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New South Wales
Consumer Credit Administration
Amendment (Finance Brokers)
Bill 2002
Contents
Page
1 Name of Act 2
2 Commencement 2
3 Amendment of Consumer Credit Administration Act 1995
No 69 2
4 Amendment of Consumer, Trader and Tenancy Tribunal
Act 2001 No 82 2
5 Repeal of Credit (Finance Brokers) Act 1984 No 96 2
Schedules
1 Amendment of Consumer Credit Administration Act 1995 3
2 Amendment of Consumer, Trader and Tenancy Tribunal
Act 2001 15
b02-016-p01.811
New South Wales
Consumer Credit Administration
Amendment (Finance Brokers)
Bill 2002
No , 2002
A Bill for
An Act to amend the Consumer Credit Administration Act 1995 to make further
provision with respect to the regulation of finance broking; to repeal the Credit
(Finance Brokers) Act 1984; and for other purposes.
Clause 1 Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
The Legislature of New South Wales enacts: 1
1 Name of Act 2
This Act is the Consumer Credit Administration Amendment (Finance 3
Brokers) Act 2002. 4
2 Commencement 5
This Act commences on a day or days to be appointed by 6
proclamation. 7
3 Amendment of Consumer Credit Administration Act 1995 No 69 8
The Consumer Credit Administration Act 1995 is amended as set out 9
in Schedule 1. 10
4 Amendment of Consumer, Trader and Tenancy Tribunal Act 2001 No 82 11
The Consumer, Trader and Tenancy Tribunal Act 2001 is amended as 12
set out in Schedule 2. 13
5 Repeal of Credit (Finance Brokers) Act 1984 No 96 14
The Credit (Finance Brokers) Act 1984 is repealed. 15
Page 2
Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Amendment of Consumer Credit Administration Act 1995 Schedule 1
Schedule 1 Amendment of Consumer Credit 1
Administration Act 1995 2
(Section 3) 3
[1] Section 3 Definitions 4
Insert in alphabetical order in section 3 (1): 5
client of a finance broker is the person on behalf of whom 6
consumer credit is to be obtained or is obtained (whether or not 7
for commission) by the finance broker. 8
commission includes any fee, charge, reward or other 9
remuneration (whether or not monetary and whether 10
characterised as a termination fee or otherwise) that is: 11
(a) paid or payable by the client of a finance broker for or 12
in respect of finance broking engaged in by the finance 13
broker on behalf of the client, and 14
(b) retained by the finance broker. 15
credit application fee or credit establishment fee means a fee 16
charged by a credit provider, or a person or body authorised to 17
act on behalf of a credit provider, for determining an 18
application for consumer credit or the initial administrative 19
costs of providing consumer credit, or both. 20
engages in finance broking--see subsection (3). 21
finance broker means a person who engages in finance 22
broking. 23
finance broking contract means a contract between a finance 24
broker and a client under which the finance broker agrees to 25
engage in finance broking on behalf of the client. 26
repayment amount or repayment arrangement--see 27
subsection (4). 28
secured--see subsection (5). 29
valuation fee means a fee for a valuation obtained in respect of 30
any security to be offered for a consumer credit contract. 31
Page 3
Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Schedule 1 Amendment of Consumer Credit Administration Act 1995
[2] Section 3 (1), definition of "consumer credit legislation" 1
Omit paragraph (d). 2
[3] Section 3 (1), definitions of "finance broker" and "finance broking" 3
Omit the definitions. 4
[4] Section 3 (3), (4) and (5) 5
Insert after section 3 (2): 6
(3) For the purposes of this Act, a person engages in finance 7
broking if the person ("the intermediary") acts, or purports to 8
act, as an intermediary to negotiate and obtain consumer credit 9
for a person (other than the intermediary's employer, or a 10
principal who is not a client of the intermediary) in return for 11
a commission or financial benefit, whether payable to the 12
intermediary by the person, the credit provider or any other 13
person or body. 14
(4) In this Act, a reference to a repayment amount or repayment 15
arrangement, in relation to consumer credit, is a reference to 16
a repayment amount or repayment arrangement that includes all 17
amounts payable under the contract for the consumer credit 18
(including any credit application fee or credit establishment fee 19
payable in connection with the consumer credit). 20
(5) For the purposes of this Act, consumer credit is secured for a 21
client when the credit provider has made a final determination 22
regarding the credit application and is prepared to provide the 23
client with the consumer credit sought. 24
Page 4
Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Amendment of Consumer Credit Administration Act 1995 Schedule 1
[5] Part 1A 1
Insert after section 4: 2
Part 1A Regulation of finance broking 3
Division 1 Preliminary 4
4A Object of Part 5
The object of this Part is to provide for the regulation of 6
persons who engage in finance broking so as to ensure that the 7
clients of finance brokers: 8
(a) are given adequate information before entering into 9
finance broking contracts, and 10
(b) are protected from unfair practices engaged in by 11
finance brokers, and 12
(c) have access to a redress mechanism when finance 13
brokers breach the terms of the finance broking 14
contract, engage in unjust conduct or charge excessive 15
commission. 16
4B Application of Part 17
(1) This Part applies to and in respect of a finance broker only in 18
so far as consumer credit to which the business of the finance 19
broker relates is, or includes, credit to be provided under a 20
credit contract within the meaning of the Consumer Credit 21
(New South Wales) Code. 22
(2) This Part does not apply to or in respect of a finance broker of 23
a class prescribed by the regulations. 24
Division 2 Finance broking contracts 25
4C Finance broking contract must be in writing and must be given 26
to client 27
(1) A finance broker must not engage in finance broking on behalf 28
of a particular client unless: 29
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Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Schedule 1 Amendment of Consumer Credit Administration Act 1995
(a) the finance broker has first entered into a written finance 1
broking contract with the client, and 2
(b) that contract has been signed by the client, and 3
(c) the contract contains the matters required by 4
subsection (3), and 5
(d) a copy of the contract has been given to the client. 6
Maximum penalty: 50 penalty units. 7
(2) Subsection (1) applies to finance broking on behalf of a client 8
whether or not the client is under any obligation to pay 9
commission under the finance broking contract. 10
(3) The matters required by this subsection are: 11
(a) particulars of the amount of consumer credit to be 12
obtained or, if the amount is not ascertainable, the 13
maximum amount of consumer credit, or the credit 14
limit, to be obtained, and 15
(b) if the consumer credit is to be for a fixed term--the 16
term of the consumer credit desired by the client, and 17
(c) if the consumer credit is intended to be repaid by 18
repayments at regular intervals--the intervals at which 19
the client is prepared to make repayments and the 20
maximum amount of each periodic repayment that the 21
client is prepared to make in respect of the consumer 22
credit, and 23
(d) if the consumer credit is not intended to be repaid at 24
regular intervals--the repayment arrangements that are 25
acceptable to the client, and 26
(e) the maximum interest rate that the client is prepared to 27
pay, and 28
(f) the date by which the finance broker is to have secured 29
the consumer credit for the client, and 30
(g) a statement, in the form prescribed by the regulations, 31
that the finance broker's recommendations will be 32
drawn from a range of potential lenders that does not 33
necessarily include all lenders who offer consumer 34
credit of the nature of the consumer credit sought, and 35
(h) the name and address of the finance broker, and 36
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Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Amendment of Consumer Credit Administration Act 1995 Schedule 1
(i) if the finance broker is a company--the Australian 1
Company Number (ACN) of the company, and 2
(j) if the finance broker trades under a business name--the 3
name and address of the principals of the relevant 4
business, and 5
(k) the amount of commission (if any is payable) payable by 6
that client or, if the exact amount of commission is not 7
known, the method of calculating the commission and 8
an estimate of the amount that will be payable if 9
consumer credit is provided on the terms set out in the 10
finance broking contract, and 11
(l) when and how any such commission will be payable, 12
and 13
(m) if a financial or other benefit will be received from a 14
person other than the client by the finance broker if 15
consumer credit is ultimately provided to the client--a 16
statement, in the terms prescribed by the regulations, as 17
to the fact that the finance broker will receive a financial 18
or other benefit and as to any other matters that may be 19
prescribed. 20
(4) A finance broker must not demand, receive or accept any 21
commission in respect of finance broking engaged in on behalf 22
of a client if the finance broker has failed to comply with this 23
section in relation to that finance broking. 24
Maximum penalty: 50 penalty units. 25
Division 3 Commission 26
4D Up-front commission prohibited 27
A finance broker must not demand, receive or accept any 28
commission from a client before securing the consumer credit 29
in respect of which the commission is payable. 30
Maximum penalty: 50 penalty units. 31
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Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Schedule 1 Amendment of Consumer Credit Administration Act 1995
4E Payment of commission depends on terms of consumer credit 1
being the same as those agreed to 2
(1) A finance broker must not demand, receive or accept any 3
commission from a client in respect of finance broking engaged 4
in on behalf of a client if: 5
(a) the amount of consumer credit secured is not the same 6
as the amount specified in the written finance broking 7
contract, or 8
(b) in the case of consumer credit intended to be for a fixed 9
term--the consumer credit secured is for a term that is 10
not the same as the term specified in the contract, or 11
(c) in the case of consumer credit intended to be repaid by 12
periodic repayments--the repayment periods are not the 13
same as those specified in the contract or the amount of 14
each periodic repayment is more than the maximum 15
amount set out in the contract, or 16
(d) in the case of consumer credit not intended to be repaid 17
by periodic repayments--the repayment arrangements 18
are not the same as those set out in the contract, or 19
(e) the consumer credit secured is at a rate of interest that is 20
more than the maximum rate specified in the contract, 21
or 22
(f) the consumer credit is not secured by the date that is set 23
out in the contract. 24
Maximum penalty: 50 penalty units. 25
(2) In this section, a reference to a finance broking contract 26
includes a reference to a contract that has been varied in writing 27
and signed by both the finance broker and the client. 28
4F Commission must not be greater than that disclosed or 29
estimated in contract 30
A finance broker must not demand, receive or accept from a 31
client in respect of consumer credit obtained pursuant to a 32
finance broking contract with the client: 33
(a) if an amount of commission is specified in the finance 34
broking contract--any commission that is greater than 35
the amount so specified, or 36
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Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Amendment of Consumer Credit Administration Act 1995 Schedule 1
(b) if the exact amount of commission is not specified in 1
the finance broking contract: 2
(i) any commission that is greater than the amount 3
calculated by the method specified in the 4
contract, or 5
(ii) if the amount calculated by the method specified 6
in the contract would result in an amount of 7
commission greater than the amount estimated in 8
the contract, any commission that is greater than 9
the amount estimated in the contract. 10
Maximum penalty: 50 penalty units. 11
4G Finance broker may charge for costs even if client declines credit 12
A finance broker must not demand, receive or accept a 13
commission in respect of finance broking engaged in on behalf 14
of a client who has decided not to enter into a credit contract 15
for the consumer credit that the finance broker has secured 16
unless: 17
(a) the consumer credit secured by the finance broker: 18
(i) is of the same amount as that specified in the 19
written finance broking contract with the client, 20
and 21
(ii) is for a term that is the same as any term 22
specified in that contract, and 23
(iii) if the consumer credit is to be repaid in periodic 24
repayments--involves repayment periods that 25
are the same as those specified in the contract 26
and periodic repayments that are no more than 27
the maximum periodic repayment amount 28
specified in the contract, and 29
(iv) if the consumer credit is not to be repaid in 30
periodic repayments--involves repayment 31
arrangements that are the same as those specified 32
in the contract, and 33
(v) is at a rate of interest that is not higher than the 34
rate specified in the contract, and 35
(vi) was secured by the date that is specified in the 36
contract, and 37
(b) the finance broking contract was not validly terminated 38
before the finance broker secured the credit, and 39
Page 9
Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Schedule 1 Amendment of Consumer Credit Administration Act 1995
(c) the finance broker and the client agreed in the finance 1
broking contract that commission may be demanded, 2
received or accepted if the client decided not to enter 3
into a credit contract for the consumer credit that the 4
finance broker has secured in the circumstances referred 5
to in paragraphs (a) and (b). 6
Maximum penalty: 50 penalty units. 7
Division 4 Records and fees 8
4H Finance broker to keep records 9
(1) A finance broker must, before or immediately after entering 10
into a transaction in the course of business as a finance broker, 11
make, or cause to be made, a record containing full particulars 12
of that transaction, including a copy of any relevant finance 13
broking contract. 14
(2) A finance broker must preserve a record made under 15
subsection (1) for a period of at least 7 years after the date of 16
the transaction to which the record relates. 17
(3) Any record kept at a place of business of a finance broker is, 18
unless the contrary is proved, to be presumed to have been 19
made by, or with the authority of, the finance broker. 20
Maximum penalty: 50 penalty units. 21
4I Valuation fees, credit application fees and credit establishment 22
fees 23
(1) A finance broker must not demand, receive or accept from a 24
client: 25
(a) any valuation fee, or 26
(b) any credit application fee, or 27
(c) any credit establishment fee, 28
except in accordance with this section. 29
Maximum penalty: 50 penalty units. 30
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Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Amendment of Consumer Credit Administration Act 1995 Schedule 1
(2) A finance broker receives or accepts a valuation fee, a credit 1
application fee or a credit establishment fee from a client in 2
accordance with this section only if: 3
(a) the fee is in the form of a cheque, money order or 4
transfer made payable to an approved person and the 5
finance broker gives or delivers it to the approved 6
person as soon as practicable after receiving it, or 7
(b) in the case of a valuation fee--the finance broker is 8
authorised by the credit provider to instruct the valuer, 9
or 10
(c) in the case of a credit application fee or credit 11
establishment fee--the finance broker is authorised to 12
act on behalf of the credit provider and will incur the 13
costs of determining the application for consumer credit 14
or the initial administrative costs of providing the credit, 15
or both, or 16
(d) in the case of a credit application fee or credit 17
establishment fee--the finance broker is also the credit 18
provider. 19
(3) In this section: 20
approved person means: 21
(a) in relation to a valuation fee--the valuer, the credit 22
provider or a person or body authorised by the credit 23
provider to instruct the valuer, or 24
(b) in relation to a credit application fee or a credit 25
establishment fee--the credit provider or a person or 26
body who is authorised to act on behalf of the credit 27
provider and who will incur the costs of determining the 28
application for consumer credit, or the initial 29
administrative costs of providing the credit, or both. 30
Division 5 Consumer action 31
4J Consumer action where contract breached, unjust conduct or 32
excessive commission 33
(1) The client of a finance broker under a finance broking contract 34
may apply to the Tribunal for an order that the finance broker: 35
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Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Schedule 1 Amendment of Consumer Credit Administration Act 1995
(a) has not complied with the contract, or 1
(b) has engaged in, or is engaging in, unjust conduct in 2
finance broking in relation to that contract, or 3
(c) has charged an excessive commission in relation to that 4
contract. 5
(2) The Tribunal may, if it considers that the finance broker has not 6
complied with the contract, has engaged in unjust conduct or 7
has charged an excessive commission: 8
(a) order the finance broker to take specified action or 9
refrain from specified action, or 10
(b) order the finance broker to pay a specified amount to 11
the client, or 12
(c) order that a specified sum of money is not due or owing 13
by the client to the finance broker, or 14
(d) make any other order that the Tribunal thinks is 15
necessary or proper for the purposes of this section (not 16
being an order that affects any contract for consumer 17
credit). 18
(3) An application under this section must be made no later than 3 19
years after the alleged non-compliance, unjust conduct or 20
charging of excessive commission. 21
(4) A person must not fail to comply with an order made by the 22
Tribunal under this section. 23
Maximum penalty: 100 penalty units or imprisonment for 12 24
months, or both. 25
Division 6 Court may take action 26
4K Court action where contract breached, unjust conduct or 27
excessive commission 28
(1) This section applies if proceedings are taken in a court by a 29
finance broker for the recovery of money in respect of a 30
transaction entered into by the finance broker under a finance 31
broking contract and it appears to the court: 32
(a) that the finance broker has not complied with the 33
finance broking contract, or 34
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Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Amendment of Consumer Credit Administration Act 1995 Schedule 1
(b) that the finance broker has engaged in unjust conduct in 1
relation to the finance broking contract, or 2
(c) that the commission charged by the finance broker in 3
respect of the transaction is excessive. 4
(2) If this section applies, the court may: 5
(a) order the finance broker to take specified action or 6
refrain from specified action, or 7
(b) order the finance broker to pay a specified amount to the 8
client, or 9
(c) order that a specified sum of money is not due or owing 10
by the client to the finance broker, or 11
(d) make any other order that the court thinks is necessary 12
or proper for the purposes of this section (not being an 13
order that affects any contract for consumer credit). 14
4L Court may order refund 15
(1) A court that finds a finance broker guilty of any offence under 16
this Act, may, whether or not it proceeds to conviction, order 17
the finance broker to refund: 18
(a) any amount received or accepted by the finance broker 19
in contravention of this Act, and 20
(b) interest payable, at the rate fixed by the court, for the 21
period from the time of the receipt or acceptance of the 22
amount until the time it is refunded. 23
(2) The rate fixed by the court under subsection (1) (b) must not 24
exceed the rate prescribed by the regulations. 25
[6] Part 2, heading 26
Insert "and finance broking" after "credit". 27
[7] Schedule 2 Savings and transitional provisions 28
Insert at the end of clause 1 (1): 29
· Consumer Credit Administration Amendment (Finance 30
Brokers) Act 2002 31
Page 13
Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Schedule 1 Amendment of Consumer Credit Administration Act 1995
[8] Schedule 2, Part 3 1
Insert after clause 7: 2
Part 3 Provisions consequent on enactment of 3
Consumer Credit Administration Amendment 4
(Finance Brokers) Act 2002 5
8 Consumer action 6
An application may be made against a finance broker under 7
section 4J, and may be dealt with by the Tribunal, in respect of 8
one or more transactions even if the transaction or transactions 9
concerned was or were entered into before the commencement 10
of the section. 11
9 Court action 12
An order may be made against a finance broker under 13
section 4K, in respect of one or more transactions even if the 14
transaction or transactions concerned was or were entered into 15
before the commencement of the section. 16
Page 14
Consumer Credit Administration Amendment (Finance Brokers) Bill 2002
Amendment of Consumer, Trader and Tenancy Tribunal Act 2001 Schedule 2
Schedule 2 Amendment of Consumer, Trader and 1
Tenancy Tribunal Act 2001 2
(Section 4) 3
[1] Section 5 Establishment of Consumer, Trader and Tenancy Tribunal 4
Omit "Credit (Finance Brokers) Act 1984" from the note to the section. 5
[2] Schedule 1 Divisions of the Tribunal 6
Omit clause 1 (b) (iv). 7
Page 15
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