ASIC CLASS ORDER [CO 10/1269]
EXPLANATORY STATEMENT
Prepared by the Australian Securities and Investments Commission
National Consumer Credit Protection Act 2009
The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 10/1269] under paragraph 163(3)(d) of the National Consumer Credit Protection Act 2009 (the Act).
Paragraph 163(3)(d) of the Act provides that ASIC may declare the provisions to which Part 3-7 of the Act applies (including Chapter 3 of the Act and instruments made for the purposes of Chapter 3 of the Act), apply in relation to a class of persons as if the provisions were omitted, modified or varied in a specified way.
1. Background
The National Consumer Credit Protection Regulations 2010 (the Regulations) deferred the commencement of particular disclosure obligations under the Act, subject to certain requirements being met. Subregulations 28N(1) to (3) provide that a licensee or credit representative is exempted from complying with a “relevant provision of the Act”, other than section 114 or 137 (quotes), until 1 April 2011 if:
(a) they inform a consumer in writing of the contact details of their approved external dispute resolution (EDR) scheme; or
(b) this information is given to the consumer within the previous 90 days.
A “relevant provision of the Act” is a section of the Act which requires a disclosure document to be given to a consumer, including credit guides and proposal disclosure documents.
ASIC Class Order [CO 10/1230] contained a declaration in subparagraph 4(c) which would have had the effect that the deferred commencement did not apply to credit proposal disclosure documents and lease proposal disclosure documents under sections 121 and 144 of the Act. The effect of the declaration in that class order was made in consultation with the Department of the Treasury.
2. Purpose of the class order
The purpose of the class order is to restore the effect of regulation 28N in relation to credit proposal disclosure documents and lease proposal disclosure documents under section 121 and 144 of the Act.
3. Operation of the class order
This class order varies ASIC Class Order [CO 10/1230] so as to produce the effect that the deferred commencement to 1 April 2011 applies to credit proposal disclosure documents and lease proposal disclosure documents, subject to certain requirements being met. Consequently, subregulations 28N(1) to (3) will apply to credit guides and proposal disclosure documents.
4. Consultation
ASIC further consulted with the Department of the Treasury to confirm that the declaration in this class order gives effect to the intended result.
Overview
The Australian Securities and Investments Commission (ASIC) Class Order [CO 10/1269] was enacted under the National Consumer Credit Protection Act 2009. This legislation was introduced to address the issue of deferred commencement of particular disclosure obligations for credit and lease proposals. The class order specifically aims to restore the effect of the National Consumer Credit Protection Regulations 2010, which had previously deferred the disclosure obligations until 1 April 2011, provided certain conditions were met. This change ensures that credit and lease proposal disclosure documents are subject to the same deferred commencement provisions as other disclosure documents, thereby maintaining consistency in regulatory compliance. The order was developed in consultation with the Department of the Treasury to ensure it achieves the intended legislative outcomes.
Scope and Application
The ASIC Class Order [CO 10/1269] under the National Consumer Credit Protection Act 2009 applies to licensees and credit representatives involved in the provision of credit services, specifically to those who must provide credit proposal disclosure documents and lease proposal disclosure documents as defined by the Act. This class order aims to modify the commencement of certain disclosure obligations that were initially deferred by the National Consumer Credit Protection Regulations 2010. The geographic reach of this class order is national, as it pertains to the implementation of the Act across Australia. The order ensures that credit licensees and credit representatives remain exempt from certain disclosure requirements until 1 April 2011, provided they inform consumers of their approved external dispute resolution scheme's contact details in writing or have done so within the previous 90 days. This class order amends a previous declaration by ASIC Class Order [CO 10/1230], which had excluded credit and lease proposal disclosure documents from the deferred commencement provisions, thereby restoring the deferred commencement to these documents.
Key Provisions
The ASIC Class Order [CO 10/1269] modifies existing legislation under the National Consumer Credit Protection Act 2009. Specifically, it addresses the deferral of certain disclosure obligations that were initially postponed under the National Consumer Credit Protection Regulations 2010. According to subregulations 28N(1) to (3), licensees and credit representatives are exempt from specific disclosure requirements until April 1, 2011, provided they inform consumers of their approved external dispute resolution (EDR) scheme's contact details either in writing or within the preceding 90 days. The "relevant provisions of the Act" refer to sections that mandate the provision of credit guides and proposal disclosure documents to consumers.
The Act imposes obligations on licensees and credit representatives to ensure that they either provide consumers with the necessary contact details of their approved EDR scheme in writing or confirm that this information was provided within the last 90 days. This obligation is a condition for the exemption from certain disclosure requirements until April 1, 2011. Failure to comply with these obligations may result in the loss of the exemption, thereby necessitating adherence to the disclosure requirements earlier than stipulated.
The class order also includes provisions for offences and penalties for non-compliance. Under the Act, if a licensee or credit representative fails to meet the specified obligations, they may face civil or criminal consequences. The exact penalties are not detailed within the explanatory statement, but typically, non-compliance with consumer protection regulations can result in fines or other legal actions as prescribed by the relevant laws. The severity of the penalties can vary based on the nature and extent of the breach, but they are intended to enforce compliance and protect consumer interests.