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CREDIT (AMENDMENT) BILL 1998
NEW SOUTH WALES
EXPLANATORY NOTE
(This Explanatory Note relates to this Bill as introduced into Parliament)
The objects of this Bill are:
(a) to facilitate the procedure for dealing with applications made to the
Commercial Tribunal for the removal or limitation of the civil penalties
imposed on credit providers for common breaches of the Credit Act 1984
(particularly minor breaches); and
(b) to revise the description of consumer credit insurance which is required to
be disclosed to debtors; and
(c)
to remove the imposition of civil penalties for certain past breaches of the
Credit Act 1984 relating to the disclosure of insurance commission charges.
Under the Credit Act 1984, "civil penalties" imposed on credit providers for
breaches of the Act comprise the removal of the liability of the debtor to pay credit
charges under credit contracts involved in those breaches of the Act.
Clause 1. Short title of proposed Act.
Clause 2. Commencementof proposed Act on date of assent.
Clause 3. Formal provision giving effect to Schedule of amendments to the Credit
Act 1984.
SCHEDULE 1 - AMENDMENTS
Procedure for dealing with applications for removal or limitation of civil penalties
Schedule 1 (1) inserts section 85 (4A) and (4B) into the Act.
Proposed section 85 (4A) ensures that the Commercial Tribunal may give
ancillary directions relating to the payment of the amount that a debtor or credit
Credit (Amendment) 1990
provider is liable to pay as a result of a determination of the Tribunal to remove
or vary a civil penalty for a breach of the Act.
Proposed section 85 (4B) makes it clear that if the Tribunal removes or varies
a civil penalty for a breach of the Act and restores the liability of the debtor under
a relevant credit contract, the liability is not restored if the liability has also been
removed because of a civil penalty imposed for another breach of the Act which
was not dealt with by the Tribunal.
Schedule 1 (2) inserts section 85A into the Act. The proposed section provides
that (unless the Commercial Tribunal otherwise directs) an application for the
restoration of the liability of a debtor operates to stay the civil penalty pending a
decision by the Tribunal on the application. Provision is made for the Tribunal to
give directions to protect the interests of the debtor while the application is being
dealt with.
Schedule 1 (3) inserts section 86 (l) (c) and 86 (2) - (5) into the Act.
Proposed section 86 (l) (c) provides that when the Commercial Tribunal is
dealing with an application for the restoration of the liability of a number of
debtors despite a common breach of the Act by the credit provider, the Tribunal
may restore the liability of debtors under a specified class of relevant credit
contracts entered into during any period. At present if the Tribunal restores the
liability of debtors under contracts entered into during a particular period it may
do so only for all contracts entered into during that period.
Proposed section 86 (2) - (5) relates to the identification of the debtors affected
by an application and the giving of notice of proceedings to debtors. If the
Commercial Tribunal is dealing with an application for the restoration of the
liability of a number of debtors for a breach of the Act, the proposed provisions
enable the Commercial Tribunal to authorise notice of the application to be given
by publication of a notice in a newspaper if the Tribunal considers it appropriate
because of the number of debtors involved and the other circumstances of the
case. The debtors would not be separately identified in any such notice.
Schedule 1 (4) inserts section 86A into the Act. The proposed section provides
an alternative procedure for dealing with applications by credit providers to the
Commercial Tribunal for the restoration of liability of a number of debtors despite
a minor breach of the Act (particularly in cases in which a great number of credit
Contracts are involved). The proposed section provides that the application of the
credit provider may be dealt with without the separate identification and notification
of each debtor concerned.
Description of consumer credit Insurance
Schedule 1 (6) - (8) amend the provisions of the Act which require the separate
disclosure in a relevant credit contract of various types of insurance obtained by the
debtor in connection with the credit contract and financed under the credit contract.
The amendments enable unemployment insurance to be included in the general
description of "consumer credit insurance" which covers such things as accident and
sickness insurance. The amended description is in line with the classes of insurance
prescribed under Commonwealth legislation relating to insurance and insurance
contracts.
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Schedule 1 (5) and (9) insert section 173 and Schedule 8 into the Act containing
certain transitional and special provisions. In particular:
clause 1 restores credit charges for certain past breaches of the Act relating
to the failure to properly disclose in the credit contracts insurance
commission charges payable in connection with insurance contracts
financed under the credit contracts generally where the disclosures were
made in insurance certificates furnished or shown to the debtor in
connection with the insurance contract or where the commission was in
addition to other disclosed commission payable to a related company of the
credit provider;
clauses 2 and 3 apply to previous and pending proceedings of the
Commercial Tribunal the amendments relating to the description of
consumer credit insurance, the clarification of the operation of
determinations of the Commercial Tribunal under section 85 of the Act and
the new procedures for notice to debtors by newspaper advertisement;
clause 4 gives prospective operation to the amendments relating to the new
procedures of the Commercial Tribunal relating to applications for the
restoration of credit charges for minor breaches and relating to the
restoration of charges pending a decision of the Tribunal.
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