On 17 September 2009, the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, announced a number of changes to the National Consumer Credit Protection legislation, following recommendations by the Senate Economics Committee.
The key change is to defer the commencement of the consumer credit reforms by six months, to 1 July 2010, to give the credit industry more time to make the necessary changes to move to the new regime.
The start date for the new responsible lending obligations on Authorised Deposit-taking Institutions (ADIs) and Registered Financial Corporations (RFCs) will remain 1 January 2011. The start date for other Australian Credit Licence holders will be 1 July 2010.
Amendments that directly address the recommendations of the Senate Economics Committee include:
- Recommendation 6 – the removal of subsection 130(3) from the National Consumer Credit Protection Bill 2009 (Cth) (NCCP Bill) so that credit providers will have to verify information provided in a preliminary assessment (Subsection 130(3) of the NCCP Bill states that if a preliminary assessment has been made by a credit assistant (such as a mortgage broker) in the preceding 90 days and the credit contract is found to be not unsuitable, the credit provider is not required to verify the consumer’s financial situation);
- Recommendation 8 – to clarify that consumers have access to remedies without having a formal finding by a court in relation to civil penalty; and
- Recommendation 11 – to require lenders to provide consumers with reasons for rejecting applications for hardship variations and stays of enforcement.
Please refer to Legal Update: Senate inquiry into the National Consumer Credit Protection Reform Package: inquiry report released dated 8 September 2009 for details on the 12 recommendations made by the Senate Economics Committee.
Other amendments included in the Government’s media release:
- modifying the definition of residential property so that it excludes properties which are not predominantly used for residential purposes;
- clarifying that certain ASIC decisions, particularly regarding enforcement action, are excluded from Administrative Appeals Tribunal review;
- enabling ASIC to issue certain documents in a form prescribed by regulations;
- clarifying that ASIC may exempt a person and all their credit representatives in a single determination;
- increasing flexibility for ASIC to grant exemptions to some parts of the National Credit Code or subject to conditions; and
- allowing for the transfer of information documents, assets or liabilities from a State or Territory to ASIC prior to the commencement of the National Credit Code.