Australia: Disclosure Commencement now 1 October 2011

The Commonwealth Treasury has announced that the disclosure regulations under the NCCP Act will now commence on 1 October 2011 instead of 1 August 2011.

While disclosure for lenders is reasonably straightforward (the issue of a credit guide), disclosure by licensees and credit representatives who provide credit assistance is more complex requiring significant information to be set out.

This disclosure comprises three documents:

• credit guide
• quote
• credit proposal disclosure.

The requirements specified in the NCCP Act itself needed some further explanation, and that explanation is to be contained in amendments to the NCCP Regulations.  These additional regulations have not yet been released. 

These disclosure regulations were due to start on 1 August 2011 but the start date has now been postponed until 1 October 2011.  The new regulations will be available soon.  Licensees and credit representatives who provide credit assistance will then be able to commence drafting their three disclosure documents.

In the meantime, regulation 28N provides an exemption to the disclosure requirements so that credit assistants do not need to provide the disclosure documents so long as before providing credit assistance they:

• disclose details of their EDR scheme;
• enter a written contract with the consumer specifying any fees payable by the consumer to the credit assistant (broker).

An easy way to comply is to use the MFAA's Finance Broking Contract which not only discloses the required information, but also provides other valuable information to help consumers and brokers alike.

Until the new regulations commence, brokers should not use documents titled 'credit guide', 'quote' or 'credit proposal document' as those titles will trigger compliance with the existing law which is very onerous and almost impossible to comply with in most cases.

What licensees and credit representatives who provide credit assistance need to do

• Until 30 September 2011, continue disclosing your EDR details and (if applicable) entering fee contracts before you provide credit assistance.  This is most conveniently achieved by using the MFAA's finance broking contract.
• As soon as the regulations are released, watch out for the MFAA's suggested form of credit guide, quote, and proposal document.
• Use the new documents from 1 October 2011.

For more information, please contact:

This report does not comprise legal advice and neither Gadens Lawyers nor the authors accept any responsibility for it.