14 Aug 2009

Consumer Credit Reform Timetable Changes and Regulations Exposure Draft Released

by Steven Klimt, Narelle Smythe, Randal Dennings

The Minister for Financial Services today announced changes to the timetable for implementation of the reforms and released for public exposure the draft National Consumer Credit Protection Reform regulations and associated explanatory material.

The timetable changes are:

  • reversion to 1 January 2010 for compliance by finance brokers and some lenders with the responsible lending requirements not to arrange or provide credit that is unsuitable. ADIs and Registered Finance Companies will still have until 1 January 2011 to introduce measures to comply with these requirements;
  • delay until 1 July 2010 to the introduction of the new national consumer credit code requirements in relation to regulation of residential investment products, direct debit default notices, business purpose declarations, default notices and notices in response to hardship applications. The existing relevant UCCC provisions will be enacted into the national consumer credit code and apply until 30 June 2010.

Key features of the draft regulations released today include:

  • exemptions for point of sale retailers such as car dealerships and retailers, where they are acting through an arrangement with a lender;
  • replication of current state based regulations such as in relation to business purpose declarations, interest rates and information to be included in notices;
  • more detailed regulation of persons registered to engage in credit activities (consistent with regulations made in respect of holders of Australian credit licences);
  • ASIC can undertake industry consultation to develop guidance material;
  • fees for licensing and compliance based upon the size of the applicant or licence holder; and
  • maintaining the existing exemptions from the electronic transactions legislation under the credit regulation scheme administered by the states and territories.

Additional regulations are expected to be released by 31 August covering the application of the credit bill to lenders under existing credit contracts in force as at the date the Commonwealth bill commences and for the calculation and payment of interest for residential investment properties.

Comments on the draft regulations can be made by 9 September 2009.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.