Consumer Credit (New South Wales)
Amendment (Maximum Annual
Percentage Rate) Bill 2005

Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.

Overview of Bill

Section 11 of the Consumer Credit (New South Wales) Act 1995 (the Principal Act)
enables a maximum annual percentage rate to be prescribed for credit contracts
covered by the Consumer Credit (New South Wales) Code (the Code). The Principal
Act together with the Consumer Credit (New South Wales) Special Provisions
Regulation 2002 (the Principal Regulation) currently set that maximum rate at 48%
and provide that the calculation for determining the maximum annual percentage rate
is to include interest charges and all credit fees and charges in the case of credit
contracts that do not exceed 62 days. Section 10B of the Principal Act also provides
that in disclosing the annual percentage rate for contracts of that duration all charges
in the nature of interest charges are to be included whether or not they are described
as interest charges.

The objects of this Bill are:

(a) to amend the Principal Act to enable the making of regulations that require the
calculation for determining the maximum annual percentage rate to include
interest charges and all credit fees and charges for all credit contracts covered
by the Code, and

(b) to amend the Principal Act to extend the disclosure requirements in section
10B of the Act to all credit contracts covered by the Code (these disclosure
requirements currently apply only to a contract for the provision of credit
limited to a total period that does not exceed 62 days), and

(c) to amend the Principal Regulation to provide that interest charges and all
credit fees and charges are to be included for the purposes of calculating the
maximum annual percentage rate for all credit contracts covered by the Code
(with the exception of certain temporary credit facilities provided by
authorised deposit-taking institutions), and

(d) to amend the Principal Regulation to provide for additional assumptions that
are to apply when calculating the maximum annual percentage rate for
continuing credit contracts.

Outline of provisions

Clause 1 sets out the name (also called the short title) of the proposed Act.

Clause 2 provides for the commencement of the proposed Act on a day or days to be
appointed by proclamation.

Clause 3 is a formal provision that gives effect to the amendments to the Principal
Act set out in Schedule 1.

Clause 4 is a formal provision that gives effect to the amendments to the Principal
Regulation set out in Schedule 2.

Schedule 1 Amendment of Consumer Credit (New
South Wales) Act 1995
Schedule 1 [1] amends section 10B of the Principal Act, to extend the disclosure
requirements in that section to all credit contracts covered by the Code. The current
disclosure requirements apply only to a contract for the provision of credit limited to
a total period that does not exceed 62 days.

Schedule 1 [2] substitutes section 11 of the Principal Act, to enable the making of
regulations that require the calculation for determining the maximum annual
percentage rate to include interest charges and all credit fees and charges for all credit
contracts covered by the Code.

Schedule 1 [3] amends section 14 of the Principal Act to enable the making of
regulations of a savings and transitional nature consequent on the enactment of the
proposed Act.

Schedule 2 Amendment of Consumer Credit (New
South Wales) Special Provisions
Regulation 2002
Schedule 2 [1] inserts proposed clause 7 (2)–(5) into the Principal Regulation, to
provide that interest charges and all credit fees and charges are to be included for the
purposes of calculating the maximum annual percentage rate for all credit contracts
covered by the Code (with the exception of certain temporary credit facilities
provided by authorised deposit-taking institutions).

Schedule 2 [2]–[4] and [6]–[8] contain consequential amendments.

Schedule 2 [5] inserts proposed clause 8 (6A) into the Principal Regulation, to
provide for additional assumptions that are to apply when calculating the maximum
annual percentage rate for continuing credit contracts.

Schedule 2 [9] applies the amendments to existing credit contracts.

Note: If this Bill is not modified, these Explanatory Notes would reflect the Bill as passed in the House. If the Bill has been amended by Committee, these Explanatory Notes may not necessarily reflect the Bill as passed.

 

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