Financial Sector Reform Act 2022 (87 of 2022)

Schedule 4   Consumer credit reforms

Part 1   Small amount credit contracts

National Consumer Credit Protection Act 2009

14   At the end of Division 2 of Part 3-2C

Add:

133CD Licensee must not enter into a small amount credit contract if repayment amounts and intervals are not equal

Requirement

(1) A licensee must not enter into, or offer to enter into, a small amount credit contract with a consumer who will be the debtor under the contract if any of the following applies:

(a) repayments that would be required under the contract are not equal;

(b) the intervals between repayment dates would not be equal;

(c) the interval between the date on which credit would be first provided under the contract and the first repayment date would be longer than twice the interval between the first repayment date and the second repayment date.

Civil penalty: 5,000 penalty units.

(2) For the purposes of paragraph (1)(a), repayments that would be required under a small amount credit contract are taken to be equal if:

(a) each repayment is of the same amount; or

(b) both of the following apply:

(i) each repayment (other than the last repayment) is the same amount;

(ii) the last repayment is up to 5% less than each other repayment; or

(c) the repayments meet the conditions determined by ASIC under subsection (5).

(3) A repayment date in relation to a small amount credit contract is the date on or by which a repayment is required to be made under the contract.

(4) For the purposes of paragraph (1)(b), if a small amount credit contract provides that:

(a) repayments that would be required under the contract are to be made on or by a fixed day of each week, fortnight or month; and

(b) if that fixed day falls on a day that is not a business day - the repayment would be required to be made on or by the immediately preceding or succeeding business day;

the intervals between repayment dates are taken to be equal.

(5) ASIC may, by legislative instrument, determine conditions for the purposes of paragraph (2)(c).

(6) Nothing in this section is intended to limit the regulations which may be made for the purposes of section 133CC.

Offence

(7) A person commits an offence if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person engages in conduct; and

(c) the conduct contravenes the requirement.

Criminal penalty: 100 penalty units.

Strict liability offence

(8) A person commits an offence if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person engages in conduct; and

(c) the conduct contravenes the requirement.

Criminal penalty: 10 penalty units.

(9) Subsection (8) is an offence of strict liability.

133CE Written documentation required in relation to the assessment for a small amount credit contract

(1) If, in an assessment made for the purposes of paragraph 128(c), the licensee assesses that a small amount credit contract is not unsuitable for a consumer, before:

(a) entering into the small amount credit contract with the consumer; or

(b) making an unconditional representation to the consumer that the licensee considers that the consumer is eligible to enter into the small amount credit contract with the licensee; or

(c) increasing the credit limit of the small amount credit contract which is the subject of that assessment; or

(d) making an unconditional representation to the consumer that the licensee considers that the credit limit of the small amount credit contract between the consumer and the licensee will be able to be increased;

the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):

(e) the assessment; and

(f) the inquiries and verification made for the purposes of paragraph 128(d) in relation to that assessment.

Civil penalty: 5,000 penalty units.

(2) ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(e) and (f) are to be documented in writing.

(3) Before making a determination under subsection (2), ASIC must:

(a) consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and

(b) have regard to any submissions made by the Information Commissioner because of that consultation.

133CF Licensee not to make certain unsolicited communications in relation to a small amount credit contract

Prohibition on certain unsolicited communications

(1) A licensee must not make, or arrange for the making of, an unsolicited communication to a consumer (whether orally, in writing or by electronic means) that contains:

(a) an offer to the consumer to enter into a small amount credit contract; or

(b) an invitation to the consumer to apply for a small amount credit contract;

if any of the following apply:

(c) the consumer is, or has at any time been, a debtor under a small amount credit contract with the licensee;

(d) the consumer has at any time applied for a small amount credit contract with the licensee;

(e) the consumer:

(i) is, or has at any time been, a debtor under a small amount credit contract with another credit provider; or

(ii) has at any time applied for a small amount credit contract with another credit provider;

and a reasonable person in the licensee's position would, if the person undertook such inquiries as are reasonable in the circumstances, be aware of the matter in subparagraph (i) or (ii) (whichever applies).

Civil penalty: 5,000 penalty units.

Meaning of unsolicited communication to a consumer

(2) An unsolicited communication to a consumer is a communication to a consumer or a consumer's agent that is made by a person by dealing directly with the consumer or the consumer's agent in any of the following circumstances:

(a) no prior request has been made by the consumer to the licensee for that communication;

(b) the consumer has made a prior request to the licensee for that communication and that request was solicited by or on behalf of the licensee;

(c) circumstances of a kind prescribed by the regulations.

However, the regulations may prescribe that specified kinds of communications are not unsolicited communications to which this section applies.

Offence

(3) A person commits an offence if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person engages in conduct; and

(c) the conduct contravenes the requirement.

Criminal penalty: 100 penalty units.

Loss of certain fees and charges

(4) If:

(a) a licensee makes an unsolicited communication to a consumer in contravention of subsection (1); and

(b) the licensee enters into a small amount credit contract with that consumer within 30 days after that unsolicited communication is made;

then:

(c) the consumer is not liable (and is taken never to have been liable) to pay a fee or charge of a kind mentioned in paragraph 31A(1)(a), (b), (c) or (d) of the National Credit Code under that small amount credit contract (whether or not the liability is imposed consistently with the National Credit Code); and

(d) the consumer may recover as a debt due to the consumer any amounts paid by the consumer that, in accordance with paragraph (c) of this subsection, the consumer is not liable to pay (or is taken never to have been liable to pay).