The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, today announced changes to the implementation of the National Consumer Credit Protection Reform Package to better protect consumers.
The changes will bring forward the responsible lending conduct requirements for brokers and some lenders, which will now apply from 1 January 2010 instead of 1 January 2011, as previously proposed.
“Bringing forward responsible lending conduct laws to apply to brokers and some lenders ensures that consumers can be immediately protected from any predatory and irresponsible lending,” Minister Bowen said.
“While it is recognised that many brokers and lenders already meet these requirements through industry codes and standards, it will set a national standard for responsible lending and prohibit poor credit practices at an earlier stage. It will also allow consumers to access remedies for irresponsible lending sooner.”
“Importantly, under this new timetable for reform, there will be no gap in consumer protection between the ‘turning off’; of the State and Territory credit regimes and the ‘turning on’; of the new Commonwealth regime with these crucial responsible lending requirements,” Minister Bowen said.
The responsible lending conduct requirements will commence for the remaining lenders (Authorised Deposit-taking Institutions (ADIs) and Registered Finance Corporations (RFCs)) from 1 January 2011. This will allow these credit providers sufficient time to prepare for compliance with the new regime and ensure a smooth transition for the industry.
All remaining responsible lending requirements (such as disclosure of fees and commissions) will commence on 1 January 2011.
“It is crucial that the Government provide businesses whose lending and credit related activities rely upon extensive and complex business processes and IT systems with enough time to be ready to comply with the new regime,” Minister Bowen said. “This revised commencement date provides an appropriate time for this to happen.”
Further changes to the implementation timetable.
In addition to this revised timetable, the commencement of selected enhancements to the new National Credit Code for all credit providers will be deferred from 1 January 2010 to 1 July 2010.
“In transitioning the State and Territory Uniform Consumer Credit Code into the new National Credit Code, substantial enhancements have been included. These enhancements will require lenders to change important paper and IT based disclosure and consumer information related documents,” Minister Bowen said.
“This extension will give all credit providers the time they need to make the changes necessary to operate in this new regulatory environment.”
A table summarising these changes is at Attachment A.
Further information regarding the Reform Package is available at www.treasury.gov.au/consumercredit.
|Implementation Requirements||In the Credit Bill
|Under Revised Timeline
|Requirement not to arrange or provide credit that is unsuitable – non-ADIs and non-RFCs||From 1/1/2011||From 1/1/2010|
|Requirement not to arrange or provide credit that is unsuitable – ADIs and RFCs||From 1/1/2011||From 1/1/2011
|Other responsible lending obligations (including disclosure requirements, such as upfront disclosure of broker fees and charges)||From 1/1/2011||From 1/1/2011
|New NCC Requirements:
• Application to credit for residential investment properties;
• Introduction of debit default notices;
• Amendments to business purpose declarations;
• Amendments to default notices; and
• New notices in response to application for hardship variations and postponements.
|From 1/1/2010||Current State Code requirements replicated in the NCC from 1 January 2010
New NCC requirements from 1 July 2010