Source: http://www.austlii.edu.au/au/legis/cth/bill/ccaclab2011652/
Timestamp: 2017-07-26 00:41:19
Document Index: 796504047

Matched Legal Cases: ['art 1', 'art 2', 'art 3', 'art 4', 'art 5', 'art 6', 'art 7', 'art 2', 'art 3', 'art 2', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 2', 'art 2', 'art 2', 'art 2', 'art 2', 'art 3', 'art 3', 'art 3', 'art 3', 'art 3', 'art 4', 'art 4', 'art 2', 'art 3', 'art 3', 'art 17', 'art 4', 'art 4', 'art 4', 'art 1', 'art 5', 'art 5', 'art 6', 'art 6', 'art 6', 'art 2', 'art 6', 'art 6', 'art 7', 'art 7', 'art 7', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 2', 'art 2', 'art 3', 'art 3', 'art 17', 'art 2', 'art 2', 'art 2', 'art 2', 'art 2', 'art 2', 'art 3', 'art 3', 'art 3', 'art 3', 'art 3', 'art 3', 'art 5', 'art 3', 'art 3', 'art 3', 'art 3', 'art 5', 'art 3', 'art 3', 'art 3', 'art 3', 'art 3', 'art 5', 'art 3', 'art 2', 'art 2', 'art 11', 'art 12', 'art 11', 'art 11', 'art 1', 'art 1', 'art 2', 'art 3', 'art 5', 'art 5', 'art 4', 'art 5', 'art 6', 'art 11', 'art 11']

2010-2011 The Parliament of the Commonwealth of Australia HOUSE OF REPRESENTATIVES Presented and read a first time Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (Treasury) A Bill for an Act to amend the law relating to consumer credit and corporations, and for related purposes i Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Contents 1 Short title ........................................................................................... 1
3 Schedule(s) ........................................................................................ 2
Schedule 1--Enhancements
Part 1--Protection of debtor in cases of hardship
Part 2--Remedies for unfair or dishonest conduct by credit service providers
Part 3--Representations about eligibility to enter credit contracts, consumer leases etc. without assessing unsuitability
Part 4--Prohibition on certain representations and other matters
Part 5--Civil remedies for contravention of the National Credit Code
Part 6--Miscellaneous amendments
Part 7--Technical corrections
Schedule 2--Reverse mortgages
Division 1--Definition of reverse mortgage
Division 2--Other definitions
Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 ii Part 2--Provisions applying to licensees
Part 3--Provisions applying to credit providers generally
Schedule 3--Small amount credit contracts
Schedule 4--Caps on costs etc. for credit contracts
Schedule 5--Consumer leases
Schedule 6--Application provisions
Schedule 7--Voting at AGMs of public companies
Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 1 A Bill for an Act to amend the law relating to 1 consumer credit and corporations, and for related 2 purposes 3 The Parliament of Australia enacts: 4 1 Short title 5 This Act may be cited as the Consumer Credit and Corporations 6 Legislation Amendment (Enhancements) Act 2011. 7 2 Commencement 8 (1) Each provision of this Act specified in column 1 of the table 9 commences, or is taken to have commenced, in accordance with 10 column 2 of the table. Any other statement in column 2 has effect 11 according to its terms. 12 13 2 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day this Act receives the Royal Assent. 2. Schedules 1, 2 and 3 Immediately after the commencement of Part 2 of Schedule 1 to the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011. 1 July 2012 3. Schedule 4 1 January 2013. 1 January 2013 4. Schedules 5 and 6 Immediately after the commencement of Schedule 2 to the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011. 1 July 2012 5. Schedule 7 The day after this Act receives the Royal Assent. Note: This table relates only to the provisions of this Act as originally 1 enacted. It will not be amended to deal with any later amendments of 2 this Act. 3 (2) Any information in column 3 of the table is not part of this Act. 4 Information may be inserted in this column, or information in it 5 may be edited, in any published version of this Act. 6 3 Schedule(s) 7 Each Act that is specified in a Schedule to this Act is amended or 8 repealed as set out in the applicable items in the Schedule 9 concerned, and any other item in a Schedule to this Act has effect 10 according to its terms. 11 Enhancements Schedule 1 Protection of debtor in cases of hardship Part 1 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 3 Schedule 1--Enhancements 1 Part 1--Protection of debtor in cases of hardship 2 National Consumer Credit Protection Act 2009 3 1 Section 72 of the National Credit Code 4 Repeal the section, substitute: 5 72 Changes on grounds of hardship 6 Hardship notice 7 (1) If a debtor considers that he or she is or will be unable to meet his 8 or her obligations under a credit contract, the debtor may give the 9 credit provider notice (a hardship notice), orally or in writing, of 10 the debtor's inability to meet the obligations. 11 Credit provider's notice in response to hardship notice 12 (2) Within 21 days after the day of receiving the debtor's hardship 13 notice, the credit provider must give the debtor: 14 (a) if the credit provider agrees to negotiate a change to the 15 credit contract--notice, in the form prescribed by the 16 regulations, that the credit provider agrees to negotiate; or 17 (b) if the credit provider does not agree to negotiate a change to 18 the credit contract--a written notice that states: 19 (i) that the credit provider does not agree to negotiate; and 20 (ii) the reasons for not agreeing to negotiate; and 21 (iii) the name of the approved external dispute resolution 22 scheme of which the credit provider is a member; and 23 (iv) the debtor's rights under that scheme. 24 Criminal penalty: 30 penalty units. 25 Note: If a debtor has given a credit provider a hardship notice, there may be 26 extra requirements that the credit provider must comply with before 27 beginning enforcement proceedings--see section 89A. 28 Schedule 1 Enhancements Part 1 Protection of debtor in cases of hardship 4 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (3) A credit provider that has given notice under paragraph (2)(a) may, 1 within 21 days after the day of giving that notice, give a notice 2 under paragraph (2)(b). 3 (4) Subsection (2) is an offence of strict liability. 4 Note: For strict liability, see section 6.1 of the Criminal Code. 5 2 Subsection 73(1) of the National Credit Code 6 Omit "on any such application", substitute "to change the credit 7 contract as a result of a hardship notice by the debtor". 8 3 Subsection 74(1) of the National Credit Code 9 Omit "in accordance with the application", substitute "as a result of a 10 hardship notice by the debtor". 11 4 Subsection 74(2) of the National Credit Code 12 Repeal the subsection, substitute: 13 (2) The court may, after allowing the applicant, the credit provider and 14 any guarantor a reasonable opportunity to be heard: 15 (a) by order change the credit contract (but not so as to reduce 16 the amount ultimately payable by the debtor to the credit 17 provider under the contract), and make such other orders as it 18 thinks fit; or 19 (b) refuse to change the credit contract. 20 5 Subparagraphs 88(3)(f)(i) and (ii) of the National Credit 21 Code 22 Repeal the subparagraphs, substitute: 23 (i) give a hardship notice under section 72; or 24 (ii) give a postponement request under section 94; or 25 6 After section 89 of the National Credit Code 26 Insert: 27 89A Effect of hardship notices on enforcement 28 (1) This section applies if: 29 (a) a credit provider is required to give a default notice under 30 section 88 before beginning enforcement proceedings; and 31 Enhancements Schedule 1 Protection of debtor in cases of hardship Part 1 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 5 (b) before or after the credit provider gives the default notice, the 1 debtor gives the credit provider a hardship notice (the current 2 hardship notice) under section 72; and 3 (c) either: 4 (i) in the 4 months before the day the current hardship 5 notice is given, the debtor had not given the credit 6 provider another hardship notice; or 7 (ii) in that 4-month period, the debtor had given the credit 8 provider one or more other hardship notices, but the 9 credit provider reasonably believes that the basis on 10 which the current hardship notice was given is 11 materially different from the bases on which the other 12 hardship notices were given. 13 (2) The credit provider must not begin enforcement proceedings 14 against the debtor unless: 15 (a) the credit provider has given the debtor a notice under 16 paragraph 72(2)(b), in response to the current hardship 17 notice, stating that the credit provider does not agree to 18 negotiate a change to the credit contract; and 19 (b) the period of 14 days, starting on the day the lessor gives the 20 notice under paragraph 72(2)(b), has expired. 21 Criminal penalty: 50 penalty units. 22 Note: The credit provider must allow the debtor at least 30 days from the 23 date of the default notice to remedy the default--see section 88. The 24 14-day period in subsection (2) may end before, at the same time as, 25 or after the end of the period for remedying the default specified in the 26 default notice. 27 (3) However, the credit provider may take possession of mortgaged 28 goods if the credit provider reasonably believes that: 29 (a) the debtor or mortgagor has removed or disposed of the 30 mortgaged goods, or intends to remove or dispose of them, 31 without the credit provider's permission; or 32 (b) urgent action is necessary to protect the goods. 33 (4) Subsection (2) is an offence of strict liability. 34 Note: For strict liability, see section 6.1 of the Criminal Code. 35 7 Subsection 94(1) of the National Credit Code 36 Repeal the subsection, substitute: 37 Schedule 1 Enhancements Part 1 Protection of debtor in cases of hardship 6 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Postponement request 1 (1) A debtor, mortgagor or guarantor who has been given a default 2 notice under section 88 or a demand for payment under section 90 3 may, at any time before the end of the period specified in the notice 4 or demand, request (a postponement request), orally or in writing, 5 that the credit provider negotiate a postponement of: 6 (a) the enforcement proceedings; or 7 (b) any action taken under such proceedings; or 8 (c) the operation of any applicable acceleration clause. 9 8 Subsection 94(2) of the National Credit Code 10 Omit "makes the request", substitute "gives the postponement request". 11 9 Subsections 94(3) and (4) of the National Credit Code 12 Repeal the subsections, substitute: 13 Enforcement proceedings 14 (3) If the debtor, mortgagor or guarantor gives the postponement 15 request, the credit provider must not begin enforcement 16 proceedings unless: 17 (a) the credit provider has given the debtor, mortgagor or 18 guarantor a notice under subsection (2) in response to the 19 postponement request; and 20 (b) the period of 14 days, starting on the day the credit provider 21 gives the notice under subsection (2), has expired. 22 Criminal penalty: 50 penalty units. 23 Note: The credit provider must allow the debtor or mortgagor at least 30 24 days from the date of the default notice to remedy the default--see 25 section 88. The 14-day period in subsection (3) may end before, at the 26 same time as, or after the end of the period for remedying the default 27 specified in the default notice. 28 (4) However, the credit provider may take possession of mortgaged 29 goods if the credit provider reasonably believes that: 30 (a) the debtor or mortgagor has removed or disposed of the 31 mortgaged goods, or intends to remove or dispose of them, 32 without the credit provider's permission; or 33 (b) urgent action is necessary to protect the goods. 34 Enhancements Schedule 1 Protection of debtor in cases of hardship Part 1 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 7 (5) Subsections (2) and (3) are offences of strict liability. 1 Note: For strict liability, see section 6.1 of the Criminal Code. 2 3 Schedule 1 Enhancements Part 2 Remedies for unfair or dishonest conduct by credit service providers 8 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Part 2--Remedies for unfair or dishonest conduct by 1 credit service providers 2 National Consumer Credit Protection Act 2009 3 10 After section 180 4 Insert: 5 180A Orders to remedy unfair or dishonest conduct by credit 6 service providers 7 (1) The court may make one or more of the orders described in 8 subsection (2) if the court is satisfied that: 9 (a) a person (the defendant) provided a credit service to a 10 consumer (the plaintiff); and 11 (b) the defendant engaged in conduct that: 12 (i) was connected with the provision of the service; and 13 (ii) was unfair or dishonest; and 14 (c) the conduct had one or more of the following results: 15 (i) the plaintiff entered a credit contract, consumer lease, 16 mortgage or guarantee that the plaintiff would not have 17 entered apart from the conduct; 18 (ii) the plaintiff entered a credit contract, consumer lease, 19 mortgage or guarantee whose terms were different from 20 a credit contract, consumer lease, mortgage or guarantee 21 the plaintiff would have entered apart from the conduct; 22 (iii) the plaintiff became liable to pay fees, costs or charges 23 to the defendant or someone else. 24 (2) The orders are as follows: 25 (a) an order that the defendant take, or refrain from taking, 26 specified action; 27 (b) an order that the defendant pay the plaintiff a specified 28 amount; 29 (c) an order that a specified amount is not due or owing by the 30 plaintiff to the defendant; 31 (d) any other order the court considers appropriate to: 32 (i) redress the unfairness or dishonesty; or 33 Enhancements Schedule 1 Remedies for unfair or dishonest conduct by credit service providers Part 2 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 9 (ii) prevent the defendant from profiting from the plaintiff 1 by engaging in the conduct; 2 except an order that affects a credit contract, consumer lease, 3 mortgage or guarantee to which the conduct related. 4 Determining whether conduct was unfair or dishonest 5 (3) In determining whether conduct was unfair or dishonest, the court: 6 (a) must have regard to the extent (if any) to which one or more 7 of the circumstances described in subsection (4) existed; and 8 (b) must consider it more likely that the conduct was unfair or 9 dishonest the more any of those circumstances existed and 10 the more any of them affected the plaintiff's interests. 11 This does not limit the matters to which the court may have regard. 12 (4) The circumstances are as follows: 13 (a) the plaintiff was at a special disadvantage in dealing with the 14 defendant in relation to the transaction involving: 15 (i) the conduct; and 16 (ii) a credit contract, consumer lease, mortgage or guarantee 17 to which the conduct related; and 18 (iii) any other contract requiring the plaintiff to make 19 payments for the purposes of which it is reasonable to 20 expect the plaintiff would or did enter such a credit 21 contract, consumer lease, mortgage or guarantee; 22 (b) the plaintiff was a member of a class whose members were 23 more likely than people who were not members of the class 24 to be at such a disadvantage; 25 (c) if the plaintiff was a member of a class referred to in 26 paragraph (b)--a reasonable person would consider that the 27 conduct was directed at that class; 28 (d) the plaintiff was unable, or considered himself or herself 29 unable, to make: 30 (i) a credit contract with a credit provider other than the 31 credit provider to which the conduct related; or 32 (ii) a consumer lease with a lessor other than the lessor to 33 which the conduct related; or 34 (iii) a mortgage with a mortgagee other than the mortgagee 35 to which the conduct related; or 36 Schedule 1 Enhancements Part 2 Remedies for unfair or dishonest conduct by credit service providers 10 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (iv) a guarantee with a beneficiary other than the beneficiary 1 to which the conduct related; 2 (e) the conduct involved a technique that: 3 (i) should not in good conscience have been used; or 4 (ii) manipulated the plaintiff; 5 (f) the defendant could determine or significantly influence the 6 terms of a contract covered by subparagraph (a)(ii) or (iii); 7 (g) the terms of the transaction described in paragraph (a) were 8 less favourable to the plaintiff than the terms of a comparable 9 transaction. 10 When order may be made 11 (5) The court may make the order only if: 12 (a) the plaintiff or ASIC (on behalf of the plaintiff) applies for an 13 order under this section; and 14 (b) the application is made within 6 years of the day the 15 defendant first started engaging in the conduct. 16 Applications for order 17 (6) For the purposes of paragraph (5)(a), ASIC may make an 18 application on behalf of the plaintiff, but only if the plaintiff has 19 given consent in writing before the application is made. 20 Recovery of amount as a debt 21 (7) If the court makes an order that the defendant pay an amount 22 specified in the order to the plaintiff, the plaintiff may recover the 23 amount as a debt due to the plaintiff. 24 When this section does not apply 25 (8) This section does not apply to the provision of credit assistance by 26 a person who is (or after the provision of the assistance becomes): 27 (a) a credit provider under the credit contract to which the 28 assistance relates; or 29 (b) a lessor under the consumer lease to which the assistance 30 relates; or 31 (c) a mortgagee under a mortgage in relation to the credit 32 contract to which the assistance relates; or 33 Enhancements Schedule 1 Remedies for unfair or dishonest conduct by credit service providers Part 2 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 11 (d) a beneficiary of a guarantee in relation to the credit contract 1 to which the assistance relates. 2 11 Section 184 3 Add at the end "or another Act". 4 5 Schedule 1 Enhancements Part 3 Representations about eligibility to enter credit contracts, consumer leases etc. without assessing unsuitability 12 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Part 3--Representations about eligibility to enter 1 credit contracts, consumer leases etc. 2 without assessing unsuitability 3 National Consumer Credit Protection Act 2009 4 12 Section 125 (paragraph relating to Division 3) 5 Omit "entering or increasing the credit limit of a credit contract", 6 substitute "doing particular things (such as entering a credit contract)". 7 13 Division 3 of Part 3-2 (heading) 8 Repeal the heading, substitute: 9 Division 3--Obligation to assess unsuitability 10 14 Section 128 (heading) 11 Repeal the heading, substitute: 12 128 Obligation to assess unsuitability 13 15 After paragraph 128(a) 14 Insert: 15 (aa) represent to a consumer that the licensee considers that the 16 consumer is eligible to enter a credit contract with the 17 licensee; or 18 16 After paragraph 128(b) 19 Insert: 20 ; or (ba) represent to a consumer that the licensee considers that the 21 credit limit of credit contract between the consumer and the 22 licensee will be able to be increased; 23 17 Section 148 (paragraph relating to Division 3) 24 Omit "entering a consumer lease", substitute "doing particular things 25 (such as entering a consumer lease)". 26 18 Division 3 of Part 3-4 (heading) 27 Repeal the heading, substitute: 28 Enhancements Schedule 1 Representations about eligibility to enter credit contracts, consumer leases etc. without assessing unsuitability Part 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 13 Division 3--Obligation to assess unsuitability 1 19 Section 151 2 Repeal the section, substitute: 3 151 Obligation to assess unsuitability 4 A licensee must not: 5 (a) enter a consumer lease with a consumer who will be the 6 lessee under the lease; or 7 (b) represent to a consumer that the licensee considers that the 8 consumer is eligible to enter a consumer lease with the 9 licensee; 10 on a day (the lease day) unless the licensee has, within 90 days (or 11 other period prescribed by the regulations) before the lease day: 12 (c) made an assessment that: 13 (i) is in accordance with section 152; and 14 (ii) covers a period in which the lease day occurs; and 15 (d) made the inquiries and verification in accordance with 16 section 130. 17 Civil penalty: 2,000 penalty units. 18 20 Section 152 19 Omit "paragraph 151(a)", substitute "paragraph 151(c)". 20 21 Subsection 153(1) 21 Omit "paragraph 151(b)", substitute "paragraph 151(d)". 22 23 Schedule 1 Enhancements Part 4 Prohibition on certain representations and other matters 14 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Part 4--Prohibition on certain representations and 1 other matters 2 National Consumer Credit Protection Act 2009 3 22 Section 27 (paragraph relating to Division 3) 4 Omit ", charging fees for unlicensed conduct, and giving misleading 5 information", substitute ", and charging fees for unlicensed conduct". 6 23 Division 3 of Part 2-1 (heading) 7 Repeal the heading, substitute: 8 Division 3--Other prohibitions relating to the requirement 9 to be licensed 10 24 Section 33 11 Repeal the section. 12 25 After Part 3-6 13 Insert: 14 Part 3-6A--Miscellaneous rules 15 Division 1--Introduction 16 160A Guide to this Part 17 This Part has a number of miscellaneous rules that require 18 responsible lending conduct when engaging in credit activities or 19 particular types of credit activities. Some of these rules apply to a 20 person even if the person is not required to be licensed. 21 Division 2 prohibits licensees from making particular 22 representations when providing a credit service to a consumer. 23 Enhancements Schedule 1 Prohibition on certain representations and other matters Part 4 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 15 Division 3 prohibits a person (whether licensed or not) from giving 1 false or misleading information in the course of engaging in a 2 credit activity. 3 Division 2--Representations 4 160B "Independent", "impartial" or "unbiased" etc. 5 (1) A licensee must not, in providing or offering to provide a credit 6 service to a consumer, use any of the following terms (either alone 7 or in combination with other words or letters) in a representation to 8 the consumer about the licensee, the service or the licensee's 9 actions in providing the service: 10 (a) the word "independent"; 11 (b) the word "impartial"; 12 (c) the word "unbiased"; 13 (d) another term (whether or not in English) that is of similar 14 import to a word mentioned in paragraph (a), (b) or (c). 15 Civil penalty: 2,000 penalty units. 16 Defences 17 (2) For the purposes of subsection (1), it is a defence if: 18 (a) the licensee does not receive any of the following: 19 (i) commissions (apart from commissions that are rebated 20 in full to the licensee's clients); 21 (ii) other gifts or benefits from a credit provider or a lessor 22 that may reasonably be expected to influence the 23 licensee; and 24 (b) in providing a credit service, the licensee operates free from 25 direct or indirect restrictions relating to the credit contracts 26 and consumer leases to which the service relates (except 27 restrictions imposed on the licensee by this Act or by an 28 Australian credit licence); and
29 (c) in providing a credit service, the licensee operates without 30 any conflicts of interest that might: 31 (i) arise from the licensee's associations or relationships 32 with credit providers and lessors; and 33 Schedule 1 Enhancements Part 4 Prohibition on certain representations and other matters 16 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (ii) reasonably be expected to influence the licensee in 1 providing the service; and 2 (d) neither of the following persons receives any commission, 3 gift, or benefit, covered by paragraph (a): 4 (i) the licensee's employer (if any); 5 (ii) any other person prescribed (whether by reference to a 6 class of person or otherwise) by the regulations. 7 (3) For the purposes of subsection (1), it is a defence if the 8 representation uses any of the terms in the negative (for example, a 9 representation that the licensee is not independent). 10 160C "Financial counsellor" etc. 11 (1) A licensee must not, in providing or offering to provide a credit 12 service to a consumer, use any of the following terms (either alone 13 or in combination with other words or letters) in a representation to 14 the consumer about the licensee, the service or the licensee's 15 actions in providing the service: 16 (a) the phrase "financial counsellor"; 17 (b) the phrase "financial counselling"; 18 (c) another term (whether or not in English) that: 19 (i) is of similar import to a phrase mentioned in 20 paragraph (a) or (b); and 21 (ii) is prescribed by the regulations. 22 Civil penalty: 2,000 penalty units. 23 Defences 24 (2) For the purposes of subsection (1), it is a defence if regulations 25 made for the purposes of paragraph 110(a) exempt the licensee 26 from section 29 in relation to a credit activity because the licensee 27 engages in the activity as part of a financial counselling service. 28 (3) For the purposes of subsection (1), it is a defence if: 29 (a) the licensee is providing, or offering to provide, the credit 30 service on behalf of another person (the principal); and 31 (b) the licensee is a representative of the principal; and 32 (c) regulations made for the purposes of paragraph 110(a) 33 exempt the principal from section 29 in relation to a credit 34 Enhancements Schedule 1 Prohibition on certain representations and other matters Part 4 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 17 activity because the principal engages in the activity as part 1 of a financial counselling service; and 2 (d) the licensee's actions in providing or offering to provide the 3 credit service are within the authority of the principal. 4 (4) For the purposes of subsection (1), it is a defence if the 5 representation uses any of the terms in the negative (for example, a 6 representation that the licensee is not a financial counsellor). 7 Division 3--Giving misleading information 8 160D Prohibition on giving misleading information etc. 9 Prohibition on giving misleading information etc. 10 (1) A person (the giver) must not, in the course of engaging in a credit 11 activity, give information or a document to another person if the 12 giver knows, or is reckless as to whether, the information or 13 document is: 14 (a) false in a material particular; or 15 (b) materially misleading. 16 Civil penalty: 2,000 penalty units. 17 Offence 18 (2) A person commits an offence if: 19 (a) the person gives information or a document to another 20 person; and 21 (b) the person does so in the course of engaging in a credit 22 activity; and 23 (c) the information or document is false in a material particular 24 or materially misleading. 25 Criminal penalty: 100 penalty units, or 2 years imprisonment, or 26 both. 27 28 Schedule 1 Enhancements Part 5 Civil remedies for contravention of the National Credit Code 18 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Part 5--Civil remedies for contravention of the 1 National Credit Code 2 National Consumer Credit Protection Act 2009 3 26 Section 124 of the National Credit Code (heading) 4 Repeal the heading, substitute: 5 124 Civil effect of contraventions 6 27 Subsection 124(1) of the National Credit Code 7 Omit "(other than one for which a civil effect is specifically provided by 8 Division 1 or by any other provision of this Code)". 9 28 Subsection 124(2) of the National Credit Code 10 Repeal the subsection, substitute: 11 (2) An application for the exercise of the court's powers under this 12 section may be made by: 13 (a) a person affected by the contravention; or 14 (b) ASIC on behalf of a person affected by the contravention, if 15 the person has consented in writing to ASIC making the 16 application; or 17 (c) ASIC (on its own behalf). 18 19 Enhancements Schedule 1 Miscellaneous amendments Part 6 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 19 Part 6--Miscellaneous amendments 1 National Consumer Credit Protection Act 2009 2 29 Subsection 19(1) of the National Credit Code 3 Omit "a contract document", substitute "a new contract document". 4 30 Section 32 of the National Credit Code 5 Repeal the section, substitute: 6 32 Fees or charges in relation to third parties 7 When this section applies 8 (1) This section applies if a fee or charge is payable by a debtor to the 9 credit provider for an amount (the third party amount) payable or 10 paid by the credit provider to another person, body or agency. 11 Third party amount ascertainable at time of debtor payment 12 (2) If, when the fee or charge is paid by the debtor to the credit 13 provider, the third party amount is ascertainable, then the amount 14 of the fee or charge must not exceed the third party amount. 15 Third party amount not ascertainable at time of debtor payment 16 (3) If: 17 (a) when the fee or charge is paid by the debtor to the credit 18 provider, the third party amount is not ascertainable; and 19 (b) after the fee or charge is paid, the credit provider ascertains 20 the third party amount; and 21 (c) the third party amount is less than the amount of the fee or 22 charge paid; 23 then the credit provider must refund or credit the difference to the 24 debtor. 25 Determining third party amount 26 (4) The third party amount is to be determined by: 27 (a) taking into account any discount, rebate or other allowance 28 that is received or receivable by the credit provider or a 29 Schedule 1 Enhancements Part 6 Miscellaneous amendments 20 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 related body corporate (within the meaning of the 1 Corporations Act 2001); and 2 (b) disregarding any rebate on tax payable by the credit provider 3 or a related body corporate (within the meaning of that Act). 4 31 Paragraph 36(1)(c) of the National Credit Code 5 Repeal the paragraph, substitute: 6 (c) any amounts currently overdue and the dates they became 7 due; 8 32 Paragraph 36(1)(d) of the National Credit Code 9 Omit "became due", substitute "becomes due". 10 33 Subsection 38(4) of the National Credit Code 11 Omit "of receiving the statement of account in which the amount, or 12 part of that amount, was first shown", substitute "after the day the 13 debtor receives the statement of account in which the amount, or part of 14 that amount, is first shown". 15 34 Subsection 38(5) of the National Credit Code 16 Omit "after the end of the contract", substitute "after the day the 17 contract ends". 18 35 Subsection 38(6) of the National Credit Code 19 Omit "at least 30 days have elapsed from the time the written 20 explanation or advice as to agreement was given", substitute "the period 21 of 30 days, starting on the day the credit provider gives the written 22 explanation or advice as to agreement, has expired". 23 36 At the end of subsection 38(6) of the National Credit Code 24 Add: 25 Criminal penalty: 50 penalty units. 26 37 Subsection 38(9) of the National Credit Code 27 Omit "Subsection (8) is an offence", substitute "Subsections (6) and (8) 28 are offences". 29 38 Division 6 of Part 2 of the National Credit Code 30 Enhancements Schedule 1 Miscellaneous amendments Part 6 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 21 Repeal the Division, substitute: 1 Division 6--Certain transactions not to be treated as new 2 contracts 3 40 Changes etc. under contracts 4 If: 5 (a) there is: 6 (i) a change to an existing credit contract that results in 7 further credit being provided; or 8 (ii) a deferral or waiver of an amount under an existing 9 credit contract; or 10 (iii) a postponement relating to an existing credit contract; 11 and 12 (b) the change, deferral, waiver or postponement is made in 13 accordance with this Code or the existing credit contract; 14 then the change, deferral, waiver or postponement is not to be 15 treated as creating a new credit contract for the purposes of this 16 Code. 17 39 Subsection 71(1) of the National Credit Code 18 Omit "under a credit contract", substitute "under an existing credit 19 contract". 20 40 Subsection 83(1) of the National Credit Code (penalty) 21 Repeal the penalty. 22 41 Subsection 83(3) of the National Credit Code 23 Omit "after the request", substitute "after the day the request". 24 42 Subsection 83(5) of the National Credit Code 25 Repeal the subsection (not including the note), substitute: 26 (5) Subsection (3) is an offence of strict liability. 27 43 Subsection 87(2) of the National Credit Code 28 Omit "direct debit default notice under this section within 10 business 29 days", substitute "notice, complying with this section, within 14 days". 30 Schedule 1 Enhancements Part 6 Miscellaneous amendments 22 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 44 Subsection 87(3) of the National Credit Code 1 Omit "direct debit default". 2 45 Paragraphs 88(5)(a) and (d) of the National Credit Code 3 Omit "believes on reasonable grounds", substitute "reasonably 4 believes". 5 46 Subsection 88(6) of the National Credit Code 6 Omit "believes on reasonable grounds", substitute "reasonably 7 believes". 8 47 Subsection 89(1) of the National Credit Code 9 After "a default notice", insert "under section 88". 10 48 Paragraphs 93(1)(c), (2)(a) and (2)(d) of the National Credit 11 Code 12 Omit "believes on reasonable grounds", substitute "reasonably 13 believes". 14 49 Subsection 95(1) of the National Credit Code 15 Omit "The default notice or demand for payment", substitute "A default 16 notice under section 88 or a demand for payment under section 90". 17 50 Subsection 98(1) of the National Credit Code 18 Omit "within 7 days", substitute ", within 7 days after the day the notice 19 is given to the mortgagor,". 20 51 Section 206 of the National Credit Code 21 Repeal the section. 22 23 Enhancements Schedule 1 Technical corrections Part 7 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 23 Part 7--Technical corrections 1 National Consumer Credit Protection Act 2009 2 52 Section 129 3 Omit "128(1)(c)", substitute "128(c)". 4 Note: This item fixes an incorrect cross-reference. 5 53 Subsection 130(1) 6 Omit "128(1)(d)", substitute "128(d)". 7 Note: This item fixes an incorrect cross-reference. 8 54 Paragraph 181(b) 9 After "order under", insert "section". 10 55 Subparagraph 88(3)(g)(i) of the National Credit Code 11 Omit "or", substitute "and". 12 56 Subsection 127(2) of the National Credit Code 13 Omit "tied continuing credit contract", substitute "tied continuing 14 credit contract". 15 57 Section 129 of the National Credit Code (heading) 16 Repeal the heading, substitute: 17 129 Right to damages under sale contract against both supplier and 18 linked credit provider 19 Note: This item removes a reference to a repealed provision. 20 58 Section 130 of the National Credit Code (heading) 21 Repeal the heading, substitute: 22 130 Limits on debtor's right of action against linked credit provider 23 Note: This item removes a reference to a repealed provision. 24 59 Section 131 of the National Credit Code (heading) 25 Repeal the heading, substitute: 26 Schedule 1 Enhancements Part 7 Technical corrections 24 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 131 Liability of supplier to linked credit provider 1 Note: This item removes a reference to a repealed provision. 2 60 Section 132 of the National Credit Code (heading) 3 Repeal the heading, substitute: 4 132 Interest may be awarded 5 Note: This item removes a reference to a repealed provision. 6 61 Section 133 of the National Credit Code (heading) 7 Repeal the heading, substitute: 8 133 Subrogation of credit provider 9 Note: This item removes a reference to a repealed provision. 10 62 Subsection 204(1) of the National Credit Code (definition 11 of approved external dispute resolution scheme) 12 After "has", insert "the". 13 14 Reverse mortgages Schedule 2 Definitions Part 1 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 25 Schedule 2--Reverse mortgages 1 Part 1--Definitions 2 Division 1--Definition of reverse mortgage 3 National Consumer Credit Protection Act 2009 4 1 Subsection 5(1) 5 Insert: 6 reverse mortgage has the same meaning as in section 13A of the 7 National Credit Code. 8 2 At the end of Part 1 of the National Credit Code 9 Add: 10 13A Reverse mortgages 11 (1) For the purposes of this Code, an arrangement is a reverse 12 mortgage if the arrangement involves a credit contract, except a 13 bridging finance contract, and a mortgage over a dwelling or land 14 securing a debtor's obligations under the contract and either: 15 (a) the conditions in subsections (2) and (3) are met; or 16 (b) the arrangement is of a kind declared by ASIC under 17 subsection (4) and is made on or after the commencement of 18 that declaration. 19 Conditions 20 (2) The first condition is that the debtor's total liability under the credit 21 contract or mortgage may exceed (to a limited or unlimited extent) 22 the maximum amount of credit that may be provided under the 23 contract without the debtor being obliged to reduce that liability to 24 less than that maximum amount. 25 Note: The debtor's total liability can exceed the maximum amount of credit 26 because interest and some other fees and charges are not included in 27 an amount of credit: see subsection 3(2). 28 Schedule 2 Reverse mortgages Part 1 Definitions 26 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (3) The second condition is that, if the regulations prescribe any 1 prerequisites for the arrangement to be a reverse mortgage, those 2 prerequisites are met. 3 Declarations by ASIC 4 (4) ASIC may by legislative instrument declare specified kinds of 5 arrangements involving a credit contract and a mortgage over a 6 dwelling or land securing a debtor's obligations under the contract 7 to be reverse mortgages. 8 3 Subsection 204(1) of the National Credit Code 9 Insert: 10 reverse mortgage: see section 13A. 11 Division 2--Other definitions 12 National Consumer Credit Protection Act 2009 13 4 Subsection 5(1) 14 Insert: 15 reverse mortgage information statement means a document 16 relating to reverse mortgages that complies with the regulations. 17 5 Subsection 204(1) of the National Credit Code 18 Insert: 19 bridging finance contract: a credit contract is a bridging finance 20 contract if: 21 (a) when the contract is made, the debtor: 22 (i) reasonably expects to receive a lump sum before the 23 term of the contract ends; and 24 (ii) intends to discharge the debtor's obligations under the 25 contract so far as possible with that sum; and 26 (b) the conditions (if any) prescribed by the regulations are met. 27 6 Subsection 204(1) of the National Credit Code 28 Insert: 29 Reverse mortgages Schedule 2 Definitions Part 1 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 27 engage in conduct means: 1 (a) do an act; or 2 (b) omit to perform an act. 3 7 Subsection 204(1) of the National Credit Code 4 Insert: 5 practising lawyer means a person who is admitted to the legal 6 profession by a federal court or a Supreme Court of a State or 7 Territory and holds a practising certificate (however described) 8 entitling the person to practise that profession. 9 8 Subsection 204(1) of the National Credit Code 10 Insert: 11 reverse mortgaged property, in relation to a credit contract for a 12 reverse mortgage, means a dwelling or land that has been 13 mortgaged to secure a debtor's obligations under the contract. 14 15 Schedule 2 Reverse mortgages Part 2 Provisions applying to licensees 28 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Part 2--Provisions applying to licensees 1 National Consumer Credit Protection Act 2009 2 9 At the end of section 133 3 Add: 4 Note: Sections 178 and 179 provide for remedies for anyone who suffers, or 5 is likely to suffer, loss or damage because of a breach of this section. 6 For example, if a consumer makes an unsuitable credit contract with a 7 licensee, rather than making a not unsuitable credit contract for a 8 reverse mortgage, a person who suffered, or is likely to suffer, loss as 9 a result may be able to get court orders under section 178 or 179 to put 10 the person in a position like the one they would have been in had the 11 consumer entered into the contract for the reverse mortgage. 12 10 Before Part 3-3 13 Insert: 14 Part 3-2D--Licensees and reverse mortgages 15 16 133DA Guide to this Part 17 This Part has rules that apply to licensees that provide credit 18 services or are credit providers. 19 Before providing credit assistance, or entering into a credit 20 contract, for a reverse mortgage, licensees must provide projections 21 of the debtor's equity in the property that may be covered by the 22 reverse mortgage. 23 Licensees must also make reverse mortgage information statements 24 available on their websites and on request. 25 Licensees must not inaccurately use terms like "reverse mortgage" 26 in making representations about credit contracts and mortgages. 27 Reverse mortgages Schedule 2 Provisions applying to licensees Part 2 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 29 133DB Giving projections of equity before providing credit 1 assistance or entering credit contract 2 Requirement to give projections 3 (1) Before a licensee makes a preliminary assessment for the purposes 4 of paragraph 115(1)(c) or (2)(a), or an assessment for the purposes 5 of paragraph 128(c), in connection with a credit contract with a 6 consumer for a reverse mortgage, the licensee must: 7 (a) show the consumer in person projections that: 8 (i) relate to the value of the dwelling or land that may 9 become reverse mortgaged property, and the consumer's 10 indebtedness, over time if the consumer were to enter 11 into a contract for a reverse mortgage; and 12 (ii) are made in accordance with the regulations by using a 13 website approved by ASIC; and 14 (b) give the consumer a printed copy of the projections; and 15 (c) tell the consumer in person the things (if any) that relate to 16 reverse mortgages and are prescribed by the regulations; and 17 (d) give the consumer a reverse mortgage information statement. 18 Civil penalty: 2,000 penalty units. 19 Offence 20 (2) A person commits an offence if: 21 (a) the person is subject to a requirement under subsection (1); 22 and 23 (b) the person engages in conduct; and 24 (c) the person's conduct breaches the requirement. 25 Criminal penalty: 50 penalty units. 26 Defences for not giving projections 27 (3) For the purposes of paragraphs (1)(a) and (b), and of subsection (2) 28 so far as it relates to either of those paragraphs, it is a defence if the 29 licensee reasonably believes that: 30 (a) another person has: 31 (i) shown the consumer in person projections described in 32 paragraph (1)(a); and 33 Schedule 2 Reverse mortgages Part 2 Provisions applying to licensees 30 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (ii) given the consumer a printed copy of the projections; 1 and 2 (b) the projections are the same, or substantially the same, as 3 those paragraph (1)(a) requires the licensee to show the 4 consumer. 5 Note: For the purposes of subsection (2), a defendant bears an evidential 6 burden in relation to the matter in subsection (3) (see subsection 7 13.3(3) of the Criminal Code). 8 (4) For the purposes of paragraphs (1)(a) and (b), and of subsection (2) 9 so far as it relates to either of those paragraphs, it is a defence if the 10 circumstances prescribed by the regulations exist. 11 Note: For the purposes of subsection (2), a defendant bears an evidential 12 burden in relation to the matter in subsection (4) (see subsection 13 13.3(3) of the Criminal Code). 14 Defence for not giving reverse mortgage information statement 15 (5) For the purposes of paragraph (1)(d), and of subsection (2) so far 16 as it relates to that paragraph, it is a defence if the licensee 17 reasonably believes that another person has given the consumer a 18 reverse mortgage information statement in the last 90 days. 19 Note: For the purposes of subsection (2), a defendant bears an evidential 20 burden in relation to the matter in subsection (5) (see subsection 21 13.3(3) of the Criminal Code). 22 133DC Making reverse mortgage information statement available 23 on website of credit provider or credit assistance provider 24 When this section applies 25 (1) This section applies if a licensee: 26 (a) is: 27 (i) a person who provides, or holds himself or herself out 28 as able to provide, credit assistance relating to credit 29 contracts for reverse mortgages; or 30 (ii) a credit provider under one or more credit contracts for 31 a reverse mortgages; and 32 (b) has a website that provides information about such contracts. 33 Reverse mortgages Schedule 2 Provisions applying to licensees Part 2 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 31 Requirement 1 (2) The licensee must make available through the website a reverse 2 mortgage information statement. 3 Civil penalty: 2,000 penalty units. 4 Offence 5 (3) A person commits an offence if: 6 (a) the person is subject to a requirement under subsection (2); 7 and 8 (b) the person engages in conduct; and 9 (c) the person's conduct breaches the requirement. 10 Criminal penalty: 50 penalty units. 11 133DD Making reverse mortgage information statement available in 12 other situations 13 When this section applies 14 (1) This section applies if: 15 (a) a licensee is: 16 (i) a person who provides, or holds himself or herself out 17 as able to provide, credit assistance relating to credit 18 contracts for reverse mortgages; or 19 (ii) a credit provider under one or more credit contracts for 20 reverse mortgages; and 21 (b) either: 22 (i) a consumer asks the licensee (otherwise than by using a 23 website of the licensee) for a reverse mortgage 24 information statement; or 25 (ii) the regulations require a consumer, in circumstances 26 prescribed by the regulations, to be given a reverse 27 mortgage information statement; and 28 (c) the consumer gives the licensee the consumer's name, and 29 the contact details required by the regulations. 30 Schedule 2 Reverse mortgages Part 2 Provisions applying to licensees 32 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Requirement 1 (2) The licensee must, in accordance with any requirements prescribed 2 by the regulations, give the consumer a reverse mortgage 3 information statement. 4 Civil penalty: 2,000 penalty units. 5 Offence 6 (3) A person commits an offence if: 7 (a) the person is subject to a requirement under subsection (2); 8 and 9 (b) the person engages in conduct; and 10 (c) the conduct contravenes the requirement. 11 Criminal penalty: 50 penalty units. 12 Defences 13 (4) For the purposes of subsections (2) and (3), it is a defence if: 14 (a) the licensee has given the consumer, or reasonably believes 15 that someone else has given the consumer, a reverse 16 mortgage information statement; or 17 (b) the licensee: 18 (i) is a credit provider under one or more credit contracts 19 for reverse mortgages; and 20 (ii) reasonably believes that the consumer would not be 21 eligible to make a credit contract with the licensee for a 22 reverse mortgage; or 23 (c) there exist circumstances prescribed by regulations as 24 circumstances in which the licensee is not required to give 25 the consumer a reverse mortgage information statement. 26 Note: For the purposes of subsection (3), a defendant bears an evidential 27 burden in relation to the matter in subsection (4) (see subsection 28 13.3(3) of the Criminal Code). 29 Reverse mortgages Schedule 2 Provisions applying to licensees Part 2 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 33 133DE Representations that use the term "reverse mortgage" etc. 1 Credit service providers 2 (1) A licensee must not, in providing or offering to provide a credit 3 service to a consumer, use either of the following terms (either 4 alone or in combination with other words or letters) in a 5 representation to the consumer about an actual or proposed credit 6 contract or mortgage: 7 (a) the phrase "reverse mortgage"; 8 (b) another term (whether or not in English) of similar import to 9 the phrase "reverse mortgage". 10 Civil penalty: 2,000 penalty units. 11 Credit providers 12 (2) A licensee that is a credit provider must not use either of the 13 following terms (either alone or in combination with other words 14 or letters) in a representation to a consumer about an actual or 15 proposed credit contract or mortgage: 16 (a) the phrase "reverse mortgage"; 17 (b) another term (whether or not in English) of similar import to 18 the phrase "reverse mortgage". 19 Civil penalty: 2,000 penalty units. 20 Defence 21 (3) For the purposes of subsections (1) and (2), it is a defence if: 22 (a) the representation truly represents that a credit contract: 23 (i) is or will be a credit contract for a reverse mortgage; or 24 (ii) is not or will not be a credit contract for a reverse 25 mortgage; or 26 (b) the representation truly represents that a mortgage: 27 (i) is or will be part of a reverse mortgage; or 28 (ii) is not or will not be part of a reverse mortgage. 29 11 At the end of section 179 30 Add: 31 Schedule 2 Reverse mortgages Part 2 Provisions applying to licensees 34 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Presumption in favour of certain orders 1 (6) Subsection (7) applies if: 2 (a) the defendant is a credit provider who has contravened 3 section 133 by entering into, or increasing the credit limit of, 4 a credit contract (the illegal contract) that is not a credit 5 contract for a reverse mortgage; and 6 (b) the debtor's obligations under the illegal contract are secured 7 by a mortgage over the debtor's principal place of residence; 8 and 9 (c) the court is satisfied that, at any time in the period in which 10 an assessment needed to be made to comply with section 128 11 in relation to the illegal contract: 12 (i) there was a credit provider (whether the defendant or 13 not) offering credit through a reverse mortgage (whether 14 or not the credit provider actually made such an offer to 15 the debtor); and 16 (ii) the debtor would have been eligible to enter into a credit 17 contract for the reverse mortgage; and 18 (iii) the credit contract for the reverse mortgage would not 19 have been unsuitable for the debtor under section 133; 20 and 21 (d) the plaintiff, or ASIC on behalf of the plaintiff, applies for an 22 order under this section to let the plaintiff reside in the place 23 to prevent or reduce loss or damage suffered or likely to be 24 suffered by the plaintiff vacating the place. 25 (7) The court must consider the order appropriate to prevent or reduce 26 the loss or damage and make the order unless the court is satisfied 27 that the order would adversely affect a person other than the debtor 28 and the defendant. 29 30 Reverse mortgages Schedule 2 Provisions applying to credit providers generally Part 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 35 Part 3--Provisions applying to credit providers 1 generally 2 National Consumer Credit Protection Act 2009 3 12 After subsection 17(15) of the National Credit Code 4 Insert: 5 Provisions for person other than debtor to occupy reverse 6 mortgaged property 7 (15A) If the credit contract for a reverse mortgage is to make provision 8 for a person other than the debtor to occupy the reverse mortgaged 9 property, the contract document must contain provisions that have 10 the following effect (whether or not the document also contains 11 other provisions relating to such occupation by such a person): 12 (a) the debtor may at any time (before, when or after the contract 13 is made): 14 (i) nominate to the credit provider a person who is to be 15 allowed to occupy the property (whether alone or with 16 other persons); and 17 (ii) revoke such a nomination by notice given to the credit 18 provider; 19 (b) while a nomination described in paragraph (a) is in force, the 20 nominated person has the same rights (against the credit 21 provider) to occupy the property as the debtor has or would 22 have apart from the death of the debtor or vacation of the 23 property by the debtor. 24 Note: Other provisions contained in the contract document may, for 25 example, limit the kinds of persons whom the debtor may nominate to 26 the credit provider as persons who are to be allowed to occupy the 27 property. 28 13 After section 18 of the National Credit Code 29 Insert: 30 Schedule 2 Reverse mortgages Part 3 Provisions applying to credit providers generally 36 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 18A Provisions that must not be included in credit contract for 1 reverse mortgage 2 (1) A credit provider must not enter into a credit contract for a reverse 3 mortgage that provides a basis for beginning enforcement 4 proceedings relating to the contract for an event described in 5 subsection (3). 6 (2) A credit provider must not agree to change, or unilaterally change, 7 a credit contract for a reverse mortgage so that it provides a basis 8 for beginning enforcement proceedings relating to the contract for 9 an event described in subsection (3). 10 (3) For the purposes of subsections (1) and (2), the events are as 11 follows: 12 (a) the debtor failing to inform the credit provider that another 13 person occupies the reverse mortgaged property; 14 (b) the debtor failing to give the credit provider evidence that the 15 debtor, or another person nominated by the debtor to the 16 credit provider, occupies or occupied the reverse mortgaged 17 property; 18 (c) the debtor leaving the reverse mortgaged property 19 unoccupied while it is the debtor's principal place of 20 residence; 21 (d) the debtor failing to pay a cost to a person other than the 22 credit provider; 23 (e) the debtor failing to comply with a provision of the credit 24 contract if the contract does not make it clear how the debtor 25 is to comply with the provision; 26 (f) the debtor breaching another credit contract with the credit 27 provider; 28 (g) an event that involves an act or omission by the debtor and is 29 prescribed by the regulations. 30 18B Disclosure if credit contract for reverse mortgage does not 31 protect tenancy of person other than debtor 32 (1) This section applies if a proposed credit contract for a reverse 33 mortgage does not include a provision (a tenancy protection 34 provision) for a person other than the debtor to have a right against 35 the credit provider to occupy the reverse mortgaged property. 36 Reverse mortgages Schedule 2 Provisions applying to credit providers generally Part 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 37 (2) A person must not provide a credit service relating to the contract 1 unless the person has told the debtor, in writing in the form (if any) 2 prescribed by the regulations, that the contract does not include a 3 tenancy protection provision. 4 Criminal penalty: 50 penalty units. 5 (3) Subsection (2) does not apply if the person is or will be the credit 6 provider under the contract. 7 (4) The credit provider must not enter into the contract unless the 8 credit provider has told the debtor, in writing in the form (if any) 9 prescribed by the regulations, that the contract does not include a 10 tenancy protection provision. 11 Criminal penalty: 50 penalty units. 12 (5) An offence against subsection (2) or (4) is an offence of strict 13 liability. 14 Note: For strict liability, see section 6.1 of the Criminal Code. 15 18C Independent legal advice before entry into credit contract for 16 reverse mortgage 17 (1) The regulations may regulate or prohibit the entry by a credit 18 provider into a credit contract for a reverse mortgage if the debtor 19 has not obtained legal advice, in accordance with the regulations, 20 about the contract or reverse mortgage. 21 (2) The regulations may provide for offences and civil penalties for 22 contraventions of regulations made for the purposes of 23 subsection (1). 24 (3) The penalties for offences described in subsection (2) must not be 25 more than 50 penalty units for an individual or 250 penalty units 26 for a body corporate. 27 (4) The civil penalties described in subsection (2) must not be more 28 than 500 penalty units for an individual or 2,500 penalty units for a 29 body corporate. 30 14 At the end of section 22 of the National Credit Code 31 Add: 32 Schedule 2 Reverse mortgages Part 3 Provisions applying to credit providers generally 38 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (3) Subsection (1) does not apply to a contravention of a requirement 1 of section 18B. 2 15 At the end of section 26 of the National Credit Code 3 Add: 4 (6) A credit contract for a reverse mortgage may not prohibit an early 5 payment that: 6 (a) is made in the circumstances described in paragraph 7 86A(1)(a); and 8 (b) is of the amount described in paragraph 86A(1)(b). 9 16 After paragraph 33(2)(a) of the National Credit Code 10 Insert: 11 (aa) in the case of a continuing credit contract for a reverse 12 mortgage--12 months; or 13 17 After paragraph 33(2)(b) of the National Credit Code 14 Insert: 15 (ba) in the case of a reverse mortgage not involving a continuing 16 credit contract--12 months; or 17 18 After section 67 of the National Credit Code 18 Insert: 19 67A Changes to tenancy protection in credit contracts for reverse 20 mortgages 21 A purported change to a credit contract for a reverse mortgage that 22 makes provision for a person other than the debtor to occupy the 23 reverse mortgaged property is void so far as the change purports to: 24 (a) remove a provision required by subsection 17(15A) to be 25 contained in the contract document; or 26 (b) vary the contract so as to limit: 27 (i) the ability of the debtor to nominate to the credit 28 provider a person who is to be allowed to occupy the 29 reverse mortgaged property (whether alone or with other 30 persons); or 31 Reverse mortgages Schedule 2 Provisions applying to credit providers generally Part 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 39 (ii) the rights of a person nominated by the debtor to the 1 credit provider to occupy the property. 2 19 Division 1 of Part 5 of the National Credit Code (heading) 3 Repeal the heading, substitute: 4 Division 1--Ending of credit contract by debtor etc. 5 Subdivision A--Paying out contract etc. 6 20 After section 86 of the National Credit Code 7 Insert: 8 Subdivision B--Ending of reverse mortgage by credit provider 9 receiving value of reverse mortgaged property 10 86A Application of this Subdivision 11 (1) This Subdivision applies in relation to a credit contract for a 12 reverse mortgage and a mortgage securing the debtor's obligations 13 under the contract if: 14 (a) the debtor's accrued liability (whether or not due and 15 payable) under the contract is more than the amount (the 16 adjusted market value) worked out under subsection (2) for 17 the reverse mortgaged property; and 18 (b) the credit provider receives an amount at least equal to the 19 adjusted market value for the reverse mortgaged property 20 either: 21 (i) as a payment accepted from the debtor under the credit 22 contract; or 23 (ii) as proceeds of the sale by the credit provider of the 24 reverse mortgaged property. 25 (2) The adjusted market value for the reverse mortgaged property is 26 the amount worked out by: 27 (a) working out the market value of the property in accordance 28 with the regulations (if any); and 29 (b) adjusting that value in accordance with the regulations (if 30 any). 31 Schedule 2 Reverse mortgages Part 3 Provisions applying to credit providers generally 40 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Regulations for the purposes of paragraph (b) may prescribe 1 different adjustments to be made in different circumstances. 2 86B Discharge of debtor's obligations under credit contract and 3 discharge of mortgage 4 (1) The debtor's obligations under the credit contract are discharged 5 by force of this subsection. 6 (2) The mortgage securing those obligations is discharged by force of 7 this subsection. 8 Note: This section does not apply in some cases: see section 86E. 9 86C Credit provider must pay debtor excess of receipt over adjusted 10 market value for reverse mortgaged property 11 If the amount received by the credit provider exceeds the adjusted 12 market value for the reverse mortgaged property, the credit 13 provider must pay the excess to the debtor. 14 Note 1: If the credit provider contravenes this requirement, the court may 15 order the credit provider to compensate anyone affected by the 16 contravention: see section 124. 17 Note 2: This section does not apply in some cases: see section 86E. 18 86D Credit provider must not demand or accept further payments 19 (1) The credit provider must not: 20 (a) purport to require payment under the credit contract; or 21 (b) accept a payment purportedly under the credit contract. 22 Note 1: If the credit provider contravenes this requirement, the court may 23 order the credit provider to compensate anyone affected by the 24 contravention: see section 124. 25 Note 2: This section does not apply in some cases: see section 86E. 26 (2) To avoid doubt, subsection (1) does not apply to the payment (if 27 any) that is described in subparagraph 86A(1)(b)(i) and caused this 28 Subdivision to apply. 29 86E Cases in which sections 86B, 86C and 86D do not apply 30 Sections 86B, 86C and 86D do not apply if: 31 Reverse mortgages Schedule 2 Provisions applying to credit providers generally Part 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 41 (a) the market value of the reverse mortgaged property was 1 reduced by deliberate damage to the property caused by the 2 debtor or a person who occupied the property with the 3 debtor's consent; or 4 (b) the debtor engaged in fraud, or made a misrepresentation, 5 relating to the reverse mortgage before, at or after the time 6 the credit contract was made; or 7 (c) circumstances prescribed by the regulations exist. 8 86F Relationship between this Subdivision and other provisions 9 This Subdivision does not limit any of the other provisions of this 10 Division. 11 Subdivision C--Notice of first direct debit default 12 21 Subsections 88(1) and (2) of the National Credit Code 13 Repeal the subsections, substitute: 14 Enforcement of credit contract 15 (1) A credit provider must not begin enforcement proceedings against 16 a debtor in relation to a credit contract unless: 17 (a) the debtor is in default under the credit contract; and 18 (b) the credit provider has given the debtor, and any guarantor, a 19 default notice, complying with this section, allowing the 20 debtor a period of at least 30 days from the date of the notice 21 to remedy the default; and 22 (c) the default has not been remedied within that period; and 23 (d) if the credit contract is for a reverse mortgage, the credit 24 provider has spoken to one of the following persons by 25 telephone or in person in that period and has thus both 26 confirmed that the debtor received the default notice and 27 informed the person of the consequences of failure to remedy 28 the default, or has made reasonable efforts to do so: 29 (i) the debtor; 30 (ii) a practising lawyer representing the debtor; 31 (iii) a person with a power of attorney relating to the 32 debtor's financial affairs. 33 Schedule 2 Reverse mortgages Part 3 Provisions applying to credit providers generally 42 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Criminal penalty: 50 penalty units. 1 Note: If a debtor or guarantor has given a credit provider a hardship notice 2 or a postponement request there may be extra requirements that the 3 credit provider must comply with before beginning enforcement 4 proceedings: see sections 89A and 94. 5 Enforcement of mortgage 6 (2) A credit provider must not begin enforcement proceedings against 7 a mortgagor to recover payment of money due or take possession 8 of, sell, appoint a receiver for or foreclose in relation to property 9 subject to a mortgage, unless: 10 (a) the mortgagor is in default under the mortgage; and 11 (b) the credit provider has given the mortgagor a default notice, 12 complying with this section, allowing the mortgagor a period 13 of at least 30 days from the date of the notice to remedy the 14 default; and 15 (c) the default has not been remedied within that period. 16 (d) if the mortgage secures an obligation under a credit contract 17 for a reverse mortgage, the credit provider has spoken to one 18 of the following persons by telephone or in person in that 19 period and has thus both confirmed that the mortgagor 20 received the default notice and informed the person of the 21 consequences of failure to remedy the default, or has made 22 reasonable efforts to do so: 23 (i) the mortgagor; 24 (ii) a practising lawyer representing the mortgagor; 25 (iii) a person with a power of attorney relating to the 26 mortgagor's financial affairs. 27 Criminal penalty: 50 penalty units. 28 Note: If a mortgagor has given a credit provider a postponement request 29 there may be extra requirements that the credit provider must comply 30 with before beginning enforcement proceedings: see section 94. 31 22 After subsection 88(7) of the National Credit Code 32 Insert: 33 Some defaults are not a basis for a default notice 34 (7A) So far as a notice purporting to be a default notice relates to an 35 alleged default under a credit contract for a reverse mortgage that 36 Reverse mortgages Schedule 2 Provisions applying to credit providers generally Part 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 43 is an event described in subsection 18A(3), the notice is not a 1 default notice for the purposes of any of the following provisions: 2 (a) subsections (1) and (2) of this section; 3 (b) section 93. 4 Note: This has the effect that: 5 (a) if the credit provider begins enforcement proceedings relating to 6 the alleged default the credit provider will contravene 7 subsection (1) or (2) of this section (unless subsection (5) of this 8 section applies); and 9 (b) section 93 will affect the operation of an acceleration clause on 10 the basis of the alleged default. 11 (7B) To avoid doubt, subsection (7A) does not affect the status of the 12 notice as a default notice for the purposes of section 89, 94 or 95. 13 23 At the end of Division 2 of Part 5 of the National Credit 14 Code 15 Add: 16 93A Extra requirements for enforcing reverse mortgage if debtor's 17 liability exceeded value of reverse mortgaged property 18 (1) This section applies in relation to a credit contract for a reverse 19 mortgage and a mortgage securing the debtor's obligations under 20 the contract if: 21 (a) Subdivision B of Division 1 applies in relation to the contract 22 and the mortgage (see section 86A); and 23 (b) just before the amount was received by the credit provider as 24 described in paragraph 86A(1)(b), the debtor's accrued 25 liability described in paragraph 86A(1)(a) exceeded that 26 amount; and 27 (c) one or more of the conditions in section 86E are met (so that 28 sections 86B, 86C and 86D do not apply). 29 (2) If section 88 requires the credit provider to give the debtor or 30 mortgagor a default notice before beginning enforcement 31 proceedings to recover any of the excess, the credit provider must 32 not begin them unless: 33 (a) the default notice given to the debtor or mortgagor specifies: 34 (i) the amount received by the credit provider; and 35 Schedule 2 Reverse mortgages Part 3 Provisions applying to credit providers generally 44 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (ii) the debtor's accrued liability just before that amount 1 was received; and 2 (iii) the conditions in section 86E that are met; and 3 (b) if the credit provider knows of a practising lawyer acting for 4 the debtor or mortgagor and the credit provider gave the 5 debtor or mortgagor the default notice by means other than 6 giving it to the lawyer--the credit provider has given the 7 lawyer a copy of the default notice at the same time as, or as 8 soon as practicable after, giving the debtor or mortgagor the 9 notice. 10 Criminal penalty: 50 penalty units. 11 24 After paragraph 111(1)(h) of the National Credit Code 12 Insert: 13 (ha) subsection 17(15A); 14 25 After paragraph 111(2)(e) of the National Credit Code 15 Insert: 16 (ea) subsection 17(15A); 17 26 After section 185 of the National Credit Code 18 Insert: 19 185A Records of nominations of persons to occupy reverse 20 mortgaged properties 21 (1) A credit provider under a credit contract for a reverse mortgage 22 that provides for the debtor to nominate to the credit provider a 23 person who is to be allowed to occupy the reverse mortgaged 24 property, and to revoke such a nomination, must keep in 25 accordance with the regulations a record of any such nominations 26 and revocations. 27 (2) A person commits an offence if: 28 (a) the person is subject to a requirement under subsection (1); 29 and 30 (b) the person engages in conduct; and 31 (c) the person's conduct contravenes the requirement. 32 Reverse mortgages Schedule 2 Provisions applying to credit providers generally Part 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 45 Criminal penalty: 50 penalty units. 1 2 Schedule 3 Small amount credit contracts 46 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Schedule 3--Small amount credit contracts 1 2 National Consumer Credit Protection Act 2009 3 1 Subsection 5(1) 4 Insert: 5 small amount credit contract: a credit contract is a small amount 6 credit contract if: 7 (a) the contract is not a continuing credit contract; and 8 (b) the credit provider under the contract is not an ADI; and 9 (c) the debtor's obligations under the contract are not secured by 10 a mortgage; and 11 (d) the credit limit of the contract is $2,000 (or such other 12 amount as is prescribed by the regulations) or less; and 13 (e) the term of the contract is 2 years (or such other number of 14 years as is prescribed by the regulations) or less; and 15 (f) the contract meets any other requirements prescribed by the 16 regulations. 17 2 At the end of section 111 18 Add: 19 Division 7 imposes requirements in relation to the website of a 20 licensee who provides credit assistance in relation to small amount 21 credit contracts. It also restricts a licensee from providing credit 22 assistance to a consumer who is a debtor under a small amount 23 credit contract. 24 3 At the end of Part 3-1 25 Add: 26 Small amount credit contracts Schedule 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 47 Division 7--Small amount credit contracts 1 124A Licensee's website must comply with requirements prescribed 2 by the regulations 3 Requirement 4 (1) If a licensee has a website that represents that the licensee 5 provides, or is able to provide, credit assistance to consumers in 6 relation to small amount credit contracts, the licensee must ensure 7 that the website complies with the requirements prescribed by the 8 regulations. 9 Civil penalty: 2,000 penalty units. 10 Offence 11 (2) A person commits an offence if: 12 (a) the person is subject to a requirement under subsection (1); 13 and 14 (b) the person engages in conduct; and 15 (c) the conduct contravenes the requirement. 16 Criminal penalty: 50 penalty units. 17 124B Prohibition on suggesting, or assisting with, small amount 18 credit contracts 19 Prohibition 20 (1) A licensee must not provide credit assistance to a consumer by 21 suggesting that the consumer apply, or assisting the consumer to 22 apply, for a small amount credit contract with a particular credit 23 provider if the licensee knows, or is reckless as to whether, the 24 consumer is a debtor under another small amount credit contract. 25 Civil penalty: 2,000 penalty units. 26 Offence 27 (2) A licensee commits an offence if: 28 Schedule 3 Small amount credit contracts 48 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (a) the licensee provides credit assistance to a consumer by 1 suggesting that the consumer apply, or assisting the consumer 2 to apply, for a small amount credit contract with a particular 3 credit provider; and 4 (b) the consumer is a debtor under another small amount credit 5 contract. 6 Criminal penalty: 50 penalty units. 7 (3) For the purposes of subsections (1) and (2), it is a defence if the 8 licensee reasonably believes that the consumer is not a debtor 9 under another small amount credit contract. 10 Note: For the purposes of subsection (2), a defendant bears an evidential 11 burden in relation to the matter in subsection (3) (see subsection 12 13.3(3) of the Criminal Code). 13 124C Prohibition on suggesting, or assisting with, credit limit 14 increases 15 Prohibition 16 (1) A licensee must not provide credit assistance to a consumer who is 17 a debtor under a small amount credit contract by suggesting that 18 the consumer apply, or assisting the consumer to apply, for an 19 increase to the credit limit of the contract. 20 Civil penalty: 2,000 penalty units. 21 Offence 22 (2) A person commits an offence if: 23 (a) the person is subject to a requirement under subsection (1); 24 and 25 (b) the person engages in conduct; and 26 (c) the conduct contravenes the requirement. 27 Criminal penalty: 50 penalty units. 28 4 After Part 3-2B 29 Insert: 30 Small amount credit contracts Schedule 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 49 Part 3-2C--Licensees that are credit providers 1 under credit contracts: additional rules 2 relating to small amount credit contracts 3 Division 1--Introduction 4 133C Guide to this Part 5 This Part has rules that apply to licensees that are credit providers 6 under small amount credit contracts. It applies in addition to the 7 general rules in Part 3-2. 8 Division 2 imposes requirements in relation to the websites of 9 credit providers. It also restricts credit providers from entering into, 10 or increasing the credit limit of, small amount credit contracts. 11 Division 2--Small amount credit contracts 12 133CA Credit provider's website must comply with requirements 13 prescribed by the regulations 14 Requirement 15 (1) If a licensee has a website that can be used by a consumer to apply 16 for, or make an inquiry about, a small amount credit contract under 17 which the licensee would be the credit provider, the licensee must 18 ensure that the website complies with the requirements prescribed 19 by the regulations. 20 Civil penalty: 2,000 penalty units. 21 Offence 22 (2) A person commits an offence if: 23 (a) the person is subject to a requirement under subsection (1); 24 and 25 (b) the person engages in conduct; and 26 (c) the conduct contravenes the requirement. 27 Schedule 3 Small amount credit contracts 50 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Criminal penalty: 50 penalty units. 1 133CB Credit providers must not enter into small amount credit 2 contracts in certain circumstances 3 Prohibition 4 (1) A licensee must not enter into, or offer to enter into, a small 5 amount credit contract with a consumer who will be a debtor under 6 the contract if the licensee knows, or is reckless as to whether, the 7 consumer is a debtor under another small amount credit contract. 8 Civil penalty: 2,000 penalty units. 9 Offence 10 (2) A licensee commits an offence if: 11 (a) the licensee enters into, or offers to enter into, a small amount 12 credit contract with a consumer; and 13 (b) the consumer is, or will be, a debtor under that contract; and 14 (c) the consumer is a debtor under another small amount credit 15 contract. 16 Criminal penalty: 50 penalty units. 17 (3) For the purposes of subsections (1) and (2), it is a defence if the 18 licensee reasonably believes that the consumer is not a debtor 19 under another small amount credit contract. 20 Note: For the purposes of subsection (2), a defendant bears an evidential 21 burden in relation to the matter in subsection (3) (see subsection 22 13.3(3) of the Criminal Code). 23 133CC Credit providers must not refinance credit provided under 24 small amount credit contracts 25 Prohibition 26 (1) A licensee must not enter into, or offer to enter into, a small 27 amount credit contract with a consumer who will be a debtor under 28 the contract if some or all of the credit provided under the contract 29 is to refinance some or all of the credit provided to the consumer 30 under another small amount credit contract. 31 Small amount credit contracts Schedule 3 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 51 Civil penalty: 2,000 penalty units. 1 Offence 2 (2) A person commits an offence if: 3 (a) the person is subject to a requirement under subsection (1); 4 and 5 (b) the person engages in conduct; and 6 (c) the conduct contravenes the requirement. 7 Criminal penalty: 50 penalty units. 8 (3) For the purposes of subsections (1) and (2), it is a defence if the 9 licensee reasonably believes that none of the credit provided under 10 the small amount contract is to refinance any of the credit provided 11 to the consumer under another small amount credit contract. 12 Note: For the purposes of subsection (2), a defendant bears an evidential 13 burden in relation to the matter in subsection (3) (see subsection 14 13.3(3) of the Criminal Code). 15 133CD Credit providers must not increase the credit limit of small 16 amount credit contracts 17 Prohibition 18 (1) A licensee who is a credit provider under a small amount credit 19 contract must not increase the credit limit of the contract. 20 Civil penalty: 2,000 penalty units. 21 Offence 22 (2) A person commits an offence if: 23 (a) the person is subject to a requirement under subsection (1); 24 and 25 (b) the person engages in conduct; and 26 (c) the conduct contravenes the requirement. 27 Criminal penalty: 50 penalty units. 28 5 Paragraph 180(1)(b) 29 Repeal the paragraph, substitute: 30 Schedule 3 Small amount credit contracts 52 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (b) the engaging in the activity contravenes any of the following: 1 (i) section 29 (which requires the holding of a licence); 2 (ii) section 124B or 124C (which deal with credit assistance 3 in relation to small amount credit contracts); 4 (iii) section 133CB, 133CC or 133CD (which deal with 5 entering into small amount credit contracts etc.); 6 7 Caps on costs etc. for credit contracts Schedule 4 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 53 Schedule 4--Caps on costs etc. for credit 1 contracts 2 3 National Consumer Credit Protection Act 2009 4 1 Subsections 17(4) to (6) of the National Credit Code 5 Omit "The contract", substitute "In the case of a credit contract other 6 than a small amount credit contract, the contract". 7 2 Section 23 of the National Credit Code (heading) 8 Repeal the heading, substitute: 9 23 Prohibited monetary obligations--general 10 3 Subsection 23(1) of the National Credit Code 11 After "credit contract", insert "(other than a small amount credit 12 contract)". 13 4 After section 23 of the National Credit Code 14 Insert: 15 23A Prohibited monetary obligations--small amount credit 16 contracts 17 (1) A small amount credit contract must not impose a monetary 18 liability on the debtor: 19 (a) in respect of an interest charge (including a default rate of 20 interest) under the contract; or 21 (b) in respect of a fee or charge prohibited by this Code; or 22 (c) in respect of an amount of a fee or charge exceeding the 23 amount that may be charged consistently with this Code. 24 (2) If a provision of a small amount credit contract imposes a 25 monetary liability prohibited by subsection (1) then: 26 (a) each provision (the void provisions) of the contract that 27 imposes a monetary liability of a kind referred to in that 28 subsection (whether or not the liability is imposed 29 Schedule 4 Caps on costs etc. for credit contracts 54 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 consistently with this Code) is void to the extent that the 1 provision relates to the liability; and 2 (b) the debtor may recover as a debt due to the debtor any 3 amount paid to the credit provider under the void provisions 4 to the extent that the amount relates to the liability. 5 5 Section 24 of the National Credit Code (heading) 6 Repeal the heading, substitute: 7 24 Offences related to prohibited monetary obligations--credit 8 providers 9 6 After subsection 24(1) of the National Credit Code 10 Insert: 11 (1A) A credit provider must not: 12 (a) enter into a small amount credit contract on terms imposing a 13 monetary liability prohibited by subsection 23A(1); or 14 (b) require or accept payment of an amount in respect of a 15 monetary liability that cannot be imposed consistently with 16 this Code. 17 Criminal penalty: 100 penalty units. 18 7 Subsection 24(2) of the National Credit Code 19 Omit "Subsection (1) is an offence", substitute "Subsections (1) and 20 (1A) are offences". 21 8 After section 24 of the National Credit Code 22 Insert: 23 24A Offences related to prohibited monetary obligations--credit 24 assistance providers 25 (1) A person must not provide credit assistance to a consumer by: 26 (a) suggesting that the consumer apply for a particular small 27 amount credit contract with a particular credit provider; or 28 (b) assisting the consumer to apply for a particular small amount 29 credit contract with a particular credit provider; 30 Caps on costs etc. for credit contracts Schedule 4 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 55 if the person knows, or is reckless as to whether, the contract will 1 contravene subsection 23A(1). 2 Criminal penalty: 50 penalty units. 3 (2) If a person provides credit assistance to a consumer that is 4 prohibited by subsection (1): 5 (a) the consumer is not liable (and is taken never to have been 6 liable) to pay any fees or charges to the person in relation to: 7 (i) the credit assistance; or 8 (ii) any other services provided by the person in connection 9 with the credit assistance; and 10 (b) the consumer may recover as a debt due to the consumer the 11 amount of any such fees or charges paid by the consumer to 12 the person. 13 9 After section 27 of the National Credit Code 14 Insert: 15 27A Application of this Division 16 This Division does not apply to a small amount credit contract. 17 10 Section 31 of the National Credit Code 18 Before "The regulations", insert "(1)". 19 11 At the end of section 31 of the National Credit Code 20 Add: 21 (2) Subsection (1) does not apply to a small amount credit contract. 22 12 After section 31 of the National Credit Code 23 Insert: 24 31A Restrictions on fees and charges for small amount credit 25 contracts 26 (1) A small amount credit contract must not impose or provide for fees 27 and charges if the fees and charges are not of the following kind: 28 (a) a fee or charge (a permitted establishment fee) that reflects 29 the credit provider's reasonable costs of determining the 30 Schedule 4 Caps on costs etc. for credit contracts 56 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 application for credit and the initial administrative costs of 1 providing the credit under the contract; 2 (b) a fee or charge (a permitted monthly fee) that is payable on a 3 monthly basis starting on the day the contract is entered into; 4 (c) a fee or charge that is payable in the event of a default in 5 payment under the contract; 6 (d) a government fee, charge or duty payable in relation to the 7 contract. 8 Note: See section 39B for the maximum amount that may be recovered by 9 the credit provider if there is a default in payment under the contract. 10 Maximum amount of permitted establishment fee 11 (2) The amount of a permitted establishment fee that may be imposed 12 or provided for under a small amount credit contract must not 13 exceed 10% of the adjusted credit amount in relation to the 14 contract. 15 Maximum amount of permitted monthly fee 16 (3) The amount of a permitted monthly fee that may be imposed or 17 provided for under a small amount credit contract must not exceed 18 2% of the adjusted credit amount in relation to the contract. 19 13 After Division 4 of Part 2 of the National Credit Code 20 Insert: 21 Division 4A--Annual cost rate of certain credit contracts 22 32A Prohibitions relating to credit contracts if the annual cost rate 23 exceeds 48% 24 Entering into a credit contract 25 (1) A credit provider must not enter into a credit contract if the annual 26 cost rate of the contract exceeds 48%. 27 Criminal penalty: 50 penalty units. 28 Caps on costs etc. for credit contracts Schedule 4 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 57 Provision of credit assistance 1 (2) A person must not provide credit assistance to a consumer by 2 suggesting that the consumer apply, or assisting the consumer to 3 apply, for a particular credit contract with a particular credit 4 provider if the person knows, or is reckless as to whether, the 5 annual cost rate of the contract exceeds 48%. 6 Criminal penalty: 50 penalty units. 7 (3) If a person provides credit assistance to a consumer that is 8 prohibited by subsection (2): 9 (a) the consumer is not liable (and is taken never to have been 10 liable) to pay any fees or charges to the person in relation to: 11 (i) the credit assistance; or 12 (ii) any other services provided by the person in connection 13 with the credit assistance; and 14 (b) the consumer may recover as a debt due to the consumer the 15 amount of any such fees or charges paid by the consumer to 16 the person. 17 Application 18 (4) This section does not apply if: 19 (a) the credit provider is an ADI; or 20 (b) the credit contract is a small amount credit contract or 21 bridging finance contract. 22 32B Calculation of annual cost rate 23 (1) The annual cost rate of a credit contract must be calculated as a 24 nominal rate per annum, together with the compounding frequency, 25 using the formula: 26 n
27 where: 28 n is the number of repayments per annum to be made under the 29 credit contract (annualised if the term of the contract is less than 12 30 months), except that: 31 (a) if repayments are to be made weekly--n is 52.18; and 32 (b) if repayments are to be made fortnightly--n is 26.09; and 33 Schedule 4 Caps on costs etc. for credit contracts 58 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (c) if the contract does not provide for a constant interval 1 between repayments--n is to be derived from the interval 2 selected for the purposes of the definition of j in 3 subsection (2). 4 r is the solution of the equation specified in subsection (2). 5 (2) The equation for the purposes of the definition of r in 6 subsection (1) is: 7 ( )
8 where: 9 A
is the amount of credit to be provided under the credit contract 10 at time j (the value of j for the provision of the first amount of 11 credit is taken to be zero). 12 C
is the credit cost amount (if any) for the credit contract that is 13 payable by the debtor at time j in addition to the repayments R
. 14 j is the time, measured as a multiple (not necessary integral) of: 15 (a) if the credit contract does not provide for a constant interval 16 between contractual repayments--an interval of any kind 17 selected by the credit provider as the unit of time; or 18 (b) otherwise--the interval between contractual repayments that 19 will have elapsed since the first amount of credit is provided 20 under the credit contract. 21 R
is the repayment to be made at time j. 22 t is the time, measured as a multiple of the interval between 23 contractual repayments (or other interval so selected), that will 24 elapse between: 25 (a) the time when the first amount of credit is provided under the 26 credit contract; and 27 (b) the time when the last repayment is to be made under the 28 contract. 29 Caps on costs etc. for credit contracts Schedule 4 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 59 Credit cost amount 1 (3) The credit cost amount for the credit contract is the sum of the 2 following amounts if they are ascertainable: 3 (a) the amount of credit fees and charges payable in relation to 4 the contract; 5 (b) the amount of a fee or charge payable by the debtor (whether 6 or not payable under the contract) to: 7 (i) any person (whether or not associated with the credit 8 provider) for an introduction to the credit provider; or 9 (ii) any person (whether or not associated with the credit 10 provider) for any service if the person has been 11 introduced to the debtor by the credit provider; or 12 (iii) the credit provider for any service relating to the 13 provision of credit, other than a service referred to in 14 subparagraph (ii); 15 (c) any other amount prescribed by the regulations. 16 (4) For the purposes of subsection (3), the amounts referred to in that 17 subsection: 18 (a) include an amount that is payable even if the credit is not 19 provided; but 20 (b) do not include an amount of a government fee, charge or duty 21 payable in relation to the credit contract. 22 Tolerances and assumptions etc. 23 (5) The annual cost rate must be correct to at least the nearest one 24 hundredth of 1% per annum. 25 (6) In calculating the annual cost rate, reasonable approximations may 26 be made if it would be impractical or unreasonably onerous to 27 make a precise calculation. 28 Example: If repayments are to be made on a fixed day each month, it may be 29 assumed that repayments will be made on that day each month even 30 though the credit contract provides for payment on the preceding or 31 succeeding business day when the due date is not a business day. 32 (7) The tolerances and assumptions under sections 180 to 182 apply to 33 the calculation of the annual cost rate
. 34 Schedule 4 Caps on costs etc. for credit contracts 60 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Continuing credit contracts 1 (8) If the credit contract is a continuing credit contract, the following 2 assumptions also apply to the calculation of the annual cost rate of 3 the contract: 4 (a) that the debtor has drawn down the maximum amount of 5 credit that the credit provider has agreed to provide under the 6 contract; 7 (b) that the debtor will pay the minimum repayments specified in 8 the contract; 9 (c) if credit is provided in respect of payment by the credit 10 provider to a third person in relation to goods or services or 11 cash supplied by that third person to the debtor from time to 12 time--that the debtor will not be supplied with any further 13 goods or services or cash; 14 (d) if credit is provided in respect of cash supplied by the credit 15 provider to the debtor from time to time--that the debtor will 16 not be supplied with any further cash. 17 14 Subsection 34(6) of the National Credit Code 18 Omit "A statement", substitute "In the case of a credit contract other 19 than a small amount credit contract, a statement". 20 15 After Division 5 of Part 2 of the National Credit Code 21 Insert: 22 Division 5A--Additional rules relating to small amount 23 credit contracts 24 39A Limit on the application of amount of credit provided under a 25 small amount credit contract 26 (1) No part of the amount of credit provided under a small amount 27 credit contract may be applied to pay an amount (the prohibited 28 credit amount) to: 29 (a) the credit provider; or 30 (b) a person prescribed by the regulations. 31 (2) Subsection (1) does not apply to: 32 Caps on costs etc. for credit contracts Schedule 4 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 61 (a) an amount of a permitted establishment fee, or a permitted 1 monthly fee, payable in relation to the small amount credit 2 contract; or 3 (b) an amount of a government fee, charge or duty payable in 4 relation to the small amount credit contract; or 5 (c) an amount prescribed by the regulations. 6 (3) If subsection (1) is contravened in relation to a small amount credit 7 contract: 8 (a) the debtor is not liable (and is taken never to have been 9 liable) to repay the prohibited credit amount to the credit 10 provider; and 11 (b) the debtor may recover as a debt due to the debtor any 12 amount paid to the credit provider to the extent that it relates 13 to the prohibited credit amount. 14 39B Limit on amount that may be recovered if there is default under 15 a small amount credit contract 16 (1) If there is a default in payment under a small amount credit 17 contract, the maximum amount that may be recovered (whether by 18 repayments under the contract or otherwise) by the credit provider 19 in relation to the contract must not exceed an amount that is twice 20 the adjusted credit amount in relation to the contract. 21 (2) Any provision of the small amount credit contract that confers a 22 greater right is void to the extent that it does so. If an amount is in 23 fact recovered in excess of this limitation, it may be recovered 24 back. 25 (3) This section does not apply to enforcement expenses. 26 16 At the end of subsection 111(1) of the National Credit 27 Code 28 Add: 29 ; (j) subsection 32A(1). 30 17 After paragraph 111(2)(f) of the National Credit Code 31 Insert: 32 (fa) subsection 32A(1); 33 Schedule 4 Caps on costs etc. for credit contracts 62 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 18 Subsection 114(1) of the National Credit Code 1 After "order", insert "in relation to a credit contract other than a small 2 amount credit contract". 3 19 After subsection 114(1) of the National Credit Code 4 Insert: 5 (1A) On application being made by a debtor or a guarantor for an order 6 in relation to a small amount credit contract, the maximum penalty 7 that may be imposed by the court for a contravention of a key 8 requirement is an amount not exceeding the sum of the following 9 amounts: 10 (a) the amount of the permitted establishment fee payable in 11 relation to the contract; 12 (b) the total amount of the permitted monthly fees payable in 13 relation to the contract based on the term of the contract 14 when it was made. 15 20 Subsection 204(1) of the National Credit Code 16 Insert: 17 adjusted credit amount, in relation to a small amount credit 18 contract, means the first amount of credit that is, or is to be, 19 provided under the contract but does not include: 20 (a) the amount of a permitted establishment fee, or a permitted 21 monthly fee, payable in relation to the contract; and 22 (b) if subsection 39A(1) is contravened in relation to the 23 contract--the prohibited credit amount; and 24 (c) any other amount prescribed by the regulations. 25 21 Subsection 204(1) of the National Credit Code 26 Insert: 27 annual cost rate of a credit contract means the annual cost rate of 28 the contract calculated in accordance with section 32B. 29 22 Subsection 204(1) of the National Credit Code 30 Insert: 31 credit cost amount: see subsection 32B(3). 32 Caps on costs etc. for credit contracts Schedule 4 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 63 23 Subsection 204(1) of the National Credit Code 1 Insert: 2 permitted establishment fee: see paragraph 31A(1)(a). 3 24 Subsection 204(1) of the National Credit Code 4 Insert: 5 permitted monthly fee: see paragraph 31A(1)(b). 6 25 Subsection 204(1) of the National Credit Code 7 Insert: 8 prohibited credit amount: see subsection 39A(1). 9 26 Subsection 204(1) of the National Credit Code 10 Insert: 11 small amount credit contract has the same meaning as in section 5 12 of the National Credit Act. 13 14 Schedule 5 Consumer leases 64 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Schedule 5--Consumer leases 1 2 National Consumer Credit Protection Act 2009 3 1 Subsection 5(1) (definition of lessor) 4 Omit "means the lessor under a consumer lease", substitute "has the 5 same meaning as in section 204 of the National Credit Code". 6 2 Subsection 5(1) (definition of value of a credit contract, 7 mortgage, guarantee or consumer lease) 8 Repeal the definition. 9 3 Subsection 5(1) 10 Insert: 11 value of a credit contract, mortgage, guarantee or consumer lease: 12 see section 199. 13 4 Paragraph 147(7)(b) 14 Omit "sections 72 and 94", substitute "sections 177B and 179H". 15 5 Subsection 147(7) (note 1) 16 Omit "Note 1", substitute "Note". 17 6 Subsection 147(7) (note 2) 18 Repeal the note. 19 7 Subsection 199(2) (table items 2, 3, 6, 7, 9 and 12) 20 Omit ", guarantee or consumer lease", substitute "or guarantee". 21 8 Subsection 199(2) (at the end of the table) 22 Add: 23 14 Section 175F of the National Credit Code the value of the consumer lease to which the order relates is not more than: (a) $40,000; or (b) if a higher amount is prescribed by the regulations--that higher Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 65 amount. 15 Subsection 175G(6) of the National Credit Code the value of the consumer lease to which the order relates is not more than: (a) $40,000; or (b) if a higher amount is prescribed by the regulations--that higher amount. 16 Section 177D of the National Credit Code not applicable. 17 Section 177E of the National Credit Code not applicable. 18 Section 177F of the National Credit Code the value of the consumer lease to which the order relates is not more than: (a) $40,000; or (b) if a higher amount is prescribed by the regulations--that higher amount. 19 Section 179K of the National Credit Code not applicable. 20 Section 179Q of the National Credit Code the value of the consumer lease to which the order relates is not more than: (a) $40,000; or (b) if a higher amount is prescribed by the regulations--that higher amount. 21 Subsection 179R(3) of the National Credit Code the order is for an amount that is not more than: (a) $40,000; or (b) if a higher amount is prescribed by the regulations--that higher amount. 9 Subsection 199(3) 1 Omit "of a credit contract, mortgage, guarantee or consumer lease", 2 substitute "of a credit contract, mortgage, guarantee or consumer lease". 3 10 Paragraph 200(1)(b) 4 Schedule 5 Consumer leases 66 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Omit "or 96", substitute ", 96, 177D or 179K". 1 11 Subsection 76(8) of the National Credit Code 2 Repeal the subsection. 3 12 Subsection 87(6) of the National Credit Code 4 Repeal the subsection. 5 13 Section 92 of the National Credit Code 6 Repeal the section. 7 14 Subsection 173(1) of the National Credit Code 8 Repeal the subsection, substitute: 9 (1) A consumer lease must be in the form of a written lease document: 10 (a) signed by the lessor and the lessee; and 11 (b) containing the information required by this Division. 12 (1A) Subject to subsection (2), a consumer lease may consist of one or 13 more separate documents. 14 15 After subsection 173(2) of the National Credit Code 15 Insert: 16 (2A) In the case of a lease document consisting of more than one 17 document, it is sufficient compliance with this section if one of the 18 documents is duly signed and the other documents are referred to 19 in the signed document. 20 16 After section 173 of the National Credit Code 21 Insert: 22 173A Other forms of consumer lease 23 (1) The regulations may authorise other ways of making a consumer 24 lease that do not involve a written document. 25 (2) In that case, the provisions of this Division apply with such 26 modifications as are prescribed by the regulations. 27 17 After section 174 of the National Credit Code 28 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 67 Insert: 1 174A Alteration of consumer lease document 2 (1) An alteration of (including an addition to) a new consumer lease 3 document by the lessor after it is signed by the lessee is ineffective 4 unless the lessee has agreed in writing to the alteration. 5 (2) This section does not apply to an alteration having the effect of 6 reducing the lessee's liabilities under the consumer lease. 7 18 After section 175 of the National Credit Code 8 Insert: 9 Division 4--Fees and charges 10 175A Prohibited consumer lease fees or charges 11 The regulations may specify: 12 (a) consumer lease fees or charges; or 13 (b) classes of consumer lease fees or charges; 14 that are prohibited for the purposes of this Code. 15 175B Fees or charges in relation to third parties 16 When this section applies 17 (1) This section applies if a fee or charge is payable by a lessee to the 18 lessor for an amount (the third party amount) payable or paid by 19 the lessor to another person, body or agency. 20 Third party amount ascertainable at time of lessee payment 21 (2) If, when the fee or charge is paid by the lessee to the lessor, the 22 third party amount is ascertainable, then the amount of the fee or 23 charge must not exceed the third party amount. 24 Third party amount not ascertainable at time of lessee payment 25 (3) If: 26 (a) when the fee or charge is paid by the lessee to the lessor, the 27 third party amount is not ascertainable; and 28 Schedule 5 Consumer leases 68 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (b) after the fee or charge is paid, the lessor ascertains the third 1 party amount; and 2 (c) the third party amount is less than the amount of the fee or 3 charge paid; 4 then the lessor must refund or credit the difference to the lessee. 5 Determining third party amount 6 (4) The third party amount is to be determined by: 7 (a) taking into account any discount, rebate or other allowance 8 that is received or receivable by the lessor or a related body 9 corporate (within the meaning of the Corporations Act 2001); 10 and 11 (b) disregarding any rebate on tax payable by the lessor or a 12 related body corporate (within the meaning of that Act). 13 Division 5--Lessor's obligation to account 14 Subdivision A--Ongoing statements of account 15 175C Statements of account 16 (1) A lessor must give to the lessee, or arrange for the lessee to be 17 given, periodic statements of account in accordance with this 18 Subdivision. 19 Criminal penalty: 100 penalty units. 20 (2) The maximum period for a statement of account is 12 months. 21 (3) A statement of account need not be given if: 22 (a) the lessee was in default under the consumer lease during the 23 statement period and the lessor has commenced enforcement 24 proceedings; or 25 (b) the lessee has died or is insolvent and the lessee's personal 26 representative or trustee in bankruptcy has not requested a 27 statement of account. 28 (4) Subsection (1) is an offence of strict liability. 29 Note: For strict liability, see section 6.1 of the Criminal Code. 30 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 69 175D Information to be contained in statements of account 1 A statement of account must contain the information prescribed by 2 the regulations. 3 175E Statement of amount owing and other matters 4 (1) A lessor must, at the request of a lessee and within the time 5 specified by this section, provide a statement of all or any of the 6 following: 7 (a) any amounts credited to the lessee's account during a period 8 specified in the request; 9 (b) any amounts currently overdue and the date they became due; 10 (c) any amount currently payable and the date it becomes due; 11 (d) any other information prescribed by the regulations. 12 Criminal penalty: 100 penalty units. 13 (2) The statement must be given: 14 (a) within 14 days, if all information requested relates to a period 15 1 year or less before the request is given; or 16 (b) within 30 days, if any information requested relates to a 17 period more than 1 year before the request is given. 18 (3) A statement under this section may be given orally but if the 19 request for the statement is made in writing the statement must be 20 given in writing. 21 (4) In the case of joint lessees, the statement under this section need 22 only be given to a lessee who requests the statement and not, 23 despite section 194, to each joint lessee. 24 (5) A lessor is not required to provide a further written statement under 25 this section if it has, within the 3 months before the request is 26 given, given such a statement to the person requesting it. 27 (6) Subsection (1) is an offence of strict liability. 28 Note: For strict liability, see section 6.1 of the Criminal Code. 29 Schedule 5 Consumer leases 70 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 175F Court may order statement of account to be provided 1 If a statement of account is not provided within the time required 2 by this Subdivision, the court may, on the application of the lessee, 3 order the lessor to provide the statement or itself determine the 4 amounts in relation to which the statement was sought. 5 175G Disputed accounts 6 (1) If: 7 (a) a liability is entered against a lessee under a consumer lease; 8 and 9 (b) the lessee, by written notice to the lessor, disputes the 10 liability; 11 then the lessor must give the lessee a written notice explaining in 12 reasonable detail how the liability arises. 13 (2) A written notice need not be given if the lessor agrees with the 14 lessee as to the disputed amount and gives the lessee a written 15 notice advising of the agreed liability. 16 (3) In the case of a consumer lease for which a statement of account is 17 given, the notice of dispute must be given to the lessor within 30 18 days after the day the lessee receives the statement of account in 19 which the amount, or part of that amount, is first shown. 20 (4) In the case of a consumer lease in respect of which a statement of 21 account need not be and is not given for the period to which the 22 disputed liability relates, the notice of dispute must be given to the 23 lessor not later than 3 months after the day the lease ends. 24 (5) The lessor must not begin enforcement proceedings on the basis of 25 a default arising from the disputed liability until the period of 30 26 days, starting on the day the lessor gives the written explanation or 27 advice as to agreement, has expired. 28 Criminal penalty: 50 penalty units. 29 (6) A lessee or lessor may apply to the court to have the court 30 determine a disputed liability and, if satisfied that a liability is 31 genuinely disputed, the court may determine the matters in dispute 32 and make such consequential orders as it thinks just. 33 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 71 (7) If an application is made to the court under this section within 30 1 days after the day the written explanation is given, the lessor must 2 not, without leave of the court, begin enforcement proceedings on 3 the basis of a default arising from the disputed liability. 4 Criminal penalty: 50 penalty units. 5 (8) Subsections (5) and (7) are offences of strict liability. 6 Note: For strict liability, see section 6.1 of the Criminal Code. 7 (9) This section does not affect a dispute not dealt with, or not arising, 8 under this section. 9 Subdivision B--End of lease statements 10 175H End of lease statement 11 (1) A lessor must arrange for the lessee to be given, not later than 90 12 days before the end of the fixed term of a consumer lease, a 13 statement containing the information prescribed by the regulations. 14 Criminal penalty: 100 penalty units. 15 (2) Subsection (1) does not apply in the circumstances (if any) 16 prescribed by the regulations. 17 (3) Subsection (1) is an offence of strict liability. 18 Note: For strict liability, see section 6.1 of the Criminal Code. 19 Division 6--Certain transactions not to be treated as new 20 consumer leases 21 175J Changes etc. under consumer leases 22 If: 23 (a) there is: 24 (i) a change to an existing consumer lease that results in 25 further goods being provided; or 26 (ii) a deferral or waiver of an amount under an existing 27 consumer lease; or 28 (iii) a postponement relating to an existing consumer lease; 29 and 30 Schedule 5 Consumer leases 72 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (b) the change, deferral, waiver or postponement is made in 1 accordance with this Code or the existing consumer lease; 2 then the change, deferral, waiver or postponement is not to be 3 treated as creating a new consumer lease or a credit contract for the 4 purposes of this Code. 5 Division 7--Changes to obligations under consumer leases 6 Subdivision A--Changes by agreement of parties 7 177A Changes by agreement 8 (1) If the parties under an existing consumer lease agree to change its 9 terms, the lessor must, not later than 30 days after the date of the 10 agreement, give to the lessee a written notice setting out: 11 (a) particulars of the change in the terms of the consumer lease; 12 and 13 (b) any information required by the regulations. 14 Criminal penalty: 100 penalty units. 15 (2) Subsection (1) does not apply to a change which defers or 16 otherwise reduces the obligations of the lessee for a period not 17 exceeding 90 days. 18 (3) This section does not apply to a change made under Subdivision B. 19 (4) The lessor may, under subsection (1), give a lessee particulars only 20 of a matter as changed instead of particulars of the change, but 21 only if the lessor: 22 (a) makes it clear to the lessee that the matter has changed; or 23 (b) issues to the lessee a new set of terms and conditions relating 24 to the consumer lease. 25 (5) Subsection (1) is an offence of strict liability. 26 Note: For strict liability, see section 6.1 of the Criminal Code. 27 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 73 Subdivision B--Changes on grounds of hardship and unjust 1 transactions 2 177B Changes on grounds of hardship 3 Hardship notice 4 (1) If a lessee considers that he or she is or will be unable to meet his 5 or her obligations under a consumer lease, the lessee may give the 6 lessor notice (a hardship notice), orally or in writing, of the 7 lessee's inability to meet the obligations. 8 Lessor's notice in response to hardship notice 9 (2) Within 21 days after the day of receiving the lessee's hardship 10 notice, the lessor must give the lessee: 11 (a) if the lessor agrees to negotiate a change to the lease--notice, 12 in the form prescribed by the regulations, that the lessor 13 agrees to negotiate; or 14 (b) if the lessor does not agree to negotiate a change to the 15 lease--a written notice that states: 16 (i) that the lessor does not agree to negotiate; and 17 (ii) the reasons for not agreeing to negotiate; and 18 (iii) the name of the approved external dispute resolution 19 scheme of which the lessor is a member; and 20 (iv) the lessee's rights under that scheme. 21 Criminal penalty: 30 penalty units. 22 Note: If a lessee has given a lessor a hardship notice, there may be extra 23 requirements that the lessor must comply with before beginning 24 enforcement proceedings--see section 179F. 25 (3) A lessor that has given notice under paragraph (2)(a) may, within 26 21 days after the day of giving that notice, give a notice under 27 paragraph (2)(b). 28 Strict liability 29 (4) Subsection (2) is an offence of strict liability. 30 Note: For strict liability, see section 6.1 of the Criminal Code. 31 Schedule 5 Consumer leases 74 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 177C Notice of change 1 (1) A lessor that enters into an agreement with a lessee to change the 2 consumer lease as a result of a hardship notice by the lessee must, 3 not later than 30 days after the date of the agreement, give to the 4 lessee a written notice setting out: 5 (a) particulars of the change in the terms of the lease; and 6 (b) any information required by the regulations. 7 Criminal penalty: 50 penalty units. 8 (2) The lessor may, under subsection (1), give the lessee particulars 9 only of a matter as changed instead of particulars of the change, 10 but only if the lessor: 11 (a) makes it clear to the lessee that the matter has changed; or 12 (b) gives to the lessee a new set of terms and conditions relating 13 to the lease. 14 (3) Subsection (1) is an offence of strict liability. 15 Note: For strict liability, see section 6.1 of the Criminal Code. 16 177D Changes by court 17 (1) If a lessor does not change a consumer lease as a result of a 18 hardship notice by a lessee, the lessee may apply to the court to 19 change the terms of the lease. 20 (2) The court may, after allowing the applicant and the lessor a 21 reasonable opportunity to be heard: 22 (a) by order change the lease (but not so as to reduce the amount 23 ultimately payable by the lessee to the lessor under the lease), 24 and make such other orders as it thinks fit; or 25 (b) refuse to change the lease. 26 (3) The court may, if it thinks it appropriate in the circumstances, stay 27 any enforcement proceedings under the lease, and make such other 28 orders as it thinks fit, until the application has been determined. 29 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 75 177E Lessor may apply for variation of change 1 (1) A lessor under a consumer lease that has been changed by an order 2 under subsection 177D(2) may apply to the court for an order 3 varying or revoking the order. 4 (2) A lessor subject to a stay of enforcement proceedings or other 5 order under subsection 177D(3) may apply to the court for an order 6 varying or revoking the stay or order. 7 (3) On an application under this section, the court may vary or revoke 8 the order or stay to which the application relates as it thinks fit, or 9 may refuse the application. 10 177F Court may reopen unjust transactions 11 Power to reopen unjust transactions 12 (1) The court may, if satisfied on the application of a lessee that, in the 13 circumstances relating to the relevant consumer lease at the time it 14 was entered into or changed (whether or not by agreement), the 15 lease or change was unjust, reopen the transaction that gave rise to 16 the lease or change. 17 Matters to be considered by court 18 (2) In determining whether a term of a particular consumer lease is 19 unjust in the circumstances relating to it at the time it was entered 20 into or changed, the court is to have regard to the public interest 21 and to all the circumstances of the case and may have regard to the 22 following: 23 (a) the consequences of compliance, or noncompliance, with all 24 or any of the provisions of the lease; 25 (b) the relative bargaining power of the parties; 26 (c) whether or not, at the time the lease was entered into or 27 changed, its provisions were the subject of negotiation; 28 (d) whether or not it was reasonably practicable for the applicant 29 to negotiate for the alteration of, or to reject, any of the 30 provisions of the lease or the change; 31 (e) whether or not any of the provisions of the lease impose 32 conditions that are unreasonably difficult to comply with, or 33 Schedule 5 Consumer leases 76 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 not reasonably necessary for the protection of the legitimate 1 interests of a party to the lease; 2 (f) whether or not the lessee, or a person who represented the 3 lessee, was reasonably able to protect the interests of the 4 lessee because of his or her age or physical or mental 5 condition; 6 (g) the form of the lease and the intelligibility of the language in 7 which it is expressed; 8 (h) whether or not, and if so when, independent legal or other 9 expert advice was obtained by the lessee; 10 (i) the extent to which the provisions of the lease or change and 11 their legal and practical effect were accurately explained to 12 the lessee and whether or not the lessee understood those 13 provisions and their effect; 14 (j) whether the lessor or any other person exerted or used unfair 15 pressure, undue influence or unfair tactics on the lessee and, 16 if so, the nature and extent of that unfair pressure, undue 17 influence or unfair tactics; 18 (k) whether the lessor took measures to ensure that the lessee 19 understood the nature and implications of the transaction and, 20 if so, the adequacy of those measures; 21 (l) whether at the time the lease was entered into or changed, the 22 lessor knew, or could have ascertained by reasonable inquiry 23 at the time, that the lessee could not pay in accordance with 24 its terms or not without substantial hardship; 25 (m) whether the terms of the transaction or the conduct of the 26 lessor is justified in the light of the risks undertaken by the 27 lessor; 28 (n) the terms of other comparable transactions involving other 29 lessors and, if the injustice is alleged to result from excessive 30 costs, the costs payable in comparable cases; 31 (o) any other relevant factor. 32 Representing lessee 33 (3) For the purposes of paragraph (2)(f), a person is taken to have 34 represented a lessee if the person represented the lessee, or assisted 35 the lessee to a significant degree, in the negotiations process prior 36 to, or at, the time the consumer lease was entered into or changed. 37 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 77 Unforeseen circumstances 1 (4) In determining whether a consumer lease is unjust, the court is not 2 to have regard to any injustice arising from circumstances that 3 were not reasonably foreseeable when the lease was entered into or 4 changed. 5 Conduct 6 (5) In determining whether to grant relief in respect of a consumer 7 lease that it finds to be unjust, the court may have regard to the 8 conduct of the parties to the proceedings in relation to the lease 9 since it was entered into or changed. 10 Application 11 (6) This section does not apply to a change to a consumer lease under 12 this Subdivision. 13 177G Orders on reopening of transactions 14 The court may, if it reopens a transaction under this Subdivision, 15 do any one or more of the following, despite any settlement of 16 accounts or any agreement purporting to close previous dealings 17 and create a new obligation: 18 (a) reopen an account already taken between the parties to the 19 transaction; 20 (b) relieve the lessee from payment of any amount in excess of 21 such amount as the court, having regard to the risk involved 22 and all other circumstances, considers to be reasonably 23 payable; 24 (c) set aside either wholly or in part or revise or alter an 25 agreement made in connection with the transaction; 26 (d) give judgement for or make an order in favour of a party to 27 the transaction of such amount as, having regard to the relief 28 (if any) which the court thinks fit to grant, is justly due to that 29 party under the consumer lease; 30 (e) give judgement or make an order against a person for 31 delivery of goods to which the lease relates and which are in 32 the possession of that person; 33 (f) make ancillary or consequential orders. 34 Schedule 5 Consumer leases 78 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 177H Applications by ASIC 1 (1) This section applies if ASIC considers that it is in the public 2 interest to make an application under this Subdivision. 3 (2) ASIC may make an application under this Subdivision and has 4 standing to represent the public interest. 5 (3) The application: 6 (a) may apply to any one or more consumer leases; and 7 (b) may apply to all or any class of consumer leases entered into 8 by a lessor during a specified period (for example, all leases 9 entered into during a specified period that are affected by a 10 specified matter for which relief is sought). 11 177J Time limit 12 An application may not be brought under this Subdivision more 13 than 2 years after the relevant consumer lease is terminated, 14 discharged or otherwise comes to an end. 15 177K Joinder of parties 16 (1) If it appears to the court that a person other than a lessor (a third 17 party) has shared in the profits of, or has a beneficial interest 18 prospectively or otherwise in, a consumer lease that the court holds 19 to be unjust, the court may make an order about the third party that 20 the court considers appropriate. 21 (2) However, before making an order about the third party, the court 22 must: 23 (a) join the third party as a party to the proceedings; and 24 (b) give the third party an opportunity to appear and be heard in 25 the proceedings. 26 19 Section 176 of the National Credit Code 27 Repeal the section. 28 20 Division 3 of Part 11 of the National Credit Code (heading) 29 Repeal the heading, substitute: 30 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 79 Division 8--Repossession, termination and enforcement of 1 consumer leases 2 Subdivision A--Repossession of goods under consumer lease 3 21 Section 177 of the National Credit Code 4 Repeal the section. 5 22 After section 178 of the National Credit Code 6 Insert: 7 Subdivision B--Termination of consumer lease by lessee 8 178A Termination before goods have been provided 9 (1) If: 10 (a) a consumer lease has been entered into; and 11 (b) the goods hired under the lease have not been provided; 12 then the lessee may, by written notice to the lessor, terminate the 13 lease. 14 (2) Nothing in subsection (1) prevents the lessor from retaining or 15 requiring payment of fees or charges incurred before the 16 termination and which would have been payable under the 17 consumer lease. 18 23 Section 179 of the National Credit Code (heading) 19 Repeal the heading, substitute: 20 179 Termination after goods have been provided 21 24 After section 179 of the National Credit Code 22 Insert: 23 179A Statement of amount payable on termination 24 (1) A lessor must, at the written request of a lessee, provide a written 25 statement of the amount required to terminate a consumer lease as 26 at such date as the lessee specifies. If so requested, the lessor must 27 also provide details of the items which make up that amount. 28 Schedule 5 Consumer leases 80 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (2) The statement must also contain: 1 (a) a statement to the effect that the amount payable to terminate 2 the lease may change according to the date on which it is 3 paid; and 4 (b) a statement to the effect that the lessee has no right to own 5 the goods if the lease is terminated; and 6 (c) a statement to the effect that the lessee must return the goods 7 to the lessor by a specified date; and 8 (d) any other matters prescribed by the regulations. 9 (3) A lessor must give a statement, complying with this section, within 10 7 days after the day the request is given to the lessor. 11 Criminal penalty: 50 penalty units. 12 (4) In the case of joint lessees, the statement need only be given to the 13 lessee who requests the statement and not, despite section 194, to 14 each joint lessee. 15 (5) Subsection (3) is an offence of strict liability. 16 Note: For strict liability, see section 6.1 of the Criminal Code. 17 179B Court may determine amount payable on termination if lessor 18 does not 19 (1) If the lessor does not provide a statement of the amount payable to 20 terminate a consumer lease in accordance with this Subdivision 21 after a request is duly made by a lessee, the court may, on the 22 application of the lessee, determine: 23 (a) the amount payable on the date of determination; and 24 (b) the amount by which it increases daily; and 25 (c) the period for which the determination is applicable. 26 (2) The consumer lease is discharged if: 27 (a) the goods hired under the lease are returned to the lessor 28 within the applicable period; and 29 (b) an amount calculated in accordance with the determination is 30 tendered to the lessor within the applicable period. 31 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 81 179C One-off notice to be given the first time a direct debit default 1 occurs 2 (1) This section applies if: 3 (a) a lessee authorises payment of an amount for a consumer 4 lease by direct debit; and 5 (b) default occurs; and 6 (c) it is the first occasion the default occurs. 7 (2) The lessor must give the lessee a notice, complying with this 8 section, within 14 days of the default occurring. 9 Criminal penalty: 50 penalty units. 10 (3) The notice must contain the information prescribed by the 11 regulations. 12 (4) Subsection (2) is an offence of strict liability. 13 Note: For strict liability, see section 6.1 of the Criminal Code. 14 (5) This section does not affect any other requirement under this Code 15 to give a notice. 16 Subdivision C--Enforcement of consumer leases 17 179D Requirements to be met before lessor can enforce consumer 18 lease against defaulting lessee 19 Enforcement of consumer lease 20 (1) A lessor must not begin enforcement proceedings against a lessee 21 in relation to a consumer lease unless: 22 (a) the lessee is in default under the lease; and 23 (b) the lessor has given the lessee a default notice, complying 24 with this section, allowing the lessee a period of at least 30 25 days from the date of the notice to remedy the default; and 26 (c) the default has not been remedied within that period. 27 Criminal penalty: 50 penalty units. 28 Note: If a lessee has given a lessor a hardship notice or a postponement 29 request there may be extra requirements that the lessor must comply 30 with before beginning enforcement proceedings--see sections 179F 31 and 179H. 32 Schedule 5 Consumer leases 82 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Default notice requirements 1 (2) A default notice must contain a prominent heading at its top stating 2 that it is a default notice and specify: 3 (a) the default; and 4 (b) the action necessary to remedy the default; and 5 (c) a period for remedying the default; and 6 (d) the date after which enforcement proceedings in relation to 7 the default, and, if relevant, repossession of goods hired 8 under the lease may begin if the default has not been 9 remedied; and 10 (e) the information prescribed by the regulations about the 11 lessee's right to: 12 (i) give a hardship notice under section 177B; or 13 (ii) give a postponement request under section 179H; or 14 (iii) make an application to the court under sections 177D 15 and 179K; and 16 (f) the information prescribed by the regulations about: 17 (i) the approved external dispute resolution scheme of 18 which the lessor is a member; and 19 (ii) the lessee's rights under that scheme; and 20 (g) that a subsequent default of the same kind that occurs during 21 the period specified for remedying the original default may 22 be the subject of enforcement proceedings without further 23 notice if it is not remedied within the period; and 24 (h) that, under the Privacy Act 1988, the debt may be included in 25 a credit reporting agency's credit information file about the 26 lessee if: 27 (i) the debt remains overdue for 60 days or more; and 28 (ii) the lessor has taken steps to recover all or part of the 29 debt; and 30 (i) any other information prescribed by the regulations. 31 When default notice not required 32 (3) A lessor is not required to give a default notice or to wait until the 33 period specified in the default notice has elapsed, before beginning 34 enforcement proceedings, if: 35 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 83 (a) the lessor reasonably believes that it was induced by fraud on 1 the part of the lessee to enter into the consumer lease; or 2 (b) the lessor has made reasonable attempts to locate the lessee 3 but without success; or 4 (c) the court authorises the lessor to begin the enforcement 5 proceedings; or 6 (d) the lessor reasonably believes that the lessee has disposed of 7 goods hired under the lease, or intends to dispose of such 8 goods, contrary to the terms of the lease; or 9 (e) the lessee becomes insolvent after entering into the consumer 10 lease. 11 Non-remedial default 12 (4) If the lessor reasonably believes that a default is not capable of 13 being remedied: 14 (a) the default notice need only specify the default; and 15 (b) the lessor may begin the enforcement proceedings after the 16 period of 30 days from the date of the notice. 17 Strict liability 18 (5) Subsection (1) is an offence of strict liability. 19 Note: For strict liability, see section 6.1 of the Criminal Code. 20 179E Defaults may be remedied 21 (1) If a default notice under section 179D states that the lessor intends 22 to take action because the lessee is in default under the consumer 23 lease, the lessee may remedy the default within the period specified 24 in the notice, and the lease is then reinstated and any acceleration 25 clause cannot operate. 26 (2) A lessee does not remedy the default if, at the end of the period, the 27 lessee is in default under the consumer lease because of the breach 28 specified in the notice or because of a subsequent breach of the 29 same type. 30 179F Effect of hardship notices on enforcement 31 (1) This section applies if: 32 Schedule 5 Consumer leases 84 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (a) a lessor is required to give a default notice under 1 section 179D before beginning enforcement proceedings; and 2 (b) before or after the lessor gives the default notice, the lessee 3 gives the lessor a hardship notice (the current hardship 4 notice) under section 177B; and 5 (c) either: 6 (i) in the 4 months before the current hardship notice is 7 given, the lessee had not given the lessor another 8 hardship notice; or 9 (ii) in that 4-month period, the lessee had given the lessor 10 one or more other hardship notices, but the lessor 11 reasonably believes that the basis on which the current 12 hardship notice was given is materially different from 13 the bases on which the other hardship notices were 14 given. 15 (2) The lessor must not begin enforcement proceedings against the 16 lessee unless: 17 (a) the lessor has given the lessee a notice under paragraph 18 177B(2)(b), in response to the current hardship notice; stating 19 that the lessor does not agree to negotiate a change to the 20 consumer lease; and 21 (b) the period of 14 days, starting on the day the lessor gave the 22 notice under paragraph 177B(2)(b), has expired. 23 Criminal penalty: 50 penalty units. 24 Note: The lessor must allow the lessee at least 30 days from the date of the 25 default notice to remedy the default--see section 179D. The 14-day 26 period in subsection (2) may end before, at the same time as, or after 27 the end of the period for remedying the default specified in the default 28 notice. 29 (3) However, the lessor may take possession of goods hired under a 30 consumer lease if the lessor reasonably believes that: 31 (a) the lessee has removed or disposed of the goods, or intends to 32 remove or dispose of them; or 33 (b) urgent action is necessary to protect the goods. 34 (4) Subsection (2) is an offence of strict liability. 35 Note: For strict liability, see section 6.1 of the Criminal Code. 36 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 85 179G Requirements to be met before lessor can enforce an 1 acceleration clause 2 (1) An acceleration clause of a consumer lease is to operate only if: 3 (a) the lessee is in default under the lease; and 4 (b) the lessor has given to the lessee a default notice under 5 section 179D; and 6 (c) the default notice contains an additional statement of: 7 (i) the manner in which the liabilities of the lessee under 8 the consumer lease would be affected by the operation 9 of the acceleration clause; and 10 (ii) the amount required to terminate the lease (as 11 accelerated); and 12 (d) the default has not been remedied within the period specified 13 in the default notice (unless the lessor reasonably believes 14 that the default is not capable of being remedied). 15 (2) However, a lessor is not required to give a default notice under 16 section 179D or to wait until the period specified in the default 17 notice has elapsed before bringing an acceleration clause into 18 operation, if: 19 (a) the lessor reasonably believes that it was induced by fraud on 20 the part of the lessee to enter into the consumer lease; or 21 (b) the lessor has made reasonable attempts to locate the lessee 22 but without success; or 23 (c) the court authorises the lessor not to do so; or 24 (d) the lessor reasonably believes that the lessee has removed or 25 disposed of goods hired under a consumer lease, or intends to 26 remove or dispose of goods hired under the lease, or that 27 urgent action is necessary to protect the goods. 28 Subdivision D--Postponement of enforcement proceedings 29 179H Postponement of exercise of rights 30 Postponement request 31 (1) A lessee who has been given a default notice under section 179D 32 may, at any time before the end of the period specified in the 33 Schedule 5 Consumer leases 86 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 notice, request (a postponement request), orally or in writing, that 1 the lessor negotiate a postponement of: 2 (a) the enforcement proceedings; or 3 (b) any action taken under such proceedings; or 4 (c) the operation of any applicable acceleration clause. 5 Lessor's notice about postponement 6 (2) If the lessee gives the postponement request, the lessor must, 7 within 21 days after the day of receiving the request, give the 8 person a written notice: 9 (a) that states whether or not the lessor agrees to negotiate a 10 postponement; and 11 (b) if the lessor does not agree to negotiate--that states: 12 (i) the name of the approved external dispute resolution 13 scheme of which the lessor is a member; and 14 (ii) the person's rights under that scheme; and 15 (iii) the reasons for not agreeing to negotiate. 16 Criminal penalty: 30 penalty units. 17 Enforcement proceedings 18 (3) If the lessee gives the postponement request, the lessor must not 19 begin enforcement proceedings unless: 20 (a) the lessor has given the lessee a notice under subsection (2) 21 in response to the postponement request; and 22 (b) the period of 14 days, starting on the day the lessor gives the 23 notice under subsection (2), has expired. 24 Criminal penalty: 50 penalty units. 25 Note: The lessor must allow the lessee at least 30 days from the date of the 26 default notice to remedy the default--see section 179D. The 14-day 27 period in subsection (3) may end before, at the same time as, or after 28 the end of the period for remedying the default specified in the default 29 notice. 30 (4) However, the lessor may take possession of goods hired under the 31 consumer lease if the lessor reasonably believes that: 32 (a) the lessee has removed or disposed of the goods, or intends to 33 remove or dispose of them; or 34 (b) urgent action is necessary to protect the goods. 35 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 87 Strict liability 1 (5) Subsections (2) and (3) are offences of strict liability. 2 Note: For strict liability, see section 6.1 of the Criminal Code. 3 179J Effect of negotiated postponement 4 (1) A default notice under section 179D is taken, for the purposes of 5 this Code, not to have been given if a postponement is negotiated 6 with the lessor under section 179H and the lessee complies with 7 the conditions of postponement. 8 (2) A lessor must give written notice of the conditions of a 9 postponement referred to in subsection (1) not later than 30 days 10 after agreement is reached on the postponement. The notice must 11 set out the consequences under subsection (5) if the conditions of 12 the postponement are not complied with. 13 Criminal penalty: 100 penalty units. 14 (3) Subsection (2) is an offence of strict liability. 15 Note: For strict liability, see section 6.1 of the Criminal Code. 16 (4) A lessor that is required to give notice under section 177A (which 17 deals with changes to leases by agreement) in relation to a 18 postponement is not required to comply with subsection (2). 19 (5) If any of the conditions of a postponement are not complied with, a 20 lessor is not required to give a further default notice under this 21 Code to the lessee with whom the postponement was negotiated 22 before proceeding with enforcement proceedings. 23 179K Postponement by court 24 (1) If the lessee is unable to negotiate a postponement, the lessee may 25 apply to the court for a postponement. 26 (2) After allowing the applicant and the lessor a reasonable 27 opportunity to be heard, the court may: 28 (a) order the postponement to which the application relates; or 29 (b) refuse to order the postponement; or 30 (c) make such other orders as it thinks fit. 31 Schedule 5 Consumer leases 88 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (3) The court may, if it thinks it appropriate in the circumstances, stay 1 any enforcement proceedings under the consumer lease until the 2 application has been determined. 3 179L Lessor may apply for variation of postponement order 4 (1) A lessor that is subject to an order under this Subdivision may 5 apply to the court for variation of the order. 6 (2) On such an application, the court may: 7 (a) vary the order to which the application relates as it thinks fit; 8 or 9 (b) refuse to vary the order; or 10 (c) revoke the order. 11 Subdivision E--Enforcement procedures for goods hired under 12 a consumer lease 13 179M Information as to location of goods hired under a consumer 14 lease 15 (1) A lessor may, by written notice to a lessee, require the lessee to 16 inform the lessor, within 7 days after the day the notice is given to 17 the lessee, where the goods hired under the consumer lease are and, 18 if the goods are not in the lessee's possession, to give the lessor all 19 information in the lessee's possession that might assist the lessor to 20 trace the goods. 21 (2) A lessee who contravenes a notice under this section commits an 22 offence. 23 Criminal penalty: 50 penalty units. 24 (3) Subsection (2) is an offence of strict liability. 25 Note: For strict liability, see section 6.1 of the Criminal Code. 26 179N Entry to residential property to take possession of goods 27 (1) A lessor, or an agent of a lessor, must not enter any part of 28 premises used for residential purposes for the purpose of taking 29 possession of goods hired under a consumer lease unless: 30 (a) the court has authorised the entry; or 31 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 89 (b) the occupier of the premises has, after being informed in 1 writing of the provisions of this section, consented in writing 2 to the entry. 3 (2) The regulations may provide for procedures for the obtaining and 4 giving of consent for the purposes of this section and may set out 5 the circumstances in which consent is or is not taken to have been 6 given. 7 (3) If premises are entered in contravention of this section by a lessor 8 or an agent of a lessor, the lessor commits an offence. 9 Criminal penalty: 50 penalty units. 10 (4) Subsection (3) is an offence of strict liability. 11 Note: For strict liability, see section 6.1 of the Criminal Code. 12 179P Court may order entry 13 The court may, on the application of a lessor that is entitled to take 14 possession of goods hired under a consumer lease, authorise the 15 lessor to enter residential premises for the purpose of taking 16 possession of the goods. 17 179Q Order for possession 18 (1) The court may, on the application of a lessor that is entitled to take 19 possession of goods hired under a consumer lease, order a person 20 who has possession of the goods to deliver them to the lessor: 21 (a) at a specified time or place; or 22 (b) within a specified period. 23 (2) The court may, on the application of a lessor or other person 24 required to deliver goods to a lessor, by order vary the place at 25 which or time or period within which goods must be delivered to 26 the lessor. 27 (3) A person who contravenes an order under this section commits an 28 offence. 29 Criminal penalty: 30 penalty units. 30 (4) Subsection (3) is an offence of strict liability. 31 Schedule 5 Consumer leases 90 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Note: For strict liability, see section 6.1 of the Criminal Code. 1 Subdivision F--Enforcement expenses 2 179R Recovery of enforcement expenses 3 (1) A lessor must not recover or seek to recover enforcement expenses 4 from a lessee in excess of those reasonably incurred by the lessor. 5 Enforcement expenses of a lessor extend to those reasonably 6 incurred by the use of the staff and facilities of the lessor. 7 (2) Any provision of the consumer lease that appears to confer a 8 greater right is void. If enforcement expenses are in fact recovered 9 in excess of this limitation, they may be recovered back. 10 (3) If there is a dispute between the lessor and the lessee about the 11 amount of enforcement expenses that may be recovered by the 12 lessor, the court may, on application by any of the parties to the 13 dispute, determine the amount of that liability. 14 Division 9--Linked lessors and tied consumer leases 15 Subdivision A--Interpretation and application 16 179S Linked lessors and tied consumer leases 17 (1) For the purposes of this Code, a linked lessor of a supplier means a 18 lessor: 19 (a) with whom the supplier has a contract, arrangement or 20 understanding relating to: 21 (i) the supply to the supplier of goods in which the supplier 22 deals; or 23 (ii) the business carried on by the supplier of supplying 24 goods; or 25 (iii) the provision to persons of a consumer lease for the hire 26 of goods supplied by the supplier to the lessor; or 27 (b) to whom the supplier, by arrangement with the lessor, 28 regularly refers persons for the purpose of being provided 29 with a consumer lease; or 30 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 91 (c) whose forms of contract or forms of application or offers for 1 a consumer lease are, by arrangement with the lessor, made 2 available to persons by the supplier; or 3 (d) with whom the supplier has a contract, arrangement or 4 understanding under which applications for a consumer lease 5 or offers to be provided with a consumer lease from the 6 lessor may be signed by persons at the premises of the 7 supplier. 8 (2) A tied consumer lease is a consumer lease entered into between a 9 lessor and a lessee where: 10 (a) the lessee enters into the lease to hire goods supplied by the 11 supplier to the lessor; and 12 (b) at the time the lease is entered into the lessor is a linked 13 lessor of the supplier. 14 Subdivision B--Liability of lessors for suppliers' 15 misrepresentations 16 179T Lessor liable for supplier's misrepresentations about hired 17 goods 18 (1) If there is a tied consumer lease, any representation, warranty or 19 statement made (whether orally or in writing) by the supplier, or 20 any person acting on behalf of the supplier, to the lessee in relation 21 to: 22 (a) goods hired under the lease; or 23 (b) the lease; or 24 (c) services, supplied or arranged by the lessor, that are 25 incidental to the hire of goods under the lease; 26 gives the lessee the same rights against the lessor as the lessee 27 would have had if it had been made by the lessor. 28 (2) Without prejudice to any other rights or remedies to which a lessor 29 may be entitled, a lessor is entitled to be indemnified by the person 30 who made the representation, warranty or statement, and any 31 person on whose behalf it was made, against any damage suffered 32 by the lessor through the operation of this section. 33 Schedule 5 Consumer leases 92 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Division 10--Conduct relating to consumer leases 1 179U False or misleading representations 2 (1) A person must not make a false or misleading representation: 3 (a) in relation to a matter that is material to entry into a 4 consumer lease or a related transaction; or 5 (b) in attempting to induce another person to enter into a 6 consumer lease or a related transaction. 7 Criminal penalty: 50 penalty units. 8 (2) It is a defence to prosecution for an offence against this section if a 9 person charged proves that he or she reasonably believed that the 10 representation was not false or misleading. 11 (3) A person who suffers loss as a result of a contravention of this 12 section by another person may recover the amount of the loss from: 13 (a) that other person; or 14 (b) any other person involved in the contravention. 15 179V Harassment 16 A lessor or supplier must not harass a person in attempting to get 17 that person to: 18 (a) apply for a consumer lease; or 19 (b) enter into a consumer lease or a related transaction. 20 Criminal penalty: 100 penalty units. 21 Division 11--Other Code provisions applicable to 22 consumer leases 23 179W Application of certain Code provisions to consumer leases 24 (1) Part 12 (relating to miscellaneous matters) and subsection 204(2) 25 (definition of associated) apply in relation to a consumer lease in 26 the same way as they apply in relation to a credit contract. 27 (2) For the purposes of the application of those provisions: 28 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 93 (a) references to a credit provider are to be read as references to 1 a lessor; and 2 (b) references to a debtor are to be read as references to a lessee; 3 and 4 (c) references to a credit contract or contract are to be read as 5 references to a consumer lease; and 6 (d) references to a linked credit provider are to be read as 7 references to a linked lessor. 8 25 Subsection 204(1) of the National Credit Code (definition 9 of acceleration clause) 10 Repeal the definition, substitute: 11 acceleration clause means: 12 (a) in relation to a credit contract or mortgage--a term of a credit 13 contract or mortgage providing that: 14 (i) on the occurrence or non-occurrence of a particular 15 event, the credit provider becomes entitled to immediate 16 payment of all, or a part, of an amount under the 17 contract that would not otherwise have been 18 immediately payable; or 19 (ii) whether or not on the occurrence or non-occurrence of a 20 particular event, the credit provider has a discretion to 21 require repayment of the amount of credit otherwise 22 than by repayments fixed, or determined on a basis 23 stated, in the contract; 24 but does not include any such term in a credit contract or 25 mortgage that is an on demand facility; or 26 (b) in relation to a consumer lease--a term of a consumer lease 27 providing that: 28 (i) on the occurrence or non-occurrence of a particular 29 event, the lessor becomes entitled to immediate payment 30 of all, or a part, of an amount under the lease that would 31 not otherwise have been immediately payable; or 32 (ii) whether or not on the occurrence or non-occurrence of a 33 particular event, the lessor has a discretion to require 34 payment of an amount payable under a lease otherwise 35 than by repayments fixed, or determined on a basis 36 stated, in the lease. 37 Schedule 5 Consumer leases 94 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 26 Subsection 204(1) of the National Credit Code 1 Insert: 2 Bulk Electronic Clearing System means the system established by 3 the Australian Payments Clearing Association to manage the 4 conduct of the exchange and settlement of bulk electronic low 5 value transactions and includes any replacement system. 6 27 Subsection 204(1) of the National Credit Code 7 Insert: 8 consumer lease fees or charges means fees or charges payable in 9 connection with a consumer lease, but does not include: 10 (a) enforcement expenses; or 11 (b) government charges, or duties, on receipts or withdrawals. 12 28 Subsection 204(1) of the National Credit Code (definition 13 of default notice) 14 Repeal the definition, substitute: 15 default notice: 16 (a) in relation to credit contracts, mortgages and guarantees--see 17 section 88; and 18 (b) in relation to consumer leases--see section 179D. 19 29 Subsection 204(1) of the National Credit Code 20 Insert: 21 direct debit, in relation to the payment of an amount, means the 22 debiting of an amount against an account with a financial 23 institution that is processed through the Bulk Electronic Clearing 24 System, as specified and authorised in writing by: 25 (a) in relation to the payment by a debtor of an amount for a 26 credit contract--the debtor; and 27 (b) in relation to the payment by a lessee of an amount for a 28 consumer lease--the lessee. 29 30 Subsection 204(1) of the National Credit Code (definition 30 of enforcement proceedings) 31 Repeal the definition, substitute: 32 Consumer leases Schedule 5 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 95 enforcement proceedings means: 1 (a) for a credit contract, consumer lease or guarantee--
2 proceedings in a court to recover a payment due under the 3 contract, lease or guarantee; or 4 (b) for a consumer lease or mortgage--taking possession of 5 property under the lease or mortgage; or 6 (c) for a mortgage--taking any other action to enforce the 7 mortgage. 8 31 Subsection 204(1) of the National Credit Code 9 Insert: 10 hardship notice: 11 (a) in relation to credit contracts--see subsection 72(1); and 12 (b) in relation to consumer leases--see subsection 177B(1). 13 32 Subsection 204(1) of the National Credit Code 14 Insert: 15 lessee means the lessee under a consumer lease to which Part 11 16 applies, and includes a prospective lessee. 17 33 Subsection 204(1) of the National Credit Code 18 Insert: 19 lessor means the lessor under a consumer lease to which Part 11 20 applies, and includes a prospective lessor. 21 34 Subsection 204(1) of the National Credit Code 22 Insert: 23 linked lessor: see subsection 179S(1). 24 35 Subsection 204(1) of the National Credit Code 25 Insert: 26 on demand facility means a credit contract or mortgage under 27 which: 28 (a) the total amount outstanding under the contract or mortgage 29 is repayable at any time on demand by the credit provider; 30 and 31 Schedule 5 Consumer leases 96 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 (b) there is no agreement, arrangement or understanding between 1 the credit provider and the debtor or mortgagor that 2 repayment will only be demanded on the occurrence or 3 non-occurrence of a particular event. 4 36 Subsection 204(1) of the National Credit Code 5 Insert: 6 postponement request: 7 (a) in relation to credit contracts, mortgages or guarantees--see 8 subsection 94(1); and 9 (b) in relation to consumer leases--see subsection 179H(1). 10 37 Subsection 204(1) of the National Credit Code 11 Insert: 12 tied consumer lease: see subsection 179S(2). 13 38 Subsection 204(1) of the National Credit Code 14 Insert: 15 unjust includes unconscionable, harsh or oppressive. 16 17 Application provisions Schedule 6 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 97 Schedule 6--Application provisions 1 2 National Consumer Credit Protection (Transitional and 3 Consequential Provisions) Act 2009 4 1 Schedule 4 (heading) 5 Repeal the heading, substitute: 6 Schedule 4--Application and transitional 7 provisions for the National Consumer 8 Credit Protection Amendment (Home 9 Loans and Credit Cards) Act 2011 10 2 Part 1 of Schedule 4 (heading) 11 Repeal the heading. 12 3 Item 1 of Schedule 4 13 Omit "In this Part", substitute "In this Schedule". 14 4 At the end of the Act 15 Add: 16 Schedule 5--Application provisions for the 17 Consumer Credit and Corporations 18 Legislation Amendment 19 (Enhancements) Act 2011 20 Part 1--Definition 21 1 Definition 22 In this Schedule: 23 amending Act means the Consumer Credit and Corporations 24 Legislation Amendment (Enhancements) Act 2011. 25 Schedule 6 Application provisions 98 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Part 2--Schedule 1 (enhancements) to the amending 1 Act 2 2 Section 128 of the National Credit Act 3 The amendments of section 128 of the National Credit Act made by 4 Schedule 1 to the amending Act apply in relation to representations 5 made on or after the commencement of that Schedule. 6 3 Section 180A of the National Credit Act 7 Section 180A of the National Credit Act, as inserted by Schedule 1 to 8 the amending Act, applies in relation to credit services provided on or 9 after the commencement of that Schedule. 10 4 Sections 32 and 40 of the new Credit Code 11 The amendments of sections 32 and 40 of the new Credit Code made by 12 Schedule 1 to the amending Act apply in relation to credit contracts 13 entered into on or after the commencement of that Schedule. 14 5 Sections 72, 73, 74 and 88 of the new Credit Code 15 The amendments of sections 72, 73, 74 and 88 of the new Credit Code 16 made by Schedule 1 to the amending Act apply in relation to credit 17 contracts made on or after the commencement of that Schedule. 18 6 Section 89A of the new Credit Code 19 Section 89A of the new Credit Code, as inserted by Schedule 1 to the 20 amending Act, applies in relation to credit contracts, mortgages and 21 guarantees entered into on or after the commencement of that Schedule. 22 7 Section 94 of the new Credit Code 23 The amendments of section 94 of the new Credit Code made by 24 Schedule 1 to the amending Act apply in relation to credit contracts, 25 mortgages and guarantees entered into on or after the commencement of 26 that Schedule. 27 8 Section 124 of the new Credit Code 28 The amendments of section 124 of the new Credit Code made by 29 Schedule 1 to the amending Act apply in relation to applications made 30 on or after the commencement of that Schedule, whether the 31 contraventions occurred before, on or after that commencement. 32 Application provisions Schedule 6 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 99 Part 3--Schedule 2 (reverse mortgages) to the 1 amending Act 2 9 Subsections 179(6) and (7) of the National Credit Act 3 Subsections 179(6) and (7) of the National Credit Act, as inserted by 4 Schedule 2 to the amending Act, apply in relation to credit contracts 5 entered into on or after the commencement of that Schedule. 6 10 Subsection 17(15A) of the new Credit Code 7 Subsection 17(15A) of the new Credit Code, as inserted by Schedule 2 8 to the amending Act, applies in relation to credit contracts entered into 9 on or after the commencement of that Schedule. 10 11 Section 18A of the new Credit Code 11 Section 18A of the new Credit Code, as inserted by Schedule 2 to the 12 amending Act, applies to entry into, and changes to, credit contracts on 13 or after the commencement of that Schedule. 14 12 Subsection 26(6) of the new Credit Code 15 Subsection 26(6) of the new Credit Code, as added by Schedule 2 to the 16 amending Act, applies in relation to credit contracts entered into on or 17 after the commencement of that Schedule. 18 13 Section 33 of the new Credit Code 19 The amendments of section 33 of the new Credit Code made by 20 Schedule 2 to the amending Act apply to credit contracts entered into 21 before, on or after the commencement of the Schedule. 22 14 Section 67A of the new Credit Code 23 Section 67A of the new Credit Code, as inserted by Schedule 2 to the 24 amending Act, applies in relation to credit contracts entered into on or 25 after the commencement of that Schedule. 26 15 Subdivision B of Division 1 of Part 5 of the new Credit 27 Code 28 Subdivision B of Division 1 of Part 5 of the new Credit Code, as 29 inserted by Schedule 2 to the amending Act, applies in relation to credit 30 contracts and mortgages entered into on or after the commencement of 31 that Schedule. 32 Schedule 6 Application provisions 100 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 16 Subsections 88(1) and (2) of the new Credit Code 1 The amendment of subsections 88(1) and (2) of the new Credit Code 2 made by Schedule 2 to the amending Act applies to credit contracts and 3 mortgages entered into before, on or after the commencement of that 4 Schedule. 5 17 Subsections 88(7A) and (7B) of the new Credit Code 6 Subsections 88(7A) and (7B) of the new Credit Code, as inserted by 7 Schedule 2 to the amending Act, apply in relation to credit contracts and 8 mortgages entered into on or after the commencement of that Schedule. 9 18 Section 93A of the new Credit Code 10 Section 93A of the new Credit Code, as added by Schedule 2 to the 11 amending Act, applies in relation to credit contracts and mortgages 12 entered into on or after the commencement of that Schedule. 13 19 Section 185A of the new Credit Code 14 Section 185A of the new Credit Code, as inserted by Schedule 2 to the 15 amending Act, applies in relation to credit contracts entered into on or 16 after the commencement of that Schedule. 17 Part 4--Schedule 3 (small amount credit contracts) 18 to the amending Act 19 20 Sections 124C and 133CD of the National Credit Act 20 Sections 124C and 133CD of the National Credit Act, as inserted by 21 Schedule 3 to the amending Act, apply in relation to small amount 22 credit contracts entered into on or after the commencement of that 23 Schedule. 24 Part 5--Schedule 4 (caps on costs etc. for credit 25 contracts) to the amending Act 26 21 Sections 23A, 31A, 39A and 39B and subsection 114(1A) 27 of the new Credit Code 28 Application provisions Schedule 6 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 101 Sections 23A, 31A, 39A and 39B and subsection 114(1A) of the new 1 Credit Code, as inserted by Schedule 4 to the amending Act, apply in 2 relation to small amount credit contracts entered into on or after the 3 commencement of that Schedule. 4 Part 6--Schedule 5 (consumer leases) to the 5 amending Act 6 22 Subsection 199(2) of the National Credit Act 7 The amendments of subsection 199(2) of the National Credit Act made 8 by Schedule 5 to the amending Act apply in relation to consumer leases 9 entered into on or after the commencement of that Schedule. 10 23 Part 11 of the new Credit Code 11 The amendments in relation to Part 11 of the new Credit Code made by 12 Schedule 5 to the amending Act apply in relation to consumer leases 13 entered into on or after the commencement of that Schedule. 14 15 Schedule 7 Voting at AGMs of public companies 102 Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 No. , 2011 Schedule 7--Voting at AGMs of public 1 companies 2 3 Corporations Act 2001 4 1 Subsection 250R(5) 5 Repeal the subsection, substitute: 6 (5) However, a person (the voter) described in subsection (4) may cast 7 a vote on the resolution as a proxy if the vote is not cast on behalf 8 of a person described in subsection (4) and either: 9 (a) the voter is appointed as a proxy by writing that specifies the 10 way the proxy is to vote on the resolution; or 11 (b) the voter is the chair of the meeting and the appointment of 12 the chair as proxy: 13 (i) does not specify the way the proxy is to vote on the 14 resolution; and 15 (ii) expressly authorises the chair to exercise the proxy even 16 if the resolution is connected directly or indirectly with 17 the remuneration of a member of the key management 18 personnel for the company or, if the company is part of 19 a consolidated entity, for the entity. 20 [Index] [Search] [Download] [Related Items] [Help]