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CREDIT (AMENDMENT) BILL 1992*
NEW SOUTH WALES
EXPLANATORY NOTE
(This Explanatory Note relates to this Bill as introduced into Parliament)
The object of this Bill is to amend the Credit Act 1984 so as:
(a) to provide for the establishment and administration of a financial counselling
trust fund; and
(b) to enable the Commercial Tribunal to require credit providers to pay money
into the trust fund in cases where the credit provider has applied for the
relaxation of a civil penalty arising from a contravention of the Credit Act 1984
or the Credit (Administration) Act 1984 in respect of 2 or more regulated
contracts.
Clause 1 specifies the short title of the proposed Act.
Clause 2 provides for the commencement of the proposed Act on a day to be
proclaimed.
Clause 3 is a formal provision that gives effect to the Schedule of amendments.
SCHEDULE 1--AMENDMENTS
The financial counselling trust fund
A trust fund, and a scheme for the administration of the trust fund, is to be set up in
accordance with the regulations (Schedule 1(1) and (4)). The regulations will be able to
provide for the establishment of a fund or scheme by reference to a trust deed under
which such a fund or scheme is established. The regulations will prescribe the purposes
(being purposes connected with the provision of financial counselling to debtors or the
education of the public in the management of personal finances) for which, and the
manner in which, the trust fund is to be applied.
* Amended in committee--see table at end of volume.
Directions for payments into the financial counselling trust fund
Various provisions of the Credit Act 1984 and the Credit (Administration) Act 1984
provide that certain contraventions of those Acts give rise to a "civil penalty". The civil
penalty consists of the statutory waiving of the credit charges otherwise payable on
contracts in respect of which the contraventions have occurred.
Section 85 of the Credit Act 1984 allows a credit provider to apply to the
Commercial Tribunal for exemption from the civil penalty. The Commercial Tribunal
may order the reinstatement of the whole, or of part only, of the credit charges.
Section 86 of that Act allows a credit provider to apply for a determination under
section 85 in respect of a number of contracts. The section allows such an application to
be made without the need to identify the debtors under the contracts concerned and sets
out the procedures to be adopted for the notification of those debtors.
Proposed section 86B (Schedule 1 (3)) will allow the Commercial Tribunal, after
making a determination arising from an application under section 86, to direct that the
debtors Concerned are to continue to pay the whole of the credit charges for which they
would otherwise be liable but that the credit provider is to pay into the financial
counselling trust fund an amount to be determined by the Commercial Tribunal. Such a
direction is not to be given unless the Commercial Tribunal is satisfied that the
contravention concerned, and the circumstances in which it occurred, are sufficiently
serious to warrant the credit provider being penalised and that it would be unreasonable
to require the credit provider to undertake the task of recalculating reduced credit
charges for each of the debtors making refunds to each of the debtors. The proposed
section also provides that, if the financial counselling trust fund is not in existence, the
amount is to be paid to the Minister for payment into the Consolidated Fund.
A consequential amendment (Schedule 1 (2)) is to be made to section 85 of the Act.