New South Wales Bills Explanatory Notes New South Wales Bills Explanatory Notes[Index] [Search] [Download] [Bill] [Help]
Bill 1995
Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.
General Outline
Objectives of the Bill
The objectives of the Bill are to provide laws that apply equally to all forms
of consumer lending and to all credit providers, and that are uniform in all
jurisdictions in Australia.
The legislation is based on the principle of truth-in-lending which will allow
borrowers to make informed choices when purchasing credit.
The Bill applies rules that regulate the credit provider's conduct throughout
the life of a loan, but without restricting product flexibility and consumer
choice. The policy of the legislation is to rely generally on competitive
forces to provide price restraint but to provide significant redress
mechanisms for borrowers in the event that credit providers fail to comply
with the legislation.
The Bill is designed to apply to a deregulated credit market and provide
standards for the provision of credit that will not be overtaken by changes in
the financial marketplace.
Reasons for the Bill
Current consumer credit legislation is outdated and overly prescriptive. It
applies only to a small percentage of the consumer credit market. It regulates
the form of credit contracts and has a monetary ceiling of $40,000. Credit
unions and building societies are not covered by the legislation. The laws
were made for a regulated credit market where a limited number of products
were available. They are no longer appropriate for a deregulated finance
industry and a regulatory environment that favours minimum intervention in
the market.
The Legislative Scheme
The Bill forms part of a legislative scheme that involves the enactment of
legislation by the States and Territories. The scheme is based on the Uniform
Credit Laws Agreement 1993 of the States and Territories.
The uniform scheme relies on the enactment by Queensland of a uniform
Consumer Credit Code. The Code is enacted and applied as the law of
Queensland by the Consumer Credit (Queensland) Bill 1994 enacted by the
Queensland Parliament on 2 September 1994. Under the Agreement, the
other States and Territories may either apply the Code (as in force from time
to time) as the law of the State or Territory or enact a law that is consistent
with the Code. Under the Agreement, the approval of a Ministerial Council
of the States and Territories will be required to any changes to the Code by
the Queensland Parliament. In this State, the Code (as in force from time to
time) is to be applied as a law of the State.
Explanatory note page 2
Code as law of New South Wales
Part 1
Preliminary
Clause 1 sets out the name (also called the short title) of the proposed Act.
Clause 2 provides for the commencement of the proposed Act by
proclamation.
Clause 3 defines expressions used in the proposed Act.
Clause 4 makes it clear that explanatory notes in the text (eg the note
setting out the initial text of the Code) do not form part of the proposed Act.
Part 2
Consumer Credit (New South Wales) Code and
Regulations
Clause 5 provides that the Consumer Credit Code set out in the Appendix
to the Queensland Act (as in force for the time being) applies as a law of
New South Wales and may, as a law of New South Wales, be referred to as
the Consumer Credit (New South Wales) Code.
Clause 6 provides that the regulations made by the Queensland
Governor-in-Council under Part 4 of the Queensland Act apply as
regulations for the purposes of the Code and may be referred to as the
Consumer Credit (New South Wales) Regulations. Those regulations will be
the uniform regulations for the purposes of the Code.
Clause 7 defines some general expressions used in the Code for the
purposes of its application as a law of New South Wales.
Part 3
Conferral of judicial and administrative functions
Clause 8 provides that the judicial functions under the New South Wales
Code are to be exercised in New South Wales by the Commercial Tribunal
and, in some cases, also by the ordinary courts.
Clause 9 specifies the Commissioner for Consumer Affairs as the officer
having the functions of the Government Consumer Agency under the New
South Wales Code.
Explanatory note page 3
Part 4
Miscellaneous
Clause 10 specifies the financial counselling trust fund established under
the Credit Act 1984 as the fund into which civil penalties payable by credit
providers under the Code are to be paid. Civil penalties under the Credit Act
1984 are at present paid into that fund.
Clause 11 is a special provision that will allow New South Wales to
prescribe by regulation a maximum annual percentage rate for consumer
credit contracts made in New South Wales. The Uniform Credit Laws
Agreement acknowledges that a State or Territory may wish to enact such a
special provision.
Clause 12 provides for a Local Court to deal with summary offences
against the Code.
Clause 13 declares that the proposed Act binds the Crown.
Clause 14 authorises the making of special savings and transitional
regulations for New South Wales.
Clause 15 is the general regulation-making power.
Clause 16 is a formal provision that gives effect to Schedule 1.
Clause 17 requires the Minister to review the proposed Act after 5 years.
Schedule 1 contains consequential amendments to the Credit Act 1984 and
other Acts. Generally speaking, the Credit Act 1984 will cease to apply to
continuing credit contracts, but will continue to apply to other credit
contracts made before the commencement of the Code.
Explanatory note page 4
Notes on Consumer Credit Code
The Appendix to the Queensland Act sets out the current provisions of the
Consumer Credit Code which is to be part of the law of New South Wales.
The Code is applied as a law of Queensland by the Queensland Act and will
be applied as the law in force in other participating States or Territories or a
law that is consistent with the Code will be enacted in other participating
States or Territories.
The current provisions of the Code are as follows:
The Consumer Credit Code
Part 1
Preliminary
Clause 1 sets out the short title of the Code.
Clause 2 states that the Code is to commence in accordance with the
proclamation under the Queensland Act.
Clause 3 states that Schedule 1 contains the principal definitions of words
and expressions used in the Code and that Schedule 2 contains other
miscellaneous provisions relating to the interpretation of the Code.
Clause 4 defines "credit" as the deferral of the payment of debt or the
incurring of deferred debt and defines the "amount of credit" as the amount
of debt actually deferred.
Clause 5 defines "credit contract" as a contract under which credit to
which the Code applies is or may be provided.
Clause 6 sets out the circumstances in which the Code will apply to the
provision of credit (and to credit contracts and related matters). The debtor
must be a natural person ordinarily resident in the jurisdiction or a strata
corporation formed in the jurisdiction, the credit must be provided wholly or
predominantly for personal, domestic or household purposes, a charge must
be made for the credit and the credit provider must provide credit as part of
a business.
Clause 7 sets out kinds of credit to which the Code will not apply. These
include short term credit, credit without prior agreement, credit provided
under bill facilities, credit provided by pawnbrokers and certain employee
loans, as well as certain other specified kinds of credit.
Explanatory note page 5
Clause 8 applies the Code to mortgages given by natural persons or strata
corporations which secure obligations under a credit contract or related
guarantee, but only to the extent that they do so.
Clause 9 applies the Code to guarantees given by natural persons or strata
corporations which guarantee obligations under a credit contract, but only to
the extent that they do so.
Clause 10 provides for the application of the Code to a contract for the hire
of goods under which a hirer has a right or obligation to purchase the goods
and where the hiring charge and other amounts payable under the contract
are more than the cash price of the goods. In this case, the Code assumes a
sale of the goods and the provision of credit.
Clause 11 sets out presumptions relating to the application of the Code to
credit contracts, mortgages and guarantees. In particular, it will enable
conclusive declarations to be made that credit is not provided for personal,
domestic or household purposes.
Part 2
Credit contracts
Division 1
Negotiating and making credit contracts
Clause 12 requires a credit contract to be in writing signed or otherwise
adopted by the parties to the contract.
Clause 13 enables the regulations to authorise other methods of making a
credit contract.
Clause 14 requires the credit provider to make pre-contractual disclosures
to the proposed debtor. The disclosures are to comprise the matters that are
required to be included in the contract document by clause 15 and an
information statement of the debtor's statutory rights and obligations. The
disclosures may include the comparison rate.
Clause 15 sets out the matters that must be included in a credit contract
document.
Clause 16 deals with the form and expression of contract documents.
Clause 17 provides that any alteration to a contract document after it is
signed by the debtor must be signed or initialled by the debtor.
Clause 18 provides for a copy of the contract document to be provided to
the debtor.
Explanatory note page 6
Clause 19 enables the debtor to terminate a credit contract before credit is
provided.
Clause 20 makes it an offence to contravene the requirements of the
Division (maximum penalty $10,000).
Division 2
Debtor's monetary obligations
Clause 21 prohibits the imposition of monetary liabilities on the debtor that
are not consistent with the Code and the imposition of charges not
authorised by the contract.
Clause 22 makes it an offence for a credit provider to impose such a
prohibited monetary liability or to accept or demand money in respect of
such a prohibited monetary liability (maximum penalty $10,000).
Clause 23 requires the credit provider to make a loan in full in cash or
money's worth without deducting interest. The regulations may authorise
such a deduction of interest in the case of the first payment of interest
charges.
Clause 24 deals with the acceptance of early payments and the crediting of
payments under the contract.
Division 3
Interest charges
Clause 25 defines relevant expressions used in the Division.
Clause 26 limits the amount of interest charges under a contract to the
amount derived by applying the daily percentage rate to unpaid daily
balances.
Clause 27 prohibits a credit credit provider from requiring payment of (or
debiting) interest in advance.
Clause 28 prohibits a higher rate of interest on default except when the
debtor is in default in payment, in respect of the amount in default and while
the default continues.
Division 4
Fees and charges
Clause 29 enables the regulations to prohibit particular credit fees or
charges.
Clause 30 deals with fees or charges passed on to other parties.
Explanatory note page 7
Division 5
Credit provider's obligation to account
Clause 31 requires the credit provider to provide the debtor with statements
of account and specifies the frequency at which they are to be provided.
Clause 32 specifies the information to be contained in a statement of
account.
Clause 33 provides that the opening balance of a statement of account must
not exceed the closing balance of the previous statement.
Clause 34 deals with the provision by the credit provider to a debtor or
guarantor on request of statements of amounts owing and certain other
matters.
Clause 35 enables the Court to order the credit provider to provide a
statement required under the Division.
Clause 36 deals with disputed accounts.
Division 6
Certain transactions not to be treated as contracts
Clause 37 provides that the requirements for making new contracts do not
apply to the provision of credit by authorised deferrals or waivers of money
due under a contract or by authorised changes to the contract.
Part 3
Related mortgages and Guarantees
Division 1
Mortgages
This Division applies to a mortgage (under which the mortgagor is a natural
person or a strata corporation) which secures obligations under a credit
contract or related guarantee.
Clause 38 deals with the form of mortgages.
Clause 39 requires the credit provider to provide the mortgagor with a copy
of the mortgage.
Clause 40 prohibits mortgages over all the property of the mortgagor.
Clause 41 restricts mortgages over future property.
Clause 42 deals with the mortgage of goods supplied under a continuing
credit contract.
Clause 43 deals with all accounts mortgages.
Explanatory note page 8
Clause 44 prohibits third party mortgages.
Clause 45 specifies the maximum amount that may be secured under a
mortgage.
Clause 46 prohibits certain securities as a mortgage security, such as
employees' remuneration or superannuation or cheques issued by the debtor.
Clause 47 requires the consent of the credit provider or the Court to the
assignment or disposal of mortgaged property by the mortgagor.
Clause 48 sets out the conditions that a credit provider may impose on the
consent to any such assignment or disposal of mortgaged property.
Clause 49 makes it an offence for the credit provider to contravene the
Division (maximum penalty $5,000).
Division 2
Guarantees
This Division applies to a guarantee (under which the mortgagor is a natural
person or a strata corporation) which secures obligations under a credit
contract or related guarantee.
Clause 50 deals with the form of guarantees.
Clause 51 requires the credit provider to make pre-contractual disclosures
to the proposed guarantor. The disclosures are to comprise the credit contract
(containing the matters that are required to be included in the contract
document by clause 15) and an information statement of the guarantor's
statutory rights and obligations.
Clause 52 requires the credit provider to provide the guarantor with a copy
of the guarantee and related credit contract.
Clause 53 enables the guarantor to withdraw from the guarantee before
credit is first provided and in certain other cases.
Clause 54 deals with the extension of a guarantee.
Clause 55 imposes limits on the liability of a guarantor.
Clause 56 deals with increases in the liability of a guarantor.
Clause 57 makes it an offence for the credit provider to contravene the
Division (maximum penalty $5,000).
Explanatory note page 9
Part 4
Changes to obligations under credit contracts,
mortgages and guarantees
Division 1 Unilateral changes by credit provider
The Division sets out procedures for the notice that must be given by credit
providers of unilateral changes by credit providers to credit contracts,
mortgages and guarantees and other requirements relating to such changes.
Clause 58 applies the Division to unilateral changes by credit providers to
credit contracts, mortgages and guarantees. It makes it clear that it will not
apply to specified changes to annual percentage rates, repayments, the terms
of credit contracts and other changes made under Division 3. The Division
does not confer any additional power to unilaterally change a credit contract.
Clause 59 sets out notice procedures for notice by credit providers of
changes to annual percentage rates and changes in the manner in which
interest is calculated or applied under credit contracts. Notice of changes in
annual percentage rates must be given not later than when the change
concerned takes effect. Notice of changes in the manner in which interest is
calculated or applied must be given at least 30 days before the change
concerned takes effect. It will be an offence not to comply with the
appropriate procedure (maximum penalty $10,000).
Clause 60 sets out notice procedures for notice by credit providers of
changes relating to repayments under credit contracts. Notice of any such
changes must be given at least 30 days before the change concerned takes
effect. It will be an offence not to comply (maximum penalty $10,000).
Clause 61 sets out notice procedures for notice by credit providers of
changes relating to credit fees or charges under credit contracts. Notice of
any such changes must be given at least 30 days before the change
concerned takes effect. It will be an offence not to comply with the
appropriate procedure (maximum penalty $10,000).
Clause 62 provides for the effect of a decision by a credit provider not to
provide any further credit under a continuing credit contract. Notice of the
decision must be given by the credit provider to the debtor as soon as
practicable after the decision is made, as well as after any decision to reduce
the credit limit. It will be an offence not to comply with the appropriate
procedure (maximum penalty $10,000). A credit provider may not increase a
credit limit under a continuing credit contract unless the debtor has requested
it or consented to it in writing.
Explanatory note page 10
Clause 63 sets out notice procedures for notice by credit providers of other
unilateral changes by credit providers to credit contracts, mortgagees and
guarantees. Notice of any such changes must be given at least 30 days
before the change concerned takes effect. It will be an offence not to comply
with the appropriate procedure (maximum penalty $10,000).
Clause 64 prohibits charges payable on early termination of a credit
contract or on prepayment of an amount under a credit contract from being
unilaterally increased by a credit provider if the annual percentage rate under
a contract is currently fixed for a specified term (including the whole term)
of the contract.
Division 2
Changes by agreement of parties
Clause 65 sets out notice procedures for credit providers of changes agreed
by the parties to credit contracts, mortgagees and guarantees. Notice of any
such changes must be given not later than 30 days after the agreement. It
will be an offence not to comply with the appropriate procedure (maximum
penalty $10,000). A credit provider must also give the debtor a written
notice containing the information required by the regulations if the parties
agree to increase the credit provided under a credit contract (maximum
penalty $10,000).
Division 3
Changes on grounds of hardship and unjust
transactions
Clause 66 entitles a debtor to seek the credit provider's agreement to
changes to the period of a credit contract together with postponement or
reduction of repayments, or postponement of repayments under the contract,
if the debtor is unable reasonably, because of illness, unemployment or other
reasonable cause to meet obligations under the contract. The provision and
the other provisions of the Division apply if the maximum possible amount
of credit under the contract is not more than $125,000.
Clause 67 sets out notice procedures for a credit provider of changes
agreed by the parties after any such application by the debtor. Notice of any
such changes must be given not later than 30 days after the agreement. It
will be an offence not to comply with the appropriate procedure (maximum
penalty $5,000).
Clause 68 empowers the Court by order to change the terms of the credit
contract on the application of the debtor if a credit provider refuses an
application for changes under clause 66. The Court is empowered to stay
enforcement proceedings and to make other orders until it determines the
application.
Explanatory note page 11
Clause 69 enables a credit provider to apply to the Court to vary an order
for changes or an associated or interim order.
Clause 70 empowers the Court to re-open transactions giving rise to a
contract, mortgage or guarantee or a change to a contract, mortgage or
guarantee, if satisfied that, in the circumstances when it was entered into or
changed, it was unjust. The matters which the Court is required to consider
and which it may consider are set out. Circumstances which were not
reasonably foreseeable may not be considered but subsequent conduct of the
parties may be considered.
Clause 71 lists the actions that the Court may take if it re-opens a
transaction.
Clause 72 empowers the Court to annul or reduce a change to the annual
percentage rate or rates under a credit contract, or to annul or reduce an
establishment fee or charge or a fee or charge payable on early termination
of a credit contract or for prepayment of an amount under a credit contract,
if satisfied that it is unconscionable. The only circumstances in which a
change to the annual percentage rate or rates or a fee or charge payable on
early termination or for prepayment of an amount is unconscionable are set
out. Matters to be considered in determining whether an establishment fee is
unconscionable are also set out.
Clause 73 limits the time within which applications may be made under the
Division.
Clause 74 enables the Court to join as parties to proceedings additional
persons who have an interest in the profits of a credit contract or mortgage,
or a beneficial interest in a credit contract or mortgage, and to make orders
affecting the persons if the Court holds the credit contract or mortgage to be
unjust.
Part 5
Ending and enforcing credit contracts, mortgages
and guarantees
Division 1
Ending of credit contract by debtor
Clause 75 sets out the right of a debtor or guarantor to pay out a credit
contract, at any time and the amounts which make up the total required to
pay out a credit contract.
Explanatory note page 12
Clause 76 requires the credit provider to provide a statement of a pay out
figure on request by a debtor or guarantor and sets out the requirements for
such a statement. It will be an offence not to comply (maximum penalty
$5,000).
Clause 77 empowers the Court to determine the amount of a pay out figure
if it is not provided by the credit provider. The credit contract may be
discharged by the tender of the amount.
Clause 78 sets out the procedures to be followed by a credit provider and a
debtor where the debtor wishes to return, and have the credit provider sell,
goods bought under a sale of goods by instalments or subject to a mortgage.
It will be an offence for a credit provider not to comply (maximum penalty
$5,000).
Clause 79 gives the debtor or mortgagor and a mortgagee under a previous
mortgage the right to apply to the Court for an order for compensation or
payment by a credit provider. The Court may make an order if it is not
satisfied that the credit provider complied with the procedures for the sale of
surrendered goods.
Division 2
Enforcement of credit contracts, mortgages and
guarantees
Clause 80 sets out the default notice procedures to be followed by a credit
provider before the credit provider can begin enforcement proceedings
against a defaulting debtor or mortgagor. It is in addition to any other law
relating to the enforcement of real property mortgages.
Clause 81 provides for the right of a debtor or mortgagor to remedy a
default within the period specified in a default notice and the effect of doing
so.
Clause 82 sets out the procedures to be followed by a credit provider
before the credit provider can enforce a judgment against a guarantor. It will
be an offence not to comply (maximum penalty $5,000).
Clause 83 prevents a credit provider from repossessing mortgaged goods if
the amount owing is less than 25% of the amount of credit or $10,000
(whichever is the lesser). It will be an offence to do so (maximum penalty
$10,000).
Clause 84 defines "acceleration clause".
Clause 85 sets out the only circumstances in which an acceleration clause
in a credit contract may operate. It is in addition to any other law relating to
the enforcement of real property mortgages.
Explanatory note page 13
Division 3
Postponement of enforcement proceedings
This Division sets out procedures relating to the postponement of
enforcement proceedings, related action, and the operation of acceleration
clauses against debtors, mortgagors or guarantors, where the maximum
amount of credit under the credit contract is $125,000. The regulations may
prescribe a higher amount.
Clause 86 sets out the right to negotiate a postponement.
Clause 87 provides for the postponement to have effect, subject to
specified requirements being complied with.
Clause 88 confers a right on a debtor, mortgagor or guarantor to apply to
the Court for a postponement if unable to negotiate a postponement with the
credit provider. The Court is empowered to stay enforcement proceedings
and to make an order for postponement and other orders.
Clause 89 enables a credit provider to apply to the Court to vary an order
for postponement or an associated order.
Division 4
Enforcement procedures for goods mortgaged
Clause 90 enables a credit provider to require a mortgagor under a goods
mortgage to give the credit provider information about the location of the
mortgaged goods. It will be an offence not to comply (maximum penalty
$5,000).
Clause 91 states the circumstances in which a credit provider may enter
residential premises to take possession of mortgaged goods under a goods
mortgage. It will be an offence not to comply (maximum penalty $5,000).
Clause 92 gives the Court power to authorise a credit provider to enter
residential premises to take possession of mortgaged goods under a goods
mortgage.
Clause 93 gives the Court power to order the delivery of mortgaged goods
under a goods mortgage to a credit provider and to vary any such order. It
will be an offence to contravene an order (maximum penalty $3,000).
Clause 94 sets out the notice procedures to be followed by a credit provider
that has taken possession of mortgaged goods. It will be an offence not to
comply (maximum penalty $5,000).
Clause 95 enables a mortgagor to nominate a purchaser for mortgaged
goods of which the credit provider has taken possession. It will be an
offence for a credit provider not to offer to sell the goods to the nominated
purchaser (maximum penalty $5,000).
Explanatory note page 14
Clause 96 sets out the procedures to be followed by a credit provider for
the sale of mortgaged goods of which the credit provider has taken
possession. It will be an offence not to comply (maximum penalty $5,000).
Clause 97 lists the kinds of deductions which the credit provider may make
from the proceeds of sale of mortgaged goods.
Clause 98 gives the debtor or mortgagor and a mortgagee under a previous
mortgage the right to apply to the Court for an order for compensation or
payment by a credit provider. The Court may make an order if it is not
satisfied that the credit provider complied with the procedures for the sale of
mortgaged goods.
Division 5
Enforcement expenses
Clause 99 prohibits a credit provider from recovering any more than
reasonable enforcement expenses from a debtor, mortgagor or guarantor and
imposes a civil penalty if the credit provider does not comply.
Part 6
Civil penalties for defaults of credit providers
Division 1
Civil penalties for breach of key disclosure and
other requirements
The Division sets out a regime for the imposition of civil penalties for
breaches by credit providers of key requirements of the Code in relation to
credit contracts and related matters.
Clause 100 sets out the provisions of the Code that contain the key
requirements of the Code for breaches of which the provisions of the
Division impose liability for civil penalties.
Clause 101 confers on parties to credit contracts, guarantors and the
Government Consumer Agency the right to apply to the Court for an order
under the Division. It also limits the rights of debtors or guarantors to make
an application if a contravention of a key requirement is or has been subject
to an application for such an order.
Clause 102 sets out the procedure for applications to the Court to ascertain
whether a credit provider has contravened a key requirement and empowers
the Court to make an order requiring a civil penalty to be paid by a credit
provider if the Court is of the opinion that there has been such a
contravention. Matters which are to be taken into account by the Court in
determining an application are listed. The Court may suppress publication of
an application.
Explanatory note page 15
Clause 103 prescribes the maximum amount of civil penalty that may be
imposed for a contravention of a key requirement if the application for an
order is made by a debtor or guarantor.
Clause 104 provides for the way in which a civil penalty may be paid if the
application is made by a debtor or guarantor, that is, either set off against
any amount due or becoming due to the credit provider or recovered as a
debt due to the debtor or guarantor by the credit provider. The Court may
make orders as to payment.
Clause 105 prescribes the maximum amount of civil penalty that may be
imposed for a contravention of a key requirement if the application for an
order is made by a credit provider or the Government Consumer Agency.
The amount is to be calculated on the basis of an upper limit of a total civil
penalty of $500,000 for all contraventions of a key requirement disclosed by
a credit provider in Australia.
Clause 106 requires an amount of civil penalty payable after an application
for an order by a credit provider or the Government Consumer Agency to be
paid into a fund established under another Act for that purpose or, if there is
no such fund, to the Government Consumer Agency.
Clause 107 enables a debtor or guarantor to apply for an order for
compensation for loss arising from a contravention of a key requirement.
Clause 108 provides for the recognition and registration of orders, and the
giving effect to orders, made in other jurisdictions under provisions
equivalent to clauses 102 and 105.
Clause 109 gives the Court a discretion to refuse to hear an application on
the ground that it is more appropriate that it be determined in another
specified jurisdiction and corresponding legislation.
Clause 110 sets out general provisions relating to the number of credit
contracts that may be covered by, and notice to be given of, applications for
orders by credit providers or the Government Consumer Agency.
Clause 111 gives the Government Consumer Agency standing to become a
party to proceedings under the Division.
Clause 112 empowers the Court to make directions to protect the interests
of a debtor or guarantor who has made an application for an order and makes
it clear that, apart from any relevant directions, the application does not
prevent enforcement action from being taken by the credit provider.
Clause 113 makes it clear that the Division does not affect any liability for
an offence against the Code or regulations.
Explanatory note page 16
Division 2
Other civil penalties
Clause 114 empowers the Court to make an order for restitution or
compensation against a credit provider if the credit provider contravenes a
requirement of or made under the Code. This does not apply if another civil
effect is provided for.
Part 7
Related sale contracts
Division 1
Interpretation and application
Clause 115 defines "sale contract".
Clause 116 describes sale contracts to which the Part applies.
Clause 117 defines "linked credit provider", "tied continuing credit
contract" and "tied loan contract".
Division 2
Liability of credit providers for suppliers'
misrepresentations
Clause 118 makes a credit provider liable for representations, warranties or
statements made by a supplier of goods or services to a debtor in relation to
a relevant tied loan contract or tied continuing credit contract. The credit
provider is entitled to be indemnified by the person who made the
representation, warranty or statement and any person on whose behalf it was
made.
Division 3
Liability of credit providers in relation to goods
The provisions of this Division are generally in the same terms as the
provisions of section 73 of the Trade Practices Act 1974 of the
Commonwealth, except that they also apply to unincorporated credit
providers.
Clause 119 establishes the joint liability of a credit provider (together with
a supplier) for loss or damage suffered by a debtor as a result of
misrepresentation, breach of contract or failure of consideration in relation to
a contract for the supply of goods or services if it was financed by a linked
credit provider. The provision also sets out the credit provider's defences to
proceedings arising out of the liability.
Clause 120 contains provisions about the limits on the debtor's right of
action against the linked credit provider under clause 119. The debtor may
set off the credit provider's liability under that provision in proceedings. The
Explanatory note page 17
rights of the debtor to bring proceedings solely against the credit provider
are limited as is the amount of the liability of the credit provider. Procedures
for enforcement of judgments against the credit provider in relation to the
liability are also set out.
Clause 121 establishes the liability of the supplier to the linked credit
provider for the loss suffered by the credit provider as a result of liability
under clause 119.
Clause 122 empowers a court to award interest in proceedings under clause
119.
Clause 123 subrogates a linked credit provider found liable in proceedings
under clause 119 (to the extent that the judgment is enforced against the
credit provider) to the rights that the debtor would have had against the
supplier or any other person but for the judgment as a result of the cause of
the liability.
Division 4
Termination of related transactions
Clause 124 confers on a purchaser of goods or services a right to terminate
a sale contract if the purchaser fails to obtain credit on reasonable terms,
where the purchaser makes it known to the supplier that the credit is
required. The resulting rights of the purchaser and supplier are also set out.
Clause 125 entitles a debtor to terminate a tied loan contract or a tied
continuing credit contract if the related sale contract is rescinded or
discharged. The resulting termination of any related guarantee or mortgage
and the resulting rights of the credit provider, debtor, mortgagor and
guarantor are also set out. It will be an offence for a supplier not to notify a
linked credit provider that a sale contract has been rescinded or discharged
(maximum penalty $5,000).
Clause 126 entitles a debtor to terminate a sale contract to supply
maintenance services, and to recover a proportionate rebate of consideration,
if a related tied loan contract or tied continuing credit contract is rescinded
or discharged before the end of the sale contract. It will be an offence for a
credit provider not to notify a debtor of the debtor's rights on any such
rescission or discharge (maximum penalty $5,000).
Clause 127 requires an entitlement to terminate a sale contract or credit
contract under the Part to be exercised in writing.
Clause 128 enables the Court to make orders about the termination of a
contract under the Part.
Clause 129 states that Part 5 does not apply to the termination of a contract
under the Part.
Explanatory note page 18
Division 5
Other provisions
Clause 130 prohibits a supplier from requiring a purchaser of goods or
services to apply for, or obtain, credit from a particular credit provider
(maximum penalty $10,000).
Clause 131 prohibits a supplier from demanding or accepting payment for
goods or services in the form of a post-dated bill of exchange or promissory
note with a face value of more than the cash price of the goods or services
(maximum penalty $10,000).
Part 8
Related insurance contracts
Clause 132 defines "credit-related insurance contract".
Clause 133 prohibits a credit provider or supplier from requiring a debtor
or guarantor to take out insurance, or to pay for insurance taken out or
arranged by the credit provider or supplier, unless it is compulsory
insurance, mortgage indemnity insurance, insurance over mortgaged
property or other prescribed insurance (maximum penalty $10,000). The
clause also prohibits a credit provider or supplier from requiring a debtor or
guarantor to take out insurance with a particular insurer, or making any
unreasonable requirements about insurance terms, in relation to a credit
contract or a sale contract in relation to which there is a tied loan contract or
tied continuing credit contract (maximum penalty $10,000). A civil effect is
also provided for.
Clause 134 prohibits a credit provider from knowingly providing credit for
a premium for insurance over mortgaged property for more than a 1 year
period, or from knowingly debiting the premium from the debtor's account
more than 30 days before the beginning of the period of insurance
(maximum penalty $10,000). A civil effect is also provided for.
Clause 135 limits the amount of commission for consumer credit insurance
taken out by a debtor which may be paid to or accepted by a credit provider,
a supplier under a sale contract in relation to which there is a tied loan
contract or tied continuing credit contract, or the agent of the credit provider
or supplier (maximum penalty $10,000). A civil effect is also provided for.
Clause 136 sets out the requirements for copies of insurance policies for
credit-related insurance contracts financed by credit contracts to be given by
insurers to debtors and for prescribed particulars of credit-related insurance
contracts entered into by credit providers and so financed to be given to
debtors. It will be an offence not to comply (maximum penalty $10,000).
Explanatory note page 19
Clause 137 sets out procedures to be followed when an insurer rejects a
proposal for credit-related insurance to be financed by a credit contract. It
will be an offence not to refund or credit in full any amount paid by the
debtor (maximum penalty $10,000).
Clause 138 provides for the termination of a relevant consumer credit
insurance contract on the termination of a credit contract and for the results
of the termination of the insurance contract.
Clause 139 entitles a debtor to terminate a relevant credit-related insurance
contract over mortgaged property on the termination of a credit contract and
for the results of the termination of the insurance contract. It will be an
offence for a credit provider not to notify a debtor of the debtor's rights on
any such termination of a credit contract (maximum penalty $5,000).
Part 9
Advertising and related conduct
Clause 140 prohibits advertising the availability of credit unless the
advertisement complies with certain requirements (particularly in relation to
the cost of the credit) (maximum penalty $10,000). Any reference to the cost
of credit must contain the annual percentage rate or rates and any fees or
charges that are payable. It may contain the comparison rate.
Clause 141 sets out the circumstances in which a person will be taken to
have caused an advertisement to be published and, accordingly, will be liable
for any contravention of the advertising requirements.
Clause 142 provides that a printer, publisher or proprietor of a newspaper,
a licensee of a broadcasting or television station, an exhibitor of a film or
any person acting with the authority of such a person is not liable for a
contravention of the credit advertising requirements unless the person
suspected or had reason to suspect the advertisement would constitute an
offence.
Clause 143 prohibits the disclosure of any interest rates other than the
annual percentage rate or the comparison rate (maximum penalty $10,000).
Clause 144 prohibits the making of false or misleading representations in
relation to a matter which is material to entry into a credit contract or related
transaction or in attempting to induce a person to enter such a contract or
transaction (maximum penalty $5,000).
Clause 145 prohibits a credit provider or supplier harassing a person in
attempting to get that person to apply for credit or enter into a credit contract
or related transaction (maximum penalty $10,000).
Explanatory note page 20
Clause 146 prohibits a credit provider visiting a person's residence for the
purpose of inducing the person to apply for or obtain credit, except by prior
arrangement with the person (maximum penalty $10,000). This does not
apply where the person is visiting the other person's residence for the
purpose of offering goods or services for sale and offers credit to finance the
sale.
Part 10 Consumer leases
Division 1
Interpretation and application
Clause 147 defines "consumer lease" as a contract for the hire of goods by
a natural person or strata corporation where the hirer does not have a right or
obligation to purchase the goods.
Clause 148 defines the circumstances in which Part 10 applies to a
consumer lease. The basic elements of a consumer lease to which Part 10
applies are as follows:
*
the lessee is connected with the jurisdiction concerned
*
the goods are hired wholly or predominantly for personal, domestic or
household purposes
*
a charge is or may be made for the hiring of the goods and the charge,
together with any other amount payable under the consumer lease,
exceeds the cash price of the goods
*
the lessor hires the goods as part of a business.
Clause 149 provides that Part 10 does not apply to leases for a fixed period
of 4 months or less or for an indefinite period, employment-related leases or
any other leases specified in the regulations as being excluded.
Clause 150 contains presumptions relating to the application of Part 10. In
particular, it will be presumed that goods are hired for business (rather than
domestic) purposes if the lessee makes a declaration to that effect before
hiring the goods (accordingly Part 10 will not apply to the lease).
Division 2
Form of and information to be included in
consumer leases
Clause 151 requires a consumer lease to be in the form of a written
document signed by the lessee and containing the information required by
Division 2 or the regulations. It is an offence for a lessor to enter into a
consumer lease in contravention of the requirements (maximum penalty
$10,000).
Explanatory note page 21
Clause 152 sets out the matters that a consumer lease must contain (if
ascertainable). These include a description of the goods, the amount of any
charges payable (including government charges), the amount of each rental
payment, the number of payments required, details as to when the payments
are due and information as to when the lease may be terminated.
Clause 153 requires a lessor to give the lessee a copy of the consumer
lease, together with a copy of a statement in the prescribed form explaining
the rights and obligations of the lessee (maximum penalty $5,000).
Clause 154 provides that the provision of further goods under a consumer
lease or a change in a consumer lease is not necessarily to be treated as
creating a new consumer lease or a credit contract.
Division 3
Other provisions applicable to consumer leases
Clause 155 applies specific provisions in the Code (relating to credit
contracts) to consumer leases.
Clause 156 requires a lessor to give 30 days' written notice of an intention
to repossess goods the subject of a consumer lease (maximum penalty
$5,000). It also contains exceptions to this requirement.
Clause 157 allows a lessee to end a consumer lease at any time by
returning the goods hired and provides for the determination of the amount
payable on such termination.
Part 11
Miscellaneous
Division 1
Tolerances and assumptions
Clause 158 sets out certain assumptions that may be made in relation to
disclosures required by the Code. It also gives power for regulations to be
made providing for further assumptions.
Clause 159 gives power for regulations to be made providing for tolerances
within which interest, fees and other charges will be taken to comply with
the Code.
Clause 160 allows the regulations to vary or provide for further
assumptions.
Explanatory note page 22
Division 2
Documentary provisions
Clause 161 relates to the form of notices. It includes a power to make
regulations in relation to the form of any notice required under the Code.
Clause 162 requires a credit provider to ensure that any credit contract,
guarantee or notice given by the credit provider under the Code is easily
legible, conforms with any regulations concerning the print or type of the
document and is clearly expressed.
Clause 163 requires a credit provider to provide, at the written request of a
debtor, mortgagor or guarantor, copies of certain documents in accordance
with the requirement set out in the clause (maximum penalty $3,000).
Clause 164 relates to the signing of documents by a person other than the
person required to sign.
Division 3
General provisions
Clause 165 provides that the Code binds the Crown.
Clause 166 provides that the Code applies to a person who is assigned the
rights of a credit provider under a contract.
Clause 167 provides that the Code applies for the benefit of a person who
is assigned the rights of a debtor, mortgagor or guarantor under a credit
contract, mortgage or guarantee.
Clause 168 requires a credit provider to comply with any direction by a
debtor who is liable to the credit provider for more than one credit contract
as to which contract a payment by the debtor should be applied.
Clause 169 prevents contracting out of the Code.
Clause 170 provides that a credit contract, mortgage or guarantee is not
illegal, void or unenforceable, merely because of a contravention of the
Code, unless the Code contains an express provision to that effect.
Clauses 171173 relate to the giving of notice and other documents under
the Code.
Clause 174 enables the Court to extend the time for doing things under the
Code.
Clause 175 relates to Court orders.
Clause 176 contains provisions relating to acting on behalf of another
person. The conduct of an officer, agent or employee of a credit provider
acting within his or her actual or ostensible authority will be imputed to the
Explanatory note page 23
credit provider. A credit provider or person associated with a credit provider
is also prohibited from purporting to act as an agent of a debtor, mortgagor
or guarantor in entering into a credit contract, mortgage or guarantee.
Clause 177 gives power for regulations to be made providing for the
cross-vesting of administrative and judicial powers conferred by the Code
among the participating States and Territories.
Division 4
Provisions relating to offences
Clauses 178 and 179 deal with penalties.
Clause 180 provides that offences against the Code are punishable
summarily.
Clause 181 prevents double jeopardy.
Clause 182 makes it an offence to aid, abet or attempt the commission of
an offence against the Code.
Clause 183 makes a director or person concerned in the management of a
corporation liable for a contravention of the Code by the corporation if the
person knowingly authorised or permitted the contravention.
Clause 184 provides for a 3 year limitation period for the bringing of
proceedings for an offence against the Code or the regulations. The period
may be extended with the consent of the Attorney General.
Schedules
Schedule 1
Principal definitions
Schedule 1 contains definitions of terms used in the Code.
Schedule 2
Miscellaneous provisions relating to
interpretation
Schedule 2 contains uniform interpretation provisions of a kind which are
usually contained in the Interpretation Act of a State or Territory.
Explanatory note page 24