On 24 April 2012 Treasury has released proposed amendments to the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) first presented to the Commonwealth Parliament on 21 September 2011. The closing date for submissions is 7 May 2012.
The key features of the amended Bill are as follows.
| Summary of proposal | Suggested commencement date |
| New hardship provisions to make it easier for borrowers to apply for hardship relief. Currently hardship applications apply when the credit amount is $500K or less, but that limit will no longer apply | 1 March 2013 |
| A prohibition on beginning enforcement action while a hardship application is being heard and for 14 days after responding to a postponement of enforcement application | 1 March 2013 |
| Courts can make orders to address unfair or dishonest conduct by finance brokers, but any such orders will not ordinarily affect the underlying loan or lease contract | 1 March 2013 |
| Restrictions on the use of 'independent', 'impartial', 'unbiased', 'financial counsellor', and 'financial counselling' by brokers, subject to exceptions when truly independent | 1 March 2013 |
| Prescribed notice to be given to borrowers/lessees and employers if a payment direction is given to an employer to collect default payments | 1 March 2013 |
| If a credit provider collects a third party fee which is unascertainable and the actual fee is less than the amount collected, the excess must be refunded or credited to the borrower | 1 March 2013 |
| If a credit provider collects a third party fee which is unascertainable and the actual fee is less than the amount collected, the excess must be refunded or credited to the borrower | 1 March 2013 |
| Extend the time for giving direct debit default notices from 10 business days to 14 days | 1 March 2013 |
| New requirements for reverse mortgages. (Some provisions start on 1 July 2012) | 1 March 2013 |
| No negative equity guarantee for reverse mortgages and extra requirements for enforcement | 1 July 2013 |
| Minor amendments to s88 (default notices) | 1 March 2013 |
| Create a new regime for 'small amount credit contracts' of $2,000 or less for terms of two years or less | 1 March 2013 |
| Impose an interest rate cap for credit contracts, with a separate regime for small amount credit contracts | TBA |
| Amend the NCC so that consumer leases are regulated more like regulated loans | 1 March 2013 |
Gadens TRAC team is working closely with the MFAA and others to monitor the progress of this legislation and make submissions as appropriate.
For more information, please contact:
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Sydney |
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Jon Denovan |
t +61 2 9931 4927 |
