract or mortgage against defaulting debtor or mortgagor

Enforcement of credit contract

             (1)  A credit provider must not begin enforcement proceedings against a debtor in relation to a credit contract unless:

                     (a)  the debtor is in default under the credit contract; and

                     (b)  the credit provider has given the debtor, and any guarantor, a default notice, complying with this section, allowing the debtor a period of at least 30 days from the date of the notice to remedy the default; and

                     (c)  the default has not been remedied within that period; and

                     (d)  if the credit contract is for a reverse mortgage, the credit provider has spoken to one of the following persons by telephone or in person in that period and has thus both confirmed that the debtor received the default notice and informed the person of the consequences of failure to remedy the default, or has made reasonable efforts to do so:

                              (i)  the debtor;

                             (ii)  a practising lawyer representing the debtor;

                            (iii)  a person with a power of attorney relating to the debtor’s financial affairs.

Criminal penalty:    50 penalty units.

Note:          If a debtor or guarantor has given a credit provider a hardship notice or a postponement request there may be extra requirements that the credit provider must comply with before beginning enforcement proceedings: see sections 89A and 94.

Enforcement of mortgage

             (2)  A credit provider must not begin enforcement proceedings against a mortgagor to recover payment of money due or take possession of, sell, appoint a receiver for or foreclose in relation to property subject to a mortgage, unless:

                     (a)  the mortgagor is in default under the mortgage; and

                     (b)  the credit provider has given the mortgagor a default notice, complying with this section, allowing the mortgagor a period of at least 30 days from the date of the notice to remedy the default; and

                     (c)  the default has not been remedied within that period.

                     (d)  if the mortgage secures an obligation under a credit contract for a reverse mortgage, the credit provider has spoken to one of the following persons by telephone or in person in that period and has thus both confirmed that the mortgagor received the default notice and informed the person of the consequences of failure to remedy the default, or has made reasonable efforts to do so:

                              (i)  the mortgagor;

                             (ii)  a practising lawyer representing the mortgagor;

                            (iii)  a person with a power of attorney relating to the mortgagor’s financial affairs.

Criminal penalty:    50 penalty units.

Note:          If a mortgagor has given a credit provider a postponement request there may be extra requirements that the credit provider must comply with before beginning enforcement proceedings: see section 94.

Default notice requirements

             (3)  A default notice must contain a prominent heading at its top stating that it is a default notice and specify:

                     (a)  the default; and

                     (b)  the action necessary to remedy the default; and

                     (c)  a period for remedying the default; and

                     (d)  the date after which enforcement proceedings in relation to the default, and, if relevant, repossession of mortgaged property may begin if the default has not been remedied; and

                     (e)  that repossession and sale of mortgaged property may not extinguish the debtor’s liability; and

                      (f)  the information prescribed by the regulations about the debtor’s right to:

                              (i)  give a hardship notice under section 72; or

                             (ii)  give a postponement request under section 94; or

                            (iii)  make an application to the court under sections 74 and 96; and

                     (g)  the information prescribed by the regulations about:

                              (i)  the AFCA scheme; and

                             (ii)  the debtor’s rights under that scheme; and

                     (h)  that a subsequent default of the same kind that occurs during the period specified for remedying the original default may be the subject of enforcement proceedings without further notice if it is not remedied within the period; and

                      (i)  that, under the Privacy Act 1988, a credit reporting body (within the meaning of that Act) may collect and hold default information (within the meaning of that Act) in relation to the default; and

                      (j)  any other information prescribed by the regulations.

Combined notices

             (4)  Default notices that may be given under subsections (1) and (2) may be combined in one document if given to a person who is both a debtor and a mortgagor.

When default notice not required

             (5)  A credit provider is not required to give a default notice or to wait until the period specified in the default notice has elapsed, before beginning enforcement proceedings, if:

                     (a)  the credit provider reasonably believes that it was induced by fraud on the part of the debtor or mortgagor to enter into the credit contract or mortgage; or

                     (b)  the credit provider has made reasonable attempts to locate the debtor or mortgagor but without success; or

                     (c)  the court authorises the credit provider to begin the enforcement proceedings; or

                     (d)  the credit provider reasonably believes that the debtor or mortgagor has removed or disposed of mortgaged goods under a mortgage related to the credit contract or under the mortgage concerned, or intends to remove or dispose of mortgaged goods, without the credit provider’s permission or that urgent action is necessary to protect the mortgaged property.

Non‑remedial default

             (6)  If the credit provider reasonably believes that a default is not capable of being remedied:

                     (a)  the default notice need only specify the default; and

                     (b)  the credit provider may begin the enforcement proceedings after the period of 30 days from the date of the notice.

             (7)  Subsections (1) and (2) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

Some defaults are not a basis for a default notice

          (7A)  So far as a notice purporting to be a default notice relates to an alleged default under a credit contract for a reverse mortgage that is an event described in subsection 18A(3), the notice is not a default notice for the purposes of any of the following provisions:

                     (a)  subsections (1) and (2) of this section;

                     (b)  section 93.

Note:          This has the effect that:

(a)    if the credit provider begins enforcement proceedings relating to the alleged default the credit provider will contravene subsection (1) or (2) of this section (unless subsection (5) of this section applies); and

(b)    section 93 will affect the operation of an acceleration clause on the basis of the alleged default.

          (7B)  To avoid doubt, subsection (7A) does not affect the status of the notice as a default notice for the purposes of section 89, 94 or 95.

Other law about mortgages not affected

             (8)  This section is in addition to any provision of any other law relating to the enforcement of real property or other mortgages and does not prevent the issue of notices to defaulting mortgagors under other legislation. Nothing in this section prevents a notice to a defaulting mortgagor under other legislation being issued at the same time, or in the same document, as the default notice under this section.

Note:          By virtue of subsection 183(2), a notice may contain information required to be given under other legislation or be included in a notice given under other legislation.

89  Defaults may be remedied

             (1)  If a default notice under section 88 states that the credit provider intends to take action because the debtor or mortgagor is in default under the credit contract or mortgage, the debtor, mortgagor or guarantor may remedy the default within the period specified in the notice, and the contract or mortgage is then reinstated and any acceleration clause cannot operate.

             (2)  A debtor, mortgagor or guarantor does not remedy the default if, at the end of the period, the debtor or mortgagor is in default under the credit contract or mortgage because of the breach specified in the notice or because of a subsequent breach of the same type.

89A  Effect of hardship notices on enforcement

             (1)  This section applies if:

                     (a)  a credit provider is required to give a default notice under section 88 before beginning enforcement proceedings; and

                     (b)  before or after the credit provider gives the default notice, the debtor gives the credit provider a hardship notice (the current hardship notice) under section 72; and

                     (c)  either:

                              (i)  in the 4 months before the day the current hardship notice is given, the debtor had not given the credit provider another hardship notice; or

                             (ii)  in that 4‑month period, the debtor had given the credit provider one or more other hardship notices, but the credit provider reasonably believes that the basis on which the current hardship notice was given is materially different from the bases on which the other hardship notices were given.

             (2)  The credit provider must not begin enforcement proceedings against the debtor unless:

                     (a)  the credit provider has given the debtor a notice under paragraph 72(4)(b), in response to the current hardship notice, stating that the credit provider and debtor have not agreed to change the credit contract; and

                     (b)  the period of 14 days, starting on the day the credit provider gives the notice under paragraph 72(4)(b), has expired.

Criminal penalty:    50 penalty units.

Note:          The credit provider must allow the debtor at least 30 days from the date of the default notice to remedy the default—see section 88. The 14‑day period in subsection (2) may end before, at the same time as, or after the end of the period for remedying the default specified in the default notice.

             (3)  However, the credit provider may take possession of mortgaged goods if the credit provider reasonably believes that:

                     (a)  the debtor or mortgagor has removed or disposed of the mortgaged goods, or intends to remove or dispose of them, without the credit provider’s permission; or

                     (b)  urgent action is necessary to protect the goods.

             (4)  Subsection (2) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

90  Requirements to be met before credit provider can enforce guarantee against guarantor

             (1)  A credit provider must not, under a guarantee, enforce a judgment against a guarantor unless:

                     (a)  the credit provider has obtained a judgment against the debtor for payment of the guaranteed liability and the judgment remains unsatisfied for 30 days after the credit provider has made a written demand for payment of the judgment debt; or

                     (b)  the court has relieved the credit provider from the obligation to obtain a judgment against the debtor on the ground that recovery from the debtor is unlikely; or

                     (c)  the credit provider has made reasonable attempts to locate the debtor but without success; or

                     (d)  the debtor is insolvent.

Criminal penalty:    50 penalty units.

             (2)  Subsection (1) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

91  Requirements to be met before credit provider can repossess mortgaged goods

             (1)  A credit provider must not, without the consent of the court, take possession of mortgaged goods if the amount currently owing under the credit contract related to the relevant mortgage is less than 25% of the amount of credit provided under the contract or $10,000, whichever is the lesser.

Criminal penalty:    100 penalty units.

             (2)  However, the restriction does not apply:

                     (a)  to a continuing credit contract; or

                     (b)  if the credit provider believes on reasonable grounds that the debtor has removed or disposed of the mortgaged goods, or intends to remove or dispose of them, without the credit provider’s permission or that urgent action is necessary to protect the goods.

             (3)  Subsection (1) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (4)  In any proceedings in which it is established that a credit provider has taken possession of mortgaged goods contrary to subsection (1), the burden of establishing that the possession of the goods was lawfully taken by virtue of subsection (2) lies on the credit provider.

             (5)  Nothing in this section prevents a credit provider from accepting the return of goods under section 85.

93  Requirements to be met before credit provider can enforce an acceleration clause

             (1)  An acceleration clause is to operate only if the debtor or mortgagor is in default under the credit contract or mortgage and:

                     (a)  the credit provider has given to the debtor and any guarantor, or to the mortgagor, a default notice under section 88; and

                     (b)  the default notice contains an additional statement of the manner in which the liabilities of the debtor or mortgagor under the contract or mortgage would be affected by the operation of the acceleration clause and also of the amount required to pay out the contract (as accelerated); and

                     (c)  the default has not been remedied within the period specified in the default notice (unless the credit provider reasonably believes that the default is not capable of being remedied).

             (2)  However, a credit provider is not required to give a default notice under section 88 or to wait until the period specified in the default notice has elapsed before bringing an acceleration clause into operation, if:

                     (a)  the credit provider reasonably believes that it was induced by fraud on the part of the debtor or mortgagor to enter into the contract or mortgage; or

                     (b)  the credit provider has made reasonable attempts to locate the debtor or mortgagor but without success; or

                     (c)  the court authorises the credit provider not to do so; or

                     (d)  the credit provider reasonably believes that the debtor or mortgagor has removed or disposed of mortgaged goods under a mortgage related to the credit contract or the mortgage concerned, or intends to remove or dispose of mortgaged goods, without the credit provider’s permission or that urgent action is necessary to protect the goods.

             (3)  This section is in addition to any provision of any other law relating to the enforcement of real property mortgages and does not prevent the issue of notices to defaulting mortgagors under other legislation.

93A  Extra requirements for enforcing reverse mortgage if debtor’s liability exceeded value of reverse mortgaged property

             (1)  This section applies in relation to a credit contract for a reverse mortgage and a mortgage securing the debtor’s obligations under the contract if:

                     (a)  Subdivision B of Division 1 applies in relation to the contract and the mortgage (see section 86A); and

                     (b)  just before the amount was received by the credit provider as described in paragraph 86A(1)(b), the debtor’s accrued liability described in paragraph 86A(1)(a) exceeded that amount; and

                     (c)  one or more of the conditions in section 86E are met (so that sections 86B, 86C and 86D do not apply).

             (2)  If section 88 requires the credit provider to give the debtor or mortgagor a default notice before beginning enforcement proceedings to recover any of the excess, the credit provider must not begin them unless:

                     (a)  the default notice given to the debtor or mortgagor specifies:

                              (i)  the amount received by the credit provider; and

                             (ii)  the debtor’s accrued liability just before that amount was received; and

                            (iii)  the conditions in section 86E that are met; and

                     (b)  if the credit provider knows of a practising lawyer acting for the debtor or mortgagor and the credit provider gave the debtor or mortgagor the default notice by means other than giving it to the lawyer—the credit provider has given the lawyer a copy of the default notice at the same time as, or as soon as practicable after, giving the debtor or mortgagor the notice.

Criminal penalty:    50 penalty units.

Division 3Postponement of enforcement proceedings

94  Postponement of exercise of rights

Postponement request

             (1)  A debtor, mortgagor or guarantor who has been given a default notice under section 88 or a demand for payment under section 90 may, at any time before the end of the period specified in the notice or demand, request (a postponement request), orally or in writing, that the credit provider negotiate a postponement of:

                     (a)  the enforcement proceedings; or

                     (b)  any action taken under such proceedings; or

                     (c)  the operation of any applicable acceleration clause.

Credit provider’s notice about postponement

             (2)  If the debtor, mortgagor or guarantor gives the postponement request, the credit provider must, within 21 days after the day of receiving the request, give the person a written notice:

                     (a)  that states whether or not the credit provider agrees to negotiate a postponement; and

                     (b)  if the credit provider does not agree to negotiate—that states:

                              (i)  the name of the AFCA scheme; and

                             (ii)  the person’s rights under that scheme; and

                            (iii)  the reasons for not agreeing to negotiate.

Criminal penalty:    30 penalty units.

Enforcement proceedings

             (3)  If the debtor, mortgagor or guarantor gives the postponement request, the credit provider must not begin enforcement proceedings unless:

                     (a)  the credit provider has given the debtor, mortgagor or guarantor a notice under subsection (2) in response to the postponement request; and

                     (b)  the period of 14 days, starting on the day the credit provider gives the notice under subsection (2), has expired.

Criminal penalty:    50 penalty units.

Note:          The credit provider must allow the debtor or mortgagor at least 30 days from the date of the default notice to remedy the default—see section 88. The 14‑day period in subsection (3) may end before, at the same time as, or after the end of the period for remedying the default specified in the default notice.

             (4)  However, the credit provider may take possession of mortgaged goods if the credit provider reasonably believes that:

                     (a)  the debtor or mortgagor has removed or disposed of the mortgaged goods, or intends to remove or dispose of them, without the credit provider’s permission; or

                     (b)  urgent action is necessary to protect the goods.

             (5)  Subsections (2) and (3) are offences of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

95  Effect of negotiated postponement

             (1)  A default notice under section 88 or a demand for payment under section 90 is taken, for the purposes of this Code, not to have been given or made if a postponement is negotiated with the credit provider and the debtor, mortgagor or guarantor complies with the conditions of postponement.

             (2)  It is a condition of any postponement negotiated with a credit provider after the credit provider has taken possession of property subject to a mortgage that the mortgagor pay the reasonable costs of the credit provider in taking possession of the property.

             (3)  A credit provider must give written notice of the conditions of a postponement referred to in subsection (1) not later than 30 days after agreement is reached on the postponement. The notice must set out the consequences under subsection (6) if the conditions of the postponement are not complied with.

Criminal penalty:    100 penalty units.

             (4)  Subsection (3) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (5)  A credit provider that is required to give notice under section 71 in relation to a postponement is not required to comply with subsection (3).

             (6)  If any of the conditions of a postponement are not complied with, a credit provider is not required to give a further default notice under this Code to the debtor, mortgagor or guarantor with whom the postponement was negotiated before proceeding with enforcement proceedings.

96  Postponement by court

             (1)  If the debtor, mortgagor or guarantor is unable to negotiate a postponement, the debtor, mortgagor or guarantor may apply to the court for a postponement.

             (2)  The court may, after allowing the applicant, the credit provider and any debtor, mortgagor or guarantor concerned a reasonable opportunity to be heard, order or refuse to order the postponement to which the application relates and may make such other orders as it thinks fit.

             (3)  The court may, if it thinks it appropriate in the circumstances, stay any enforcement proceedings under the credit contract or mortgage until the application has been determined.

97  Credit provider may apply for variation of postponement order

             (1)  A credit provider that is subject to an order under this Division may apply to the court for variation of the order.

             (2)  On such an application, the court may vary the order to which the application relates as it thinks fit or may refuse to vary the order or may revoke the order.

Division 4Enforcement procedures for goods mortgaged

98  Information as to location of mortgaged goods

             (1)  A credit provider may, by written notice to a mortgagor under a goods mortgage, require the mortgagor to inform the credit provider, within 7 days after the day the notice is given to the mortgagor, where the mortgaged goods are and, if the mortgaged goods are not in the mortgagor’s possession, to give the credit provider all information in the mortgagor’s possession that might assist the credit provider to trace the goods.

             (2)  A mortgagor who contravenes a notice under this section commits an offence.

Criminal penalty:    50 penalty units.

             (3)  Subsection (2) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

99  Entry to residential property to take possession of goods

             (1)  A credit provider, or an agent of a credit provider, must not enter any part of premises used for residential purposes for the purpose of taking possession of mortgaged goods under a goods mortgage unless:

                     (a)  the court has authorised the entry; or

                     (b)  the occupier of the premises has, after being informed in writing of the provisions of this section, consented in writing to the entry.

             (2)  The regulations may provide for procedures for the obtaining and giving of consent for the purposes of this section and may set out the circumstances in which consent is or is not taken to have been given.

             (3)  If premises are entered in contravention of this section by a credit provider or an agent of a credit provider, the credit provider commits an offence.

Criminal penalty:    50 penalty units.

             (4)  Subsection (3) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

100  Court may order entry

                   The court may, on the application of a credit provider that is entitled to take possession of mortgaged goods, authorise the credit provider to enter residential premises for the purpose of taking possession of mortgaged goods.

101  Order for possession

             (1)  The court may, on the application of a credit provider that is entitled to take possession of mortgaged goods, order a person who has possession of the goods to deliver them to the credit provider at a specified time or place or within a specified period.

             (2)  The court may, on the application of a credit provider or other person required to deliver goods to a credit provider, by order vary the place at which or time or period within which goods must be delivered to the credit provider.

             (3)  A person who contravenes an order under this section commits an offence.

Criminal penalty:    30 penalty units.

             (4)  Subsection (3) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

102  Procedures to be followed by credit provider after taking possession of goods

Notice to be given

             (1)  A credit provider that has taken possession of goods under a mortgage must, within 14 days after doing so, give the mortgagor a written notice containing the following matters:

                     (a)  the estimated value of the goods;

                     (b)  the enforcement expenses incurred up to the date on which the goods were taken into the credit provider’s possession and, if enforcement expenses are accruing while the goods remain in the credit provider’s possession, the rate of accrual;

                     (c)  a statement of the mortgagor’s rights and obligations in the form set out in the regulations.

Goods not to be sold immediately

             (2)  A credit provider must not dispose of goods taken under the mortgage within 21 days after the date of the notice, unless the court authorises the credit provider to do so.

Effect of proceedings

             (3)  If at the end of that 21 day period a stay of enforcement proceedings is in force under this Code or an application under section 76 has not been determined, the credit provider must not dispose of the goods until those proceedings have been determined and any period allowed for appeal has elapsed.

Payment during notice period

             (4)  The credit provider must return the goods if:

                     (a)  the amount in arrears (less any accelerated amount) and the credit provider’s reasonable enforcement expenses are paid within that 21 day period and the debtor has not committed a further default of the same kind under the credit contract; or

                     (b)  the credit contract is paid out.

Offence

             (5)  A credit provider that contravenes this section commits an offence.

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.

103  Mortgagor may nominate purchaser of goods taken by credit provider

             (1)  The mortgagor may, within 21 days after the date of the notice given under section 102, nominate in writing a person who is prepared to purchase the goods from the credit provider at the estimated value or at any greater amount for which the credit provider has obtained a written offer to buy the goods.

             (2)  The credit provider must offer to sell the goods to that person for the estimated value or, if there is a written offer to buy the goods for a greater amount, that amount.

Criminal penalty:    50 penalty units.

             (3)  Subsection (2) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

104  Sale of goods by credit provider

             (1)  The credit provider must, if payment is not made within 21 days after the date of the notice given under section 102 and that section does not prevent the sale, as soon as reasonably practicable (or at such time as the credit provider and mortgagor agree) sell the goods in accordance with section 103 or, if there is no nominated buyer or the nominated buyer under that section does not buy the goods, for the best price reasonably obtainable.

             (2)  The credit provider must credit the mortgagor with a payment equivalent to the proceeds of the sale less any amounts which the credit provider is entitled to deduct from those proceeds. On the sale of the goods, the amount required to pay out the contract becomes due.

             (3)  A credit provider that sells mortgaged goods must give the mortgagor a written notice stating the gross amount realised on the sale, the net proceeds of the sale, the amount required to pay out the credit contract or the amount due under the guarantee, any further recovery action proposed to be taken by the credit provider against the debtor and any other information required by the regulations.

             (4)  A credit provider that contravenes a requirement of this section commits an offence.

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.

105  Matters for which account can be debited after mortgagee sale of goods

                   A credit provider that sells mortgaged goods under section 104 is entitled to deduct from the proceeds of that sale only the following amounts:

                     (a)  the amount currently secured by the mortgage in relation to the credit contract, not being more than the amount required to discharge the contract;

                     (b)  the amount payable to discharge any prior mortgage to which the goods were subject;

                     (c)  the amounts payable in successive discharge of any subsequent mortgages to which the goods were subject and of which the credit provider had notice;

                     (d)  the credit provider’s reasonable enforcement expenses.

106  Compensation to mortgagor

             (1)  The court, on application by a mortgagor, may order a credit provider to credit the mortgagor with a payment, fixed by the court, exceeding the net proceeds of sale if it is not satisfied that the credit provider sold the goods as soon as reasonably practicable, or at a time agreed between the credit provider and the mortgagor, for the best price reasonably obtainable.

             (2)  On application by a mortgagor, the mortgagee under any prior mortgage to which the goods are subject or the mortgagee under any subsequent mortgage of which the credit provider has notice, the court, if not satisfied that the credit provider exercised its power of sale in accordance with this Division, may make an order requiring the credit provider to compensate the mortgagor or the relevant mortgagee for any loss suffered as a result.

             (3)  The onus of proving that a power of sale was exercised in accordance with this Division is on the credit provider that exercised it.

Division 5Enforcement expenses

107  Recovery of enforcement expenses

             (1)  A credit provider must not recover or seek to recover enforcement expenses from a debtor, mortgagor or guarantor in excess of those reasonably incurred by the credit provider. Enforcement expenses of a credit provider extend to those reasonably incurred by the use of the staff and facilities of the credit provider.

Civil effect

             (2)  Any provision of the credit contract, mortgage or guarantee that appears to confer a greater right is void. If enforcement expenses are in fact recovered in excess of this limitation, they may be recovered back.

             (3)  If there is a dispute between the credit provider and the debtor, mortgagor or guarantor about the amount of enforcement expenses that may be recovered by the credit provider, the court may, on application by any of the parties to the dispute, determine the amount of that liability.

Division 6Mortgagor’s remedies

108  Mortgagor may apply to regain possession of mortgaged goods

             (1)  If a credit provider takes possession of mortgaged goods in contravention of Division 2 or Division 4, the court may, on the application of the mortgagor, order the credit provider, at the credit provider’s expense, to return possession of the goods to the mortgagor.

             (2)  An order may be made under subsection (1) even though the relevant default has not been remedied.

             (3)  A person who contravenes an order under subsection (1) commits an offence.

Criminal penalty:    30 penalty units.

             (4)  Subsection (3) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

109  Order for possession for mortgagor

             (1)  The court may, when making an order under subsection 108(1), order a person who has possession of the goods to deliver them to the mortgagor at a specified time or place or within a specified period.

             (2)  If the person is not the credit provider, the court may also order the credit provider to pay the person’s costs of delivering the goods to the mortgagor.

             (3)  The court may, on the application of a mortgagor or other person required to deliver goods to a mortgagor, by order vary the place at which or time or period within which goods must be delivered to the mortgagor.

             (4)  A person who contravenes an order under this section commits an offence.

Criminal penalty:    30 penalty units.

             (5)  Subsection (4) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

110  Ancillary or consequential orders

             (1)  This section applies if the court makes an order under this Division.

             (2)  The court may make ancillary or consequential orders it considers appropriate, including, for example, orders to restore the parties to the position they were in before the taking of possession in contravention of Division 2 or Division 4.

             (3)  Without limiting subsection (2), the court may order that the mortgagor be paid compensation for any damage to the goods because of the taking of possession.

Part 6Penalties for defaults of credit providers

Division 1Penalties for breach of key disclosure and other requirements

111  Key requirements

             (1)  For the purposes of this Division, a key requirement in connection with a credit contract (other than a continuing credit contract) is any one of the requirements of this Code contained in the following provisions:

                     (a)  subsection 17(3);

                     (b)  subsection 17(4);

                     (c)  subsection 17(5);

                     (d)  subsection 17(6);

                     (e)  paragraphs 17(8)(a) and (b)—but only in respect of retained credit fees and charges;

                      (f)  subsection 17(9);

                     (g)  subsection 17(11);

                     (h)  paragraphs 17(15)(a) and (b);

                   (ha)  subsection 17(15A);

                      (i)  subsection 23(1)—but only at the time the credit contract is entered into;

                      (j)  subsection 32A(1);

                     (k)  subsection 32AA(2).

             (2)  For the purposes of this Division, a key requirement in connection with a continuing credit contract is any one of the requirements of this Code contained in the following provisions:

                     (a)  paragraph 17(3)(b);

                     (b)  subsection 17(4);

                     (c)  subsection 17(5);

                     (d)  paragraphs 17(8)(a) and (b)—but only in respect of retained credit fees and charges;

                     (e)  subsection 17(9);

                    (ea)  subsection 17(15A);

                      (f)  subsection 23(1);

                    (fa)  subsection 32A(1);

                    (fb)  subsection 32AA(2);

                     (g)  subsection 34(6);

                     (h)  section 35.

             (3)  A key requirement relating to a disclosure or a statement of account extends to the requirements set out in Part 2 as to the manner in which the disclosure or statement is to be made, but does not extend to any requirements set out in the regulations.

112  Application for order relating to key requirements

             (1)  A party to a credit contract or a guarantor or ASIC may apply to the court for an order under this Division.

             (2)  A debtor or guarantor may not make an application for an order under this Division in respect of a contravention under a contract if the contravention under that contract is or has been subject to an application for an order made by the credit provider or ASIC anywhere in Australia under this Code.

             (3)  Subsection (2) does not prevent an application from being made for an order for the payment of compensation under section 118.

113  Penalty may be imposed for contravention of key requirement

Declaration as to key requirement

             (1)  The court must, on an application being made, by order declare whether or not the credit provider has contravened a key requirement in connection with the credit contract or contracts concerned.

Penalty orders

             (2)  The court may make an order, in accordance with this Division, requiring the credit provider to pay an amount as a penalty, if it is of the opinion that the credit provider has contravened a key requirement.

Prudential standing

             (3)  The court, in considering the imposition of a penalty, must have regard primarily to the prudential standing of any credit provider concerned, or of any subsidiary of the credit provider (within the meaning of the Corporations Act 2001), if the credit provider 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 requests the court to do so.

Other matters to be considered

             (4)  The court, in considering the imposition of a penalty, must have regard to the following:

                     (a)  the conduct of the credit provider and debtor before and after the credit contract was entered into;

                     (b)  whether the contravention was deliberate or otherwise;

                     (c)  the loss or other detriment (if any) suffered by the debtor as a result of the contravention;

                     (d)  when the credit provider first became aware, or ought reasonably to have become aware, of the contravention;

                     (e)  any systems or procedures of the credit provider to prevent or identify contraventions;

                      (f)  whether the contravention could have been prevented by the credit provider;

                     (g)  any action taken by the credit provider to remedy the contravention or compensate the debtor or to prevent further contraventions;

                     (h)  the time taken to make the application and the nature of the application;

                      (i)  any other matter the court considers relevant.

Related contraventions

             (5)  The court must, for the purposes of determining an application for an order under this Division or the amount of a penalty, treat a contravention of a key requirement that occurs merely because of another contravention of a key requirement as being a contravention of the same kind. If a provision referred to in section 111 contains several requirements, the court must treat contraventions of more than one of those requirements as a single contravention of the one key requirement for the purposes of determining the amount of a penalty.

Suppression of publication of application

             (6)  The court may, if it thinks it appropriate in the circumstances, order that particulars of or any matters relating to an application for an order under this Division not be published.

114  Penalty if application made by debtor or guarantor

             (1)  On application being made by a debtor or a guarantor for an order in relation to a credit contract other than a small amount credit contract, the maximum penalty that may be imposed by the court for a contravention of a key requirement is an amount not exceeding the amount of:

                     (a)  except as provided by paragraphs (b) and (c)—all interest charges payable under the contract from the date it was made; or

                     (b)  in the case of a contravention of a key requirement relating to a statement of account of a continuing credit contract—all interest charges payable under the contract for the period to which the statement of account relates; or

                     (c)  in the case of a contravention of a key requirement relating to prohibited monetary obligations—all interest charges accruing under the contract from the date the contravention occurred.

          (1A)  On application being made by a debtor or a guarantor for an order in relation to a small amount credit contract, the maximum penalty that may be imposed by the court for a contravention of a key requirement is an amount not exceeding the sum of the following amounts:

                     (a)  the amount of the permitted establishment fee payable in relation to the contract;

                     (b)  the total amount of the permitted monthly fees payable in relation to the contract based on the term of the contract when it was made.

             (2)  The court may, however, impose a greater penalty if the debtor or guarantor satisfies the court that the debtor 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 of future interest charges payable under a credit contract is to be calculated on the assumptions in sections 180 and 182.

115  Payment of penalty to debtor or guarantor

             (1)  An amount of penalty ordered by the court to be paid on an application for an order made by a debtor or a guarantor may be set off by the debtor or guarantor against any amount that is due or becomes due to the credit provider under the credit contract. If there is no such amount, the amount of the penalty is a debt due by the credit provider to the debtor or guarantor.

             (2)  The Consolidated Revenue Fund is appropriated for the purposes of:

                     (a)  a set‑off; or

                     (b)  a debt due;

in relation to a penalty ordered under subsection (1). The Public Governance, Performance and Accountability Act 2013 does not apply in relation to those amounts.

             (3)  An order made on application by a debtor or a guarantor may include such directions as the court considers appropriate relating to the payment of the amount owed by the debtor or the credit provider as a result of the order.

116  Penalty if application made by a credit provider or ASIC

             (1)  On application being made by a credit provider 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) does not exceed 5,000 penalty units for an individual.

             (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 or ASIC must be paid by the credit provider to ASIC on behalf of the Commonwealth.

118  Compensation for debtor or guarantor

             (1)  The court may, on application by a debtor or a guarantor, order that the credit provider pay to the debtor 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 or guarantor satisfies the court that the debtor 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 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 penalty for the purposes of section 116.

119  General provisions relating to applications by credit providers or ASIC

             (1)  An application for an order by a credit provider or ASIC:

                     (a)  may apply to any one or more credit contracts; and

                     (b)  may apply to all or any class of credit contracts entered into by the credit provider 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 must be given by the credit provider to ASIC.

120  ASIC may represent interests of debtors

                   ASIC may apply to the court to become a party to an application under this Division and, if joined as a party, has standing to represent the public interest and the interests of debtors.

121  Directions pending court’s decision

             (1)  The court may, before disposing of an application by a debtor or guarantor for an order under this Division, make such directions as it considers appropriate to protect the interests of the debtor or guarantor concerned.

             (2)  Subject to any such directions of the court, the application does not prevent:

                     (a)  any proceedings for the enforcement of the debtor’s obligations (or the obligations of a guarantor) from being taken; or

                     (b)  any rights over property the subject of a mortgage from being exercised.

             (3)  For the purposes of this section, a reference to the disposal of an application includes a reference to its withdrawal by the applicant.

             (4)  A credit provider affected by a direction of the court may apply to the court for variation of the direction. The court may, on such an application being made, vary or revoke the direction or refuse to vary or revoke the direction.

122  Offences

                   Nothing in this Division affects the liability of a person for an offence against this Code or the regulations.

123  Time limit for application for orders under this Division

             (1)  Proceedings under this Division for a declaration of contravention and the imposition of a penalty for a contravention may not be brought after 6 years from the day the contravention happened.

             (2)  Subsection (1) applies despite any Act relating to the limitation of time for commencing actions.

             (3)  In this section:

contravention means contravention of a key requirement.

Division 2Other penalties

124  Civil effect of contraventions

             (1)  If a credit provider contravenes a requirement of or made under this Code, the court may order the credit provider to make restitution or pay compensation to any person affected by the contravention and, in that event, may make any consequential order it considers appropriate in the circumstances.

             (2)  An application for the exercise of the court’s powers under this section may be made by:

                     (a)  a person affected by the contravention; or

                     (b)  ASIC on behalf of a person affected by the contravention, if the person has consented in writing to ASIC making the application; or

                     (c)  ASIC (on its own behalf).

Part 7Related sale contracts

Division 1Interpretation and application

125  Meaning of sale contract

                   For the purposes of this Code, a sale contract is a contract for any one or more of the following:

                     (a)  a contract for the sale of goods;

                     (b)  a contract for the supply of services.

126  Sale contracts to which this Part applies

                   This Part applies to or in respect of a sale contract or proposed sale contract only if the sale of the goods or supply of services concerned is financed, or is proposed to be financed, wholly or partly by the provision of credit to which this Code applies.

127  Linked credit providers and tied credit contracts

             (1)  For the purposes of this Code, a linked credit provider of a supplier means a credit provider:

                     (a)  with whom the supplier has a contract, arrangement or understanding relating to the supply to the supplier of goods in which the supplier deals, relating to the business carried on by the supplier of supplying goods or services or relating to the provision to persons to whom goods or services are supplied by the supplier of credit in respect of payment for those goods or services; or

                     (b)  to whom the supplier, by arrangement with the credit provider, regularly refers persons for the purpose of obtaining credit; or

                     (c)  whose forms of contract or forms of application or offers for credit are, by arrangement with the credit provider, made available to persons by the supplier; or

                     (d)  with whom the supplier has a contract, arrangement or understanding under which contracts or applications or offers for credit from the credit provider may be signed by persons at the premises of the supplier.

             (2)  For the purposes of this Code, a tied continuing credit contract is a continuing credit contract under which a credit provider provides credit in respect of the payment by a debtor for goods or services supplied by a supplier in relation to whom the credit provider is a linked credit provider.

             (3)  For the purposes of this Code, a tied loan contract is a credit contract (other than a continuing credit contract) entered into between a credit provider and a debtor where:

                     (a)  the credit provider knows or ought reasonably to know that the debtor enters into the credit contract wholly or partly for the purposes of payment for the goods or services supplied by a supplier; and

                     (b)  at the time the credit contract is entered into the credit provider is a linked credit provider of the supplier.

Division 2Liability of credit providers for suppliers’ misrepresentations

128  Credit provider liable with respect to supplier’s misrepresentations etc. about tied credit contract

             (1)  If there is a tied loan contract or a tied continuing credit contract in respect of a sale contract, any representation, warranty or statement made (whether orally or in writing) by the supplier, or any person acting on behalf of the supplier, to the debtor in relation to the tied loan contract or tied continuing credit contract gives the debtor the same rights against the credit provider as the debtor would have had if it had been made by the credit provider.

             (2)  Without prejudice to any other rights or remedies to which a credit provider may be entitled, a credit provider is entitled to be indemnified by the person who made the representation, warranty or statement, and any person on whose behalf it was made, against any damage suffered by the credit provider through the operation of this section.

Division 3Liability of credit providers in relation to goods

129  Right to damages under sale contract against both supplier and linked credit provider

General right to damages

             (1)  If:

                     (a)  a supplier supplies goods, or causes goods to be supplied, to a linked credit provider of the supplier and a debtor enters into a contract with the linked credit provider for the provision of credit in respect of the supply by way of sale of the goods to the debtor; or

                     (b)  a debtor enters into a contract with a linked credit provider of a supplier for the provision of credit in respect of the supply by the supplier of goods or services, or goods and services, to the debtor;

and the debtor suffers loss or damage as a result of misrepresentation, bre