Consumer Credit (Finance Brokers) Act 1998 (Vic)

Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998

TABLE OF PROVISIONS

Section Page

1.	Purposes	1
2.	Commencement	2
3.	Principal Act	2
4.	New Part 4A inserted	2
PART 4A—FINANCE BROKING	2
Division 1—Preliminary	2
37A. Definitions	2

37B. Exemption from this Part 4

Division 2—Offences	4
37C.	Certain persons prohibited from engaging in finance
broking 4
37D.	Certain persons not to be directors of or to manage or
control corporations that engage in finance broking 6
37E.	Who or what is a disqualified person? 6
Division 3—Permission to engage in finance broking	9
37F.	Applications for permission to engage or be involved in
finance broking 9
37G.	Permission from the Authority 10
37H.	Authority may impose conditions 11
37I.	Application for review 12
Division 4—Permissible fees	12
37J.	Requirements before finance brokers may demand or
accept fees 12
37K.	Fee representing reasonable costs and expenses payable
in certain circumstances 15
37L.	Finance brokers not to demand receive accept or charge
fee to which they are not entitled 16
37M. Valuation and credit application fees	17

i

Section Page

Division 5—Jurisdiction of courts and the Tribunal under

Part 4A	18
37N.	Right to recover fees if there is non-compliance with this
Part 18
37O.	Jurisdiction of the Tribunal to order repayment of fees 18
37P.	Court power to order repayment where there is a
contravention of section 37L 19
Division 6—Miscellaneous and transitional provisions	19

37Q. Documents of appointment must be held for 7 years 19

37R. Misrepresentation 19

37S.	Register of finance brokers and agents	20
37T.	Finance broker licences and agents licences	20
37U.	Director to exercise and perform certain powers and
duties of Registrar	21

5.	Consequential amendments to Principal Act	21
6.	Regulations	22
7.	Amendment of Credit (Administration) Act 1984	22
8.	Repeal	23

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NOTES 24

ii

Victoria

No. 77 of 1998

Consumer Credit (Finance Brokers) Act

1998†

[Assented to 10 November 1998]

The Parliament of Victoria enacts as follows:

1. Purposes

The main purposes of this Act are—

(a)	to repeal the Finance Brokers Act 1969; and
(b)	to insert a new Part into the Consumer Credit (Victoria) Act 1995 so as to prohibit certain persons from engaging or being involved in finance broking; and

Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998 s. 2

(c) Authority to permit certain persons to engage

to empower the Business Licensing that permission, disqualified from doing so; and

(d) to make consequential amendments to the Consumer Credit (Victoria) Act 1995 and the Credit Administration Act 1984.

2. Commencement

This Act comes into operation on 1 July 1999.

3. Principal Act

In this Act, the Consumer Credit (Victoria) Act	No. 41/1995. Reprint No. 1
1995 is called the Principal Act.	as at 1 July 1998.

4. New Part 4A inserted

After Part 4 of the Principal Act insert—

'PART 4A—FINANCE BROKING

Division 1—Preliminary

37A. Definitions

In this Part—

"client" means a person who appoints a

finance broker to negotiate consumer

credit on their behalf for a fee;

"consumer credit" means—

(a)

a credit contract within the (Victoria) Code; or

(b) a consumer lease to which Part 10 of the Consumer Credit (Victoria) Code applies;

Consumer Credit (Finance Brokers) Act 1998

s. 4 Act No. 77/1998

"credit application fee" means any fee

charged by—

(a) application for the provision of
credit under a credit contract
within the meaning of the

a credit provider in respect of an or

(b) application to enter into a
consumer lease to which Part 10

a lessor in respect of an Code applies;

"engage in finance broking" means—

(a)	to negotiate consumer credit for a fee; or
(b)	to hold oneself out to the public as being prepared, for a fee, to negotiate consumer credit;

"fee" includes a charge, commission, reward

or other remuneration, whether
monetary or otherwise;

"finance broker" means a person who engages in finance broking;

"negotiate consumer credit" means to

negotiate, or to act as intermediary to
obtain, consumer credit for persons
other than an employer or principal
(except where that principal is the
client) of the person so negotiating or
acting;

Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998 s. 4

"valuation fee" means any fee for a

valuation obtained in respect of any
security to be offered for any proposed
credit contract within the meaning of

the Consumer Credit (Victoria) Code.

37B. Exemption from this Part

(1) The Governor in Council may, by Order

published in the Government Gazette,
declare that this Part, wholly or to the extent

specified in the Order, does not apply to—

(a)	a specified person or to a specified class of person; or
(b)	a specified transaction or to a specified class of transaction.

(2) An Order made under sub-section (1)—

(a)	may specify the period during which the Order shall remain in force; and
(b)	may provide that its operation is subject to such terms and conditions as are specified in the Order.

Division 2—Offences

37C. Certain persons prohibited from engaging in finance broking

(1) A person is prohibited from engaging in

finance broking if that person—

(a) in the case of a natural person—

(i) is under 18 years of age; or

(ii)	is an insolvent under administration; or
(iii)

is a represented person within the and Administration Act 1986; or

Consumer Credit (Finance Brokers) Act 1998

s. 4 Act No. 77/1998

(b) in the case of a corporation—

(i)  is an externally administered body corporate; or

(ii)

is a corporation one or more of the (A) a person referred to in

paragraph (a); or

(B) a disqualified person who does not hold permission given by the Authority under

Division 3 to be a director of a corporation that engages in finance broking; or

(iii)  is a corporation that is managed or effectively controlled by a natural person who is—

(A) a person referred to in

paragraph (a); or

(B) a disqualified person who does not hold permission given by the Authority under

Division 3 to manage or
effectively control a
corporation that engages in

finance broking; or

(c) in any case, is a disqualified person that does not hold permission given by the Authority under Division 3 to engage in finance broking.

(2) A person prohibited by sub-section (1) from

doing so must not engage in finance broking.

Penalty:  In the case of a corporation,
240 penalty units;

Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998 s. 4

In any other case, 240 penalty units or 2 years imprisonment.

37D. Certain persons not to be directors of or to

manage or control corporations that engage
in finance broking

(1) A natural person is prohibited from being a

director of, or managing or effectively
controlling, a corporation that engages in
finance broking if he or she is—

(a)

prohibited from engaging in finance or

(b) a disqualified person who does not hold permission given by the Authority under Division 3 to be a director of, or manage or effectively control, a corporation that engages in finance broking (as the case may be).

(2) A natural person who is prohibited by sub- section (1) from doing so must not be a

director of, or manage or effectively control,
a corporation that engages in finance

broking.

Penalty:  240 penalty units or 2 years
imprisonment.

37E. Who or what is a disqualified person?

(1) A disqualified person for the purposes of this Part is a natural person who, or a corporation that—

(a) in the preceding 10 years has been found guilty—

(i)  in Victoria or elsewhere, of an offence involving fraud,

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s. 4 Act No. 77/1998

dishonesty, drug trafficking or

violence; or

(ii) Act 1984, the Credit
(Administration) Act 1984, this
Act, the Consumer Credit
(Victoria) Code or a similar

of an offence against the Credit Territory of Australia; or

(iii) of an offence against the Finance Brokers Act 1969 or a similar enactment of another State or a Territory of Australia; or

(b)	in the preceding 2 years has had their application for the grant or renewal of a finance broker's licence under the Finance Brokers Act 1969 refused; or
(c)	in the preceding 2 years has had their application for the grant or renewal of a finance broker's licence, or for registration to act as a finance broker, refused under any enactment of another State or a Territory of Australia; or
(d)	is a disqualified person for the purposes of this Part by force of sub-section (2).

(2) A natural person or a corporation that—

(a)	has carried on any occupation, profession or business that is regulated under any enactment of Victoria or of the Commonwealth or of another State or a Territory of Australia; and
(b)	licence, registration or permission to

under that enactment has had their business suspended or cancelled, or has

Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998	s. 4
been disqualified from carrying on that occupation, profession or business—

is a disqualified person for the purposes of

this Part—

(c)	in the case of a suspension, during the period of the suspension; and
(d)	in the case of a cancellation, during the 5 years following the cancellation; and
(e)	the 5 years following the disqualification or the period of the

in the case of a disqualification, during longer.

(3) Any person that—

(a)	immediately before 1 July 1999 held a finance broker's licence under the Finance Brokers Act 1969 or any enactment of another State or a Territory of Australia, or was registered to act as a finance broker under any enactment of another State or Territory of Australia; and
(b)	but for this sub-section would become a disqualified person within the meaning of sub-section (1) at the beginning of
that date by reason of a finding of guilt, refusal, suspension, cancellation or disqualification that occurred before that date—

is not to be regarded as a disqualified person

for the purposes of this Part.

(4) A person that—

Consumer Credit (Finance Brokers) Act 1998

s. 4 Act No. 77/1998

(a)	at any time after 1 July 1999 becomes a disqualified person within the meaning of sub-section (1); and
(b)

immediately before becoming a finance broking or was a director of, or managed or effectively controlled, a corporation that was engaged in finance broking (as the case may be)—

is not to be regarded as a disqualified person

for the purposes of this Part until—

(c)	the expiry of 30 days after becoming a disqualified person; or
(d)	if an application for permission under Division 3 is made before that expiry, the application is withdrawn or refused.

Division 3—Permission to engage in finance

broking

37F. Applications for permission to engage or be involved in finance broking

(1) A disqualified person within the meaning of section 37E(1) may apply to the Authority at any time for permission to do any or all of

the following—

(a) engage in finance broking; or

(b)	be a director of a corporation that engages in finance broking; or
(c)

manage or effectively control a broking.

(2) An application must be—
Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998 s. 4

(a)	in a form approved by the Authority; and
(b)	accompanied by a fee of $150 or any other fee that is prescribed.

(3) An application may be withdrawn at any

time before the Authority determines it.

37G. Permission from the Authority

(1) The Authority may give its permission if it is satisfied that—

(a)	it is not contrary to the public interest for it to do so; and
(b)	disqualified person by reason of a suspension, cancellation or disqualification referred to in section 37E(2), the relevant occupation,

in a case where the person became a finance broker; and

(c)	in a case where the person became a disqualified person by reason of a finding of guilt of an offence referred to in section 37E(1)(a)(i), the offence was not related to conduct carried out by the person—
(i)	while engaging in finance broking; or

(ii)  as a director of a corporation that engages in finance broking; or

(iii) effectively controlling a

as a person who is managing or finance broking; and

(d) in any case, special circumstances led to the offence, refusal, suspension,

Consumer Credit (Finance Brokers) Act 1998

s. 4	Act No. 77/1998
cancellation or disqualification by reason of which the person became a disqualified person.

(2) In determining whether to give its

permission, the Authority—

(a) is not required to conduct a hearing;

(b)	may require the applicant to provide such further information as it considers necessary;
(c)	may seek and use information and advice from any person or body or other source as it thinks fit.

(3) Without limiting its discretion to do so, the Authority may refuse to give its permission if—

(a)	the applicant refuses or fails to provide any information requested by the Authority under sub-section (2)(b); or
(b)	the applicant unreasonably delays the consideration of the application.

37H. Authority may impose conditions

(1) In giving its permission under this Division, the Authority may impose any conditions it considers appropriate to ensure the ongoing protection of the public interest.

(2) The person given the permission, or the

Director, may apply to the Authority for a
variation or revocation of any conditions the
Authority has imposed.

(3) A person given the permission must comply

with any conditions imposed in respect of
that permission.

Consumer Credit (Finance Brokers) Act 1998

s. 4
s. 4

Act No. 77/1998

Penalty:  In the case of a corporation,
240 penalty units;
In any other case, 240 penalty
units or 2 years imprisonment.

(4) If the Authority is satisfied that any

condition imposed in respect of a permission
has been contravened or not complied with,
it may revoke the permission.

(5) Before taking any action under this section, the Authority may seek and use information and advice from any person or body or other source as it thinks fit.

37I. Application for review

(1) A person whose interests are affected by a

decision of the Authority under section 37G or 37H may apply to the Tribunal for review of the decision.

(2) An application for review must be made

within 28 days after the later of—

(a)	the day on which the decision is made; or
(b)	if, under the Victorian Civil and Administrative Tribunal Act 1998, the person requests a statement of reasons for the decision, the day on which the statement of reasons is given to the person or the person is informed under section 46(5) of that Act that a statement of reasons will not be given.

Division 4—Permissible fees

37J. Requirements before finance brokers may demand or accept fees

Consumer Credit (Finance Brokers) Act 1998
Act No. 77/1998

(1) A finance broker must not demand, receive

or accept any fee in respect of negotiating
consumer credit unless—

(a)	the finance broker has been appointed by the client in writing to negotiate consumer credit on their behalf; and
(b)	the document of appointment sets out the fee to be charged or its method of calculation; and
(c)	the document of appointment specifies the matters required by sub-section (3); and
(d)	appointment before the finance broker

the client has signed the document of credit on their behalf; and

(e) the client is given a copy of the signed document of appointment before the finance broker commences negotiating consumer credit on their behalf; and

(f) the client accepts—

(i)

the consumer credit that is appointment; or

(ii) finance broker that is reasonably
comparable to the consumer credit

consumer credit negotiated by the appointment.

(2) A reference in this Part to a document of

appointment is a reference to that document
as varied by the finance broker and the
client, whether before or after the finance
broker commences to negotiate consumer
credit.

Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998 s. 4

(3) For the purposes of sub-section (1)(c)—

(a) appointed to negotiate consumer credit

where the finance broker is being meaning of the Consumer Credit (Victoria) Code, the matters required to be specified in the document of appointment are—

(i) amount of credit is not
ascertainable, the maximum

the amount of credit, or if the be negotiated under the credit contract;

(ii)  if there is a term of the credit contract, that term;

(iii)  the maximum annual percentage rate or rates the client is prepared to pay;

(iv) the duration of the appointment;

(v) credit application fees and

an agreed maximum amount of be required to pay;

(b) appointed to negotiate consumer credit

where the finance broker is being Part 10 of the Consumer Credit (Victoria) Code applies, the matters required to be specified in the document of appointment are—

(i)  a description or identification of the goods to be hired under the lease;

Consumer Credit (Finance Brokers) Act 1998

s. 4 Act No. 77/1998

(ii)  the number of rental payments to be made;

(iii)

the maximum amount of rental client is prepared to pay;

(iv)  the amount of any other charges not included in the rental that the client is prepared to pay under the lease;

(v) the duration of the appointment;

(vi)  an agreed maximum amount of credit application fees that the client may be required to pay.

37K. Fee representing reasonable costs and

expenses payable in certain circumstances

(1) Despite section 37J, if the requirements of paragraphs (a) to (e) of section 37J(1) have been met, the finance broker may charge a fee in respect of the reasonable costs

incurred, and a reasonable fee for the
services provided, by the finance broker in
negotiating consumer credit on behalf of the

client if—

(a)	the finance broker successfully negotiates the consumer credit specified in the document of
appointment, but the client declines to accept that consumer credit; or
(b)	the client terminates the appointment for any reason other than—

(i)  the finance broker advising them that all avenues for obtaining the consumer credit specified in the document of appointment have been exhausted; or

Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998	s. 4
(ii)

the finance broker engaging in terminate the appointment; or

(iii)  the finance broker repudiating the appointment; or

(iv)  the agreed maximum amount of credit application and valuation fees required to be paid by the

client having been paid but the consumer credit specified in the document of appointment not having been negotiated within a reasonable time after the payment; or
(v)	the document of appointment not

the consumer credit specified in time agreed to in the document of appointment.

(2) The finance broker must not charge a fee

under sub-section (1) unless the finance

broker and the client agree in the document

of appointment to such a fee being charged.

37L. Finance brokers not to demand receive

accept or charge fee to which they are not
entitled

A finance broker must not demand, receive, accept or charge—

(a)	any fee for negotiating consumer credit other than a fee to which they are entitled under this Part; or
(b)	any deposit on account of a fee for negotiating consumer credit.
Penalty:	In the case of a corporation
For a first offence, 30 penalty

Consumer Credit (Finance Brokers) Act 1998

s. 4 Act No. 77/1998

units;
For a subsequent offence,
60 penalty units.
In any other case—
For a first offence, 30 penalty
units or 3 months imprisonment;
For a subsequent offence,
60 penalty units or 6 months

imprisonment.

37M. Valuation and credit application fees

(1) A finance broker must not demand payment of any valuation fees or credit application

fees in cash or any other form other than in the form of a cheque, money order or other transfer made payable only to the person
who has provided or is to provide the
valuation, or the credit provider (as the case

may be).

Penalty:	In the case of a corporation
For a first offence, 30 penalty units; For a subsequent offence, 60 penalty units. In any other case— For a first offence, 30 penalty units or 3 months imprisonment; For a subsequent offence, 60 penalty units or 6 months imprisonment.

(2) As soon as practicable after receiving a

cheque, money order or other transfer
referred to in sub-section (1), the finance
broker must give or deliver it to the person
who has provided or is to provide the
valuation, or the credit provider (as the case
may be).

Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998 s. 4

Penalty:	In the case of a corporation
For a first offence, 30 penalty units; For a subsequent offence, 60 penalty units. In any other case— For a first offence, 30 penalty units or 3 months imprisonment; For a subsequent offence, 60 penalty units or 6 months imprisonment.

Division 5—Jurisdiction of courts and the

Tribunal under Part 4A

37N. Right to recover fees if there is non-

compliance with this Part

If a finance broker charges, receives, or accepts from a client, any amount as a fee to which that finance broker is not entitled under this Part, or any amount as a deposit on account of a fee for negotiating consumer credit, that client may—

(a)	recover that amount as a debt in a court of competent jurisdiction; or
(b)	apply to the Tribunal for an order requiring the finance broker to repay that amount.

37O. Jurisdiction of the Tribunal to order

repayment of fees

On the application of a client, the Tribunal may make an order for the repayment of any amount that a finance broker has received or

Consumer Credit (Finance Brokers) Act 1998

s. 4

s. 4 Act No. 77/1998

accepted as a fee to which that finance
broker was not entitled, or as a deposit on
account of a fee for negotiating consumer

credit.

37P. Court power to order repayment where

there is a contravention of section 37L

On finding a finance broker guilty of an was received or accepted until the time the amount is repaid.

offence under section 37L, the Magistrates'
Court, in addition to imposing a penalty,
may make an order requiring the finance
broker to repay any amount that has been
received or accepted by the finance broker in
contravention of that section, together with
interest at a rate that is set by the court, not
exceeding the rate for the time being fixed
under section 2 of the Penalty Interest

Division 6—Miscellaneous and transitional

provisions

37Q. Documents of appointment must be held for

7 years

A finance broker must retain the signed original document of appointment to negotiate consumer credit for 7 years from the date that the document of appointment was signed by the client.

Penalty:  For a first offence, 30 penalty
units;
For a subsequent offence,
60 penalty units.

37R. Misrepresentation

A finance broker must not—
Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998

(a)	by a false, misleading or deceptive statement, representation or promise; or
(b)	by any wilful concealment of a material fact—

induce or attempt to induce any person to enter into an agreement or contract for or with respect to any consumer credit, or the

provision of any consumer credit.

Penalty:	In the case of a corporation— For a first offence, 30 penalty units;
For a subsequent offence, 60 penalty units. In any other case— For a first offence, 30 penalty units or 3 months imprisonment; For a subsequent offence, 60 penalty units or 6 months imprisonment.

37S. Register of finance brokers and agents On 1 July 1999, the Director shall take possession, and have custody, control and

use of the register within the meaning of

section 6 of the Finance Brokers Act 1969.

37T. Finance broker licences and agents

licences

(1) As soon as practicable after 1 July 1999, the Director must send a notice to every person who, immediately before that date, held a

finance broker's licence or agent's licence, requiring that person to give or send their licence to the Director.

Consumer Credit (Finance Brokers) Act 1998

s. 5 Act No. 77/1998

(2) A person must within 14 days of receipt of the notice give or send their licence to the Director.

Penalty: 30 penalty units.

37U. Director to exercise and perform certain powers and duties of Registrar

On and from 1 July 1999, any power that could have been exercised by the Registrar before that date under section 19 of the Finance Brokers Act 1969 for the purpose of ascertaining whether the provisions of that Act had been complied with by any finance broker or agent before that date, vests in the Director and may be exercised by the Director for that purpose as if that Act had not been repealed.'.

5. Consequential amendments to Principal Act

(1) In section 3(1) of the Principal Act, after the

definition of "exempt credit provider" insert—

' "externally administered body corporate" has

the same meaning as in the Corporations
Law;

"insolvent under administration" means a person who is a bankrupt in respect of a bankruptcy from which the person has not

been discharged and includes—

(a) a person for whom a debt agreement has been made under Part IX of the Bankruptcy Act 1966 of the Commonwealth (or the corresponding provisions of the law of another jurisdiction) where the debt agreement has not ended or has not been terminated; and

Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998 s. 6

(b) arrangement under Part X of the
Bankruptcy Act 1966 of the
Commonwealth (or the corresponding

a person who has executed a deed of jurisdiction) where the terms of the deed have not been fully complied with; and

(c) a composition under Part X of the
Bankruptcy Act 1966 of the
Commonwealth (or the corresponding

a person whose creditors have accepted jurisdiction) where a final payment has not been made under that composition;'.

(2) In section 30(3)(h) of the Principal Act, omit

"within the meaning of the Corporations Law".

6. Regulations

In section 41(1) of the Principal Act, after
paragraph (c) insert—

"(d) prescribing fees for applications to the

Authority.".

7. Amendment of Credit (Administration) Act 1984

(1) In section 10A of the Credit (Administration) Act 1984, in the definition of "Credit Acts", after	No. 10091. Reprint No. 3
as at 1 July

"Credit Act 1984" insert ", Consumer Credit	1998.
(Victoria) Act 1995".

(2) In section 12 of the Credit (Administration) Act 1984, after "credit provider" (wherever occurring) insert "or finance broker".

(3) In section 13 of the Credit (Administration) Act

1984—

(a) after "mortgagee" (wherever occurring)
insert "or finance broker";

Consumer Credit (Finance Brokers) Act 1998

s. 8 Act No. 77/1998

(b) after "mortgage" insert "or consumer credit (as the case requires)".

(4) In section 14(c) of the Credit (Administration

Act 1984), for "or mortgagee" (wherever occurring) substitute ", mortgagee or finance broker".

8. Repeal

No. 7846.	The Finance Brokers Act 1969 is repealed.
Reprint No. 2 as at 8 August 1997.

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Consumer Credit (Finance Brokers) Act 1998

Act No. 77/1998 Notes

NOTES

†

Minister's second reading speech—

Legislative Assembly: 3 September 1998

Legislative Council: 21 October 1998

The long title for the Bill for this Act was "to repeal the Finance Brokers
Act 1969, to amend the Consumer Credit (Victoria) Act 1995 so as to
prohibit certain persons from engaging or being involved in finance
broking, to empower the Business Licensing Authority to permit certain
persons to engage in finance broking and for other purposes."