Commonwealth Numbered Acts Commonwealth Numbered Acts
National Consumer Credit Protection Act 2009
1A At the end of paragraph 335A(1)(a)
Add:
(iv) sections 23A, 31A, 31B, 39A and 39B of the National Credit Code;
1 Subsections 17(4) to (6) of the National Credit Code
Omit "The contract", substitute "In the case of a credit contract other than a small amount credit contract, the contract".
2 Section 23 of the National Credit Code (heading)
Repeal the heading, substitute:
23 Prohibited monetary obligations--general
3 Subsection 23(1) of the National Credit Code
After "credit contract", insert "(other than a small amount credit contract)".
4 After section 23 of the National Credit Code
Insert:
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.
5 Section 24 of the National Credit Code (heading)
Repeal the heading, substitute:
24 Offences related to prohibited monetary obligations--credit providers
6 After subsection 24(1) of the National Credit Code
Insert:
(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.
Criminal penalty: 100 penalty units.
7 Subsection 24(2) of the National Credit Code
Omit "Subsection (1) is an offence", substitute "Subsections (1) and (1A) are offences".
8 After section 24 of the National Credit Code
Insert:
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.
9 After section 27 of the National Credit Code
Insert:
27A Application of this Division
This Division does not apply to a small amount credit contract.
10 Section 31 of the National Credit Code
Before "The regulations", insert "(1)".
11 At the end of section 31 of the National Credit Code
Add:
(2) Subsection (1) does not apply to a small amount credit contract.
12 After section 31 of the National Credit Code
Insert:
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.
(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.
13 After Division 4 of Part 2 of the National Credit Code
Insert:
Division 4A -- Annual 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.
(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:
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:
where:
"A j 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).
"C j 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 R j " .
"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.
"R j 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.
14 Subsection 34(6) of the National Credit Code
Omit "A statement", substitute "In the case of a credit contract other than a small amount credit contract, a statement".
15 After Division 5 of Part 2 of the National Credit Code
Insert:
Division 5A -- Additional 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 maximum amount that may be recovered (whether by repayments under the contract or otherwise) by the credit provider in relation to the contract must not exceed an amount that is twice the adjusted credit amount in relation to the contract.
(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.
16 At the end of subsection 111(1) of the National Credit Code
Add:
; (j) subsection 32A(1);
(k) subsection 32AA(2).
17 After paragraph 111(2)(f) of the National Credit Code
Insert:
(fa) subsection 32A(1);
(fb) subsection 32AA(2);
18 Subsection 114(1) of the National Credit Code
After "order", insert "in relation to a credit contract other than a small amount credit contract".
19 After subsection 114(1) of the National Credit Code
Insert:
(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.
20 Subsection 204(1) of the National Credit Code
Insert:
"adjusted credit amount" , in relation to a small amount credit contract, means the first amount of credit that is, or is to be, provided under the contract.
Note: Some amounts are to be disregarded in working out the first amount of credit (see subsection (3)).
21 Subsection 204(1) of the National Credit Code
Insert:
"annual cost rate" of a credit contract means the annual cost rate of the contract calculated in accordance with section 32B.
22 Subsection 204(1) of the National Credit Code
Insert:
"credit cost amount" : see subsection 32B(3).
22A Subsection 204(1) of the National Credit Code
Insert:
"medium amount credit contract" : a credit contract is a medium amount credit contract if:
(a) the contract is not a continuing credit contract; and
(b) the credit provider under the contract is not an ADI; and
(c) the credit limit of the contract is:
(i) at least $2,001 (or such other amount as is prescribed by the regulations); but
(ii) not more than $5,000 (or such other amount as is prescribed by the regulations); and
(d) the term of the contract is at least 16 days but not longer than 2 years (or such other number of years as is prescribed by the regulations); and
(e) the contract meets any other requirements prescribed by the regulations.
23 Subsection 204(1) of the National Credit Code
Insert:
"permitted establishment fee" : see paragraph 31A(1)(a).
24 Subsection 204(1) of the National Credit Code
Insert:
"permitted monthly fee" : see subsection 31A(2).
25 Subsection 204(1) of the National Credit Code
Insert:
"prohibited credit amount" : see subsection 39A(1).
26 Subsection 204(1) of the National Credit Code
Insert:
"small amount credit contract" has the same meaning as in section 5 of the National Credit Act.
27 At the end of section 204 of the National Credit Code
Add:
(3) In working out the first amount of credit that is, or is to be, provided under a small amount credit contract for the purposes of the definition of adjusted credit amount in subsection (1), the following amounts are to be disregarded:
(a) if some or all of the amount of a fee or charge (the fee amount ) payable in relation to the contract forms, or is to form, part of the first amount of credit that is, or is to be, provided under the contract--the fee amount;
(b) if subsection 39A(1) is contravened in relation to the contract--the prohibited credit amount;
(c) any other amount prescribed by the regulations.
