Minister for Financial Services, Superannuation and Corporate Law
9 June 2009 - 14 September 2010
National Consumer Credit Protection Amendment Regulations
The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP has welcomed the release of regulations which make amendments and enhancements to the existing National Consumer Credit Protection Regulations.
These regulations include changes to the transitional provisions for residential property investment loans, the referral exemption relating to referral via website link, and the responsible lending obligations for pre-existing contracts.
Minister Bowen has also released further details of arrangements to relieve from licensing, temporary employees and locums that are controlled, managed and supervised in the same way as the other employees of the licensee.
Since the release of the National Consumer Credit Protection Regulations in March, the Government has undertaken extensive consultations with industry and consumer groups on key arrangements under the National Consumer Credit Regime. These Amendment Regulations are the result of these further consultations.
“This underscores the Government’s commitment to continue to work closely in consultation with industry and other stakeholders to achieve the best regulatory balance and outcomes for the community”, Minister Bowen said.
These latest regulations, which were approved by the Executive Council on 29 June as the National Consumer Credit Protection Legislation Amendment Regulations, amend the National Consumer Credit Protection Regulations 2010 and the National Consumer Credit Protection (Transitional and Consequential Provisions) Regulations 2010.
The Government appreciates the valuable input and contribution from stakeholders to refine and clarify the regulatory arrangements for the credit reform regulations.A summary of the key changes to the consumer credit regulation package is attached. Updates and further information on the new consumer credit regime is available at www.treasury.gov.au/consumercredit or www.asic.gov.au/credit.
2 July 2010
Summary of Key Changes to The Consumer Credit Protection Regulation Package
Consumer Credit Protection Legislation Amendment Regulations include changes to the following:
Transitional arrangements for residential investment property loans
- Provision has been made in the regulations to exempt lenders offering credit in relation to a residential investment property from the pre-contractual disclosure requirements of the Code and the pre-contractual responsible lending conduct requirements of the Credit Act. The exemption applies where the offer was made prior to 1 July 2010, but accepted by a consumer after that date. This clarifies any uncertainty in relation to the application of requirements for those transitional contracts.
- The contract will still be regulated by the Credit Act and credit providers will still need to comply with other requirements (for example, providing hardship variations and requirements in relation to enforcement activity). Consumers would also still have remedies under the Credit Act and the Code (for example, being able to seek the reopening of the contract as unjust).
- The regulation would cease to have effect from 1 October 2010. Any credit contracts formed after this date would not be exempt from the pre-contractual requirements under the Act and the Code.
Modification of the referrer exemption to allow referral via website link
- The existing exemption for persons who pass on the contact details of a licensee or registered person to a consumer (referrers) has been amended to ensure that the exemption covers referrers who facilitate contact via a website link between a consumer and a licensee, registered person or representative.
Commencement of responsible lending conduct obligations for pre-existing contracts
- The amendments clarify that the commencement of the responsible lending conduct obligations in relation to pre-existing contracts is to coincide with the staggered timeframe set for new contracts. That is, the high level conduct obligations apply primarily to brokers and smaller lenders from 1 July 2010 and to banks and large lenders from 1 January 2011. Additional documentary requirements also apply to all licensees from 1 January 2011.
New Arrangements Applying to Temporary Employees and Locums
The new arrangements will allow credit businesses to continue to operate without the need to meet additional licensing obligations when they engage individuals to ‘fill in’ for regular employees or they engage employees through an employment or on-hire agency. The arrangements clarify that additional obligations are not required in particular circumstances of engagement where the person is subject to the same level of control and supervision as an employee.
These arrangements will affect the treatment of locums, temporary and on-hire staff and employment agencies under the Credit law.
- Locums will be treated in the same way as employees of a licensee where they
- replace a person who is absent from work as an employee who is reasonably expected to return;
- be substantially performing the same duties of that employee; and
- be subject to similar control or direction as that employee.
- Temporary and on-hired staff will be treated as credit representatives but excused from the requirement to be a member of an ASIC approved dispute resolution scheme and have the licensee notify ASIC of their authorisation subject to the conditions that they:
- be only engaged on a temporary basis;
- be engaged in similar duties and be under a similar level of control, management and supervision as other employees of the licensee;
- not be engaged because they possess particular skills that would prevent the licensee or registered person exercising the level of control that the person can exercise over its actual employees;
- be predominantly remunerated other than by way of commission; and
- be perceived by a reasonable consumer that they are an employee of the licensee.
- Employment agencies that only engages in credit activities by providing temporary or on-hired staff will be exempt from licensing requirements where they:
- only engage in credit activities by providing individuals to a licensee, registered person or their representative who engage in credit activities on behalf of the licensee or registered person; and
- these individuals are locums, or temporary or on-hired staff who meet the criteria above.
- These arrangements do not extend to independent contractors engaged to complete a defined scope of work; they will still need to be authorised as a credit representative.