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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
Consumer Credit (Queensland) and Other
Acts Amendment Bill 2008
Explanatory Notes
Short Title
The short title of the Bill is the Consumer Credit (Queensland) and Other
Acts Amendment Bill 2008.
Objective of the Bill
Consumer Credit (Queensland) Act 1994
Under the Australian Uniform Credit Laws Agreement 1993, the
Governments of each State and Territory agreed to establish a uniform
scheme to regulate consumer credit. Clause 13 of the Agreement allows a
State to individually introduce legislation that fixes the maximum interest
rates payable under consumer credit contracts entered under the national
Consumer Credit Code (the Code).
The Consumer Credit (Queensland) Act 1994 currently allows a regulation
to prescribe a maximum annual percentage rate and permits utilising
provisions of the Code for offences and remedies. The objective of the Bill
is to amend the Consumer Credit (Queensland) Act 1994 to facilitate the
implementation of a maximum annual percentage rate for a consumer
credit contract in Queensland. The amendments will allow for the capping
of interest, fees and charges and will ensure all consumers are protected,
particularly vulnerable and marginalised consumers without the capacity or
financial means to legally challenge a loan. The level of the cap and how it
is calculated will be placed in a regulation.
Legal Profession Act 2007
The Legal Profession Act 2007 is being amended as a consequence of the
expiry of the Legal Profession (Transitional) Regulation 2007 and to
facilitate terms of office on the Queensland Law Society council being for
calendar years.
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
Security Providers Act 1993
The Security Providers Act 1993 is being amended in relation to security
equipment installers, security office licence categories and the licence
conditions regarding on-going training.
Reasons for the Bill
Consumer Credit (Queensland) Act 1994
Australian households are holding historically high levels of debt. At the
same time, the costs of many basic living expenses such as rent and petrol
are also increasing. Against this background, many Queensland households
are at risk of financial stress. Many of those most at risk resort to high cost
loans because they are unable to obtain credit from mainstream lenders
such as banks and credit unions.
Borrowers who use high cost lenders are predominantly low-income,
disadvantaged or vulnerable consumers. Many have poor credit histories,
are already in financial difficulty and have been excluded from the
mainstream market. Such consumers often seek credit in urgent or
desperate circumstances when they are most vulnerable to exploitation.
The consumer detriment flowing from high cost loans can be serious.
Problems include serious financial hardship including inability to meet
other bills and household expenses; forced sale of assets; a depleted
capacity to save; debt spirals or debt traps; an increased likelihood of
default on loan repayments; bankruptcy; stress and other health and social
costs including family breakdown caused by financial stress. High cost
loans also have broader social impacts including an increased strain on
community and welfare services, and reduced consumer confidence. Legal
Aid Queensland's advice services to consumers aggrieved by high-cost
loans has increased by 20% in the year 2006-2007, compared to the year
2005-2006.
Victoria, New South Wales and the Australian Capital Territory have
interest rate caps to control the cost of consumer credit.
In late 2006, community consultation was conducted on options for better
protecting vulnerable Queensland consumers from exploitation by
short-term credit providers. Apart from responses received from payday
lenders and other small amount credit providers, respondents supported the
introduction of a legislative cap on interest, fees and charges.
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
Submissions received from key stakeholders including welfare and
consumer advocacy groups showed significant community concern about
increasing social problems arising from debt incurred under high interest
loans. Submissions also indicate borrowers of high cost credit are likely to
`roll over' their loan rather than pay it back in accordance with the original
loan period, or form a dependency on repeatedly obtaining credit to live
from month to month. Many lenders offer loan extensions or further capital
over the phone. The risk of vulnerable consumers falling into a debt trap is
significant.
While the fringe lending industry in Queensland has grown dramatically in
recent years, competition has failed to lower the price of credit to
acceptable levels. The Queensland Government has approved a course of
action that includes capping interest rates, fees and charges to ensure all
consumers are protected. An interest rate cap provides relief to consumers
and is easily enforced. It also sends a clear message to lenders about what
is legitimate lending practice, and provides consistency and certainty for
both consumers and industry.
Legal Profession Act 2007
Section 751 of the Legal Profession Act 2007 provides for regulations of a
savings or transitional nature to be made for matters for which the Act has
not made sufficient provision. Regulations made under the section expire
one year after the commencement of the section. The Legal Profession
(Transitional) Regulation 2007 (the transitional regulation) made under the
section provides for:
ˇ an exemption from the reservation of legal work to legal practitioners
for certain activities of licensees under the Property Agents and Motor
Dealers Act 2000 (PAMDA); and
ˇ the liability for the costs of a costs assessment.
Provision for these matters needs to be incorporated into the Legal
Profession Act 2007 because the transitional regulation expires on 1 July
2008.
The Bill also includes an amendment to facilitate terms of office on the
Queensland Law Society council being according to calendar years from 1
January 2009. The Council will be able to make rules of a transitional
nature extending to 31 December 2008 the terms of the current president
and deputy president whose terms would otherwise expire on 27 July 2008
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
and to 31 December 2009 the terms of other council members whose terms
would otherwise expire on 27 July 2009.
Security Providers Act 1993
The Security Providers Amendment Act 2007 introduced licensing
requirements for security equipment installers. Under these requirements,
new sectors of the security industry will be licensed, including businesses
which work within electrical contracting and locksmithing. In keeping
with the overall framework of this Act, an age requirement of 18 years and
over applies to applicants for licences in these new sectors of the industry.
However, subsequent to the passing of these amendments it became clear
that the security equipment installation sector engages apprentices and
trainees - many of whom may not yet be 18 years of age, and are therefore
unable to be licensed under the Security Providers Act 1993. As security
equipment installation is not associated with physically maintaining order
and control in liquor licensed premises, the age limit is not directly
relevant.
An amendment will provide certainty that trainees and apprentices under
the age of 18 may obtain a security equipment installers licence.
Modifications to the definition of security officer activities introduced by
the Security Providers Amendment Act 2007 were made to define specific
security officer activities in place of the previously broad definition. For
example, the specific activity of guarding through the use of electronic
monitoring devices such as closed circuit television systems.
The amendments in relation to security officer licensing will implement the
new categories of security officer licences envisaged by the Security
Providers Amendment Act 2007.
The Security Providers Amendment Act 2007 also introduced an on-going
training regime for security providers as part of the Queensland
Government's commitment to ensuring a skilled and knowledgeable
security industry. The amendments clarify the `show cause' provisions of
the Security Providers Act 1993 do not apply to a determination by the
Chief Executive to update new or modified training requirements for
security providers. This will enable more efficient State wide
commencement of new training requirements and will contribute to
personal safety and the protection of property.
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
Achievement of the Objective
Consumer Credit (Queensland) Act 1994
The Consumer Credit (Queensland) Act 1994 will be amended to establish
the legislative framework for the implementation of an annual percentage
rate cap on consumer credit contracts.
The Government has decided that the cap will be set at 48% and that all
fees and charges, as well as interest charges for a credit contract, are to be
included in the calculation of the annual percentage rate. A regulation will
be made after the Bill is passed to specify the cap amount and the formula
for calculating an annual percentage rate to determine whether the total
amount of interest, fees and charges under a credit contract exceeds the cap
limit. This policy is consistent with the approach taken in New South Wales
and the Australian Capital Territory. Furthermore, any amount above the
48% interest rate cap that has been paid under a credit contract is void and
recoverable by the borrower. The credit provider will also have committed
an offence. The current provisions in the Code for offences and remedies
will be utilised.
The regulation will also provide that credit fees and charges are not to be
calculated where a temporary credit facility is established, such as an
overdraft or a bridging loan, if it is provided by an authorised
deposit-taking institution. Authorised deposit-taking institutions include
the major banks and credit unions. Consultation did not reveal community
concern that these institutions were charging low income and vulnerable
consumers excessive amounts for credit. This is also consistent with the
approach taken in New South Wales and the Australian Capital Territory.
Legal Profession Act 2007
The Legal Profession Act will be amended to make provision for the
matters currently dealt with in the Legal Profession (Transitional)
Regulation 2007 relating to a current exemption from the reservation of
legal work for certain activities of licensees under the Property Agents and
Motor Dealers Act 2000 and liability for the costs of costs assessments.
The Act will also be amended to allow for a transitional society rule to be
made to facilitate the terms of office for members of the Queensland Law
Society Council being according to calendar years.
Security Providers Act 1993
The Security Providers Act 1993 will be amended to allow security
equipment installer apprentices and trainees under the age of 18 years to
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
apply for a licence. The Chief Executive must be satisfied that the applicant
is an apprentice or trainee within the meaning of the Vocational Education,
Training and Employment Act 2000, meaning that the person must be a
party to a signed apprenticeship or traineeship under that Act.
The Security Providers Act 1993 will also be amended to provide licences
for specific security officer activities and to facilitate a State wide
commencement of the on-going training regime.
Estimated Cost for Government Implementation
Consumer Credit (Queensland) Act 1994
The Government will resource a comprehensive package of supporting
measures to assist low income credit consumers. Funding will be provided
to:
ˇ conduct a communications campaign to inform lenders and borrowers
about the cap and its effect;
ˇ boost compliance resources to ensure lenders comply with the cap, to
prosecute lenders who flaunt the cap or attempt to avoid the cap by
operating outside the Code and where appropriate, conciliate disputes
between borrowers and lenders;
ˇ boost Legal Aid Queensland's capacity to provide legal information,
advice and representation for consumers of high cost consumer loans.
This is critical because without representation, such loans are rarely
challenged as vulnerable, low income borrowers do not have the
means, the capacity or the confidence to take such action;
ˇ explore and facilitate other community-based assistance such as
no-interest and low-interest loans schemes, which offer a partial
supply-side answer to high cost credit. Traditionally operated by
community organisations, welfare organisations and charities either
alone or in partnership with mainstream lenders, such schemes
provide vulnerable consumers with a safe and non-exploitative
alternative for small loans. Such schemes also have the capacity to
promote competition in the marketplace, which in turn places
downward pressure on prices; and
ˇ develop greater community awareness of alternatives to high cost
loans, such as Centrelink special payments and hardship payment
arrangements offered by utility providers.
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
Legal Profession Act 2007
Implementation of these amendments will be met with existing budget
allocations.
Security Providers Act 1993
Implementation of these amendments will be met with existing budget
allocations.
Consistency with Fundamental Legislative Principles
The amendments to the Security Providers Act 1993 in relation to the
power enabling the Chief Executive to require further training involves an
inconsistency with fundamental legislative principles. This is because the
amendments do not allow for the exercise of power by the Chief Executive
in requiring new training to be subject to review.
This inconsistency is justified on the basis that the Queensland Government
has decided to introduce an on-going training regime for security providers
to lift their competencies because the conduct of security providers has a
direct impact on personal safety and the protection of property. Security
providers must already be trained with a minimum set of skills and
knowledge before applying for a licence and the amendments will ensure
new and advanced training techniques can be implemented without
challenge which would cause unwarranted delay, administrative expense
and uncertainty.
The amendment to the Legal Profession Act 2007 to facilitate the terms of
office of members of the Queensland Law Society council being for
calendar years from 1 January 2009 may involve an inconsistency with the
fundamental legislative principles. This is because it allows the making of
rules by the QLS council to extend the terms of the president, deputy
president and other council members beyond the terms of one and two
years stated in section 685 and 686 of the Act. The justification is that the
rules are for the purpose of allowing a short term extension only for the
purpose of allowing the terms to move to calendar years. The rules will
apply for a short period and the limits for the making of the rules are
clearly stated in the transitional amendment for this purpose.
All other proposed amendments are consistent with Fundamental
Legislative Principles.
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
Consultation
Consumer Credit (Queensland) Act 1994
Community
Widespread consultation has taken place. From 4 November 2006 to 15
December 2006, stakeholder submissions were received in response to a
Discussion Paper entitled `Managing the Cost of Consumer Credit in
Queensland'. On 26 November 2007, the draft Consumer Credit
(Queensland) Amendment Bill 2008 and Consumer Credit (Queensland)
Special Provisions Regulation 2008 which contained a 48% interest rate
cap inclusive of interest, fees and charges, were released for public
consultation until 15 February 2008. The Attorney-General and staff of the
Department of Justice and Attorney-General have also met with industry
and consumer stakeholders.
Government
All Queensland Government Departments have been consulted on the
proposed amendments including the Department of the Premier and
Cabinet, Queensland Treasury, and the Office of Regulatory Efficiency in
the Department of Tourism, Regional Development and Industry.
Legal Profession Act 2007
The Queensland Law Society and the Real Estate Institute of Queensland
have been consulted on the proposed amendments to section 24 of the
Legal Profession Act 2007. The Queensland Law Society has been
consulted on proposed new section 770.
Notes on Provisions
Part 1 Preliminary
Clause 1 provides that the short title is the Consumer Credit (Queensland)
and Other Acts Amendment Act 2008.
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
Clause 2 provides that Part 2 amending the Consumer Credit (Queensland)
Act 1994 and Part 3 amending the Legal ProfessionAct 2007 commence on
a date to be fixed by proclamation and Part 4 amending the Security
Providers Act 1993 commences immediately after all the provisions of the
Security Providers Amendment Act 2007 have commenced.
Part 2 Amendment of Consumer Credit
(Queensland) Act 1994.
Clause 3 provides that this Part amends the Consumer Credit (Queensland)
Act 1994.
Clause 4 amends section 14 of the Consumer Credit (Queensland) Act
1994 which provides for a maximum annual percentage rate.
Section 14(2) currently provides Part 2, Division 2 of the Consumer Credit
Code which limits a debtor's monetary obligations applies to a maximum
annual percentage rate prescribed by a regulation. A note is inserted for
subsection (2) clarifying the effect of the application of these provisions of
the Code should a provision of a credit contract impose a monetary liability
in excess of a prescribed rate.
New subsection (3) enables a regulation to require that for calculating the
annual percentage rate of a credit contract for section 14(1), not only
interest charges but all credit fees and charges payable by the debtor under
the credit contract are to be included. The term `credit fees and charges' is
defined in schedule 1 of the Code.
New subsection (4) makes clear that other remedies over and above the
protection provided by the cap may be available to the borrower under the
Code, including those contained in provisions relating to hardship and the
reopening of unjust transactions.
Clause 5 replaces the Part 10 heading of the Consumer Credit
(Queensland) Act 1994 consequential to the insertion of a new Division 2
and new section 66 (clause 6).
Clause 6 inserts new Division 2 and new section 66 into the transitional
provisions of the Consumer Credit (Queensland) Act 1994. The new
section will apply if a maximum annual percentage rate is prescribed for a
credit contract under section 14(1) of the Act. Section 66(2) facilitates a
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
regulation providing the circumstances for the prescribed maximum annual
percentage rate to apply to a credit contract entered into before the day the
rate is prescribed.
Part 3 Amendment of Legal Profession
Act 2007
Clause 7 states that this Part amends the Legal Profession Act 2007.
Clause 8 amends section 24 of the Legal Profession Act 2007 by:
ˇ omitting the current subsection (2)(e) which provides for section 24(1)
not to apply to certain activities of PAMDA licensees;
ˇ inserting additional subsections which describe the activities of
Property Agents and Motor Dealers Act 2000 licensees and
employees that are not engaging in legal practice; and
ˇ clarifying that, for the purpose of determining whether the activities of
a Property Agents and Motor Dealers Act 2000 licensee amount to
engaging in legal practice:
-- it is immaterial that a fee is charged by the Property Agents and
Motor Dealers Act 2000 licensee for the transaction for which
the licensee or employee provides, prepares or completes the
property contract or other document; and
-- it is material if charging the fee is an offence under section 578 of
the Property Agents and Motor Dealers Act 2000.
Clause 9 replaces section 342 of the Legal Profession Act 2007 to be
consistent with the equivalent provision under the national model laws for
the regulation of the legal profession developed through the Standing
Committee of Attorneys-General.
Clause 10 provides for society rules of a transitional nature to be made for
extending to 31 December 2008 the terms of the current president and
deputy president whose terms would otherwise expire on 27 July 2008 and
to 31 December 2009 the terms of other council members whose terms
would otherwise expire on 27 July 2009. This is intended to facilitate terms
of office on the Queensland Law Society council being according to
calendar years from 1 January 2009.
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
Part 4 Amendment of Security
Providers Act 1993
Clause 11 states that this Part amends the Security Providers Act 1993.
Clause 12 removes the words `with or without a guard dog' from the
definition of a security officer in the Act.
Clause 13 clarifies an applicant must state in the application:
(a) if it is for carrying out the functions of a security officer--the category
of functions intended to be carried out under the licence; or
(b) if it is for carrying out the functions of a security firm--the security
firm services intended to be supplied under the licence
Clause 14 amends section 11 in relation to entitlement to licences.
Security equipment installer apprentices and trainees under the age of 18 years
will be able to apply for a licence. The Chief Executive must be satisfied that
the applicant is an apprentice or trainee within the meaning of the Vocational
Education, Training and Employment Act 2000, meaning that the person must
be a party to a signed apprenticeship or traineeship contract under that Act.
Clause 15 removes a drafting error.
Clause 16 clarifies that Chief Executive decisions apply to all forms of
licences.
Clause 17 modifies the statutory conditions under the Act to include a
condition on the completion of on-going training requirements by the
licensee. If required in writing by the Chief Executive, these training
requirements must be completed:
(a) on renewal of the licence; or
(b) at 1 or more stated intervals during the term of the licence; or
(c) both on renewal of the licence and at 1 or more stated intervals during
the term of the licence.
The Chief Executive may make a requirement under Clause 17 only if
satisfied the relevant approved training is required:
(a) because of an increased risk to public safety or protection of property
since the licensee's latest successful completion of an approved
training course or relevant approved training; or
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
(b) to update the licensee's competency for carrying out the functions, or
the category of functions, of a security provider authorised under the
licence.
No appeal lies against a decision of the Chief Executive made under Clause
17. A court or tribunal must dismiss a proceeding started in of Clause 17.
Clause 18 provides that without limiting the conditions the Chief Executive
may impose on a licence, imposed conditions may include a condition that
the licensee must monitor, at stated intervals, whether or not its employees
who are employed as security providers are complying with this Act
Clause 19 provides for modified definitions in the Act.
appropriate licence means--
(a) for a security provider other than a security officer--a class 1 or class
2 unrestricted licence authorising the licensee to carry out the
functions of the types of security provider stated in the licence; or
(b) for a security provider who is a security officer--
(i) a class 1 unrestricted licence authorising the licensee to carry out
the category of functions of a security officer stated in the
licence; or
(ii) a class 1 restricted licence authorising the licensee to carry out
the category of functions of a security officer stated in the
licence, under appropriate direct supervision; or
(c) for a security provider other than a security firm or security officer--a
class 1 or class 2 restricted licence authorising the licensee to carry
out the functions of the types of security provider stated in the licence,
under appropriate direct supervision.
Under the Security Providers Act 1993, a person must not carry on the
functions of a security provider unless they hold an appropriate licence.
approved training course, for carrying out the functions or a category of
functions of a particular type of security provider, means a training course
approved by the Chief Executive for the carrying out of the functions or the
category of functions.
cash in transit category, of functions of a security officer, means the
carrying out of the activities of personally guarding, patrolling or watching
another person's cash or other valuables while they are in transit or being
stored in connection with their transit.
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
This is a specific definition of the type of activities which may be carried
out under a security officer (cash in transit) licence.
category, of functions of a security officer, means--
(a) cash in transit category; or
(b) dog patrol category; or
(c) monitoring category; or
(d) unarmed category.
dog patrol category, of functions of a security officer, means the carrying
out of the activities of personally guarding, patrolling or watching another
person's property with a dog.
This is a specific definition of the type of activities which may be carried
out under a security officer (dog patrol) licence.
functions, of a security provider--
(a) means the carrying out of the activities mentioned in a following
provision--
(i) for a bodyguard--section 4A;
(ii) for a crowd controller--section 5;
(iii) for a private investigator--section 6;
(iv) for a security adviser--section 6A;
(v) for a security equipment installer--section 6B;
(vi) for a security firm--section 8; or
(b) for a security officer, means 1 or more categories of functions of a
security officer.
These definitions refer to the activities which are mentioned in the relevant
section of the Security Providers Act 1993.
monitoring category, of functions of a security officer, means the carrying
out of the activities mentioned in section 7(1)(b).
This is a specific definition of the type of activities which may be carried
out under a security officer (monitoring) licence. Specifically, the personal
monitoring of property by operating an audiovisual or visual recording
system, a radio or other electronic monitoring device.
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Consumer Credit (Queensland) and Other Acts Amendment Bill 2008
statutory condition, of a licence, means a condition to which the licence is
subject under section 14B(1) or (2).
unarmed category, of functions of a security officer, means the carrying
out of the activities of personally guarding, patrolling or watching another
person's property--
(a) other than as mentioned in section 7(1)(b); and
(b) without a weapon within the meaning of the Weapons Act 1990.
This is a specific definition of the type of activities which may be carried
out under a security officer (unarmed) licence. These activities include
personally guarding, patrolling or watching another person's property other
than by personal monitoring of property by operating an audiovisual or
visual recording system, a radio or other electronic monitoring device and
without a weapon within the meaning of the Weapons Act 1990.
unrestricted licence means a licence for carrying out, other than under
appropriate direct supervision--
(a) for a security provider other than a security officer--the functions of
each type of security provider stated in the licence; or
(b) for a security officer--the category of functions of a security officer
stated in the licence.
ŠThe State of Queensland 2008
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