ASIC Class Order [CO 14/41]

Overview

The ASIC Class Order [CO 14/41], enacted in 2014 under the National Consumer Credit Protection Act 2009, addresses the need to provide flexibility in the notice requirements for credit providers and lessors under the National Credit Code. This legislative instrument was developed by the Australian Securities and Investments Commission (ASIC) and is aimed at offering a temporary exemption for certain credit providers and lessors from the obligation to provide notice of agreements to change credit contracts or consumer leases. The exemption is designed to alleviate administrative burdens on credit providers and lessors during specified periods, allowing them to focus on other critical aspects of their operations while still ensuring compliance with overarching consumer protection principles. This exemption is valid until 1 April 2024, thereby providing a time-bound relief to the affected entities.

Scope and Application

The ASIC Class Order [CO 14/41] is an instrument made by the Australian Securities and Investments Commission (ASIC) under subsection 203A(3) of the National Credit Code, which is found in Schedule 1 to the National Consumer Credit Protection Act 2009. This Class Order applies to credit providers and lessors who enter into credit contracts or leases within specific periods and would otherwise be required to comply with certain notice provisions of the National Credit Code. The Class Order provides exemptions from these notice requirements for credit providers and lessors until 1 April 2024. The exemptions apply to simple arrangements, defined as agreements that defer or reduce the obligations of debtors or lessees for a period of no more than 90 days. The Class Order has been subject to amendments through subsequent instruments, as evidenced in the table of amendments, which modify certain provisions and reflect changes over time.

Key Provisions

The ASIC Class Order [CO 14/41], made under subsection 203A(3) of the National Credit Code (the Code), provides specific exemptions from certain notice requirements for credit providers and lessors. These exemptions are applicable to agreements entered into during particular periods and pertain to simple arrangements that defer or reduce obligations for debtors or lessees for up to 90 days. Specifically, credit providers entering into credit contracts before 28 February 2013 are exempt from subsections 73(1) and 72(3)(a) of the Code, while those entering into contracts from 1 March 2013 are exempt from paragraphs 72(4)(a) and 177C(1) of the Code in relation to simple arrangements. Similarly, lessors granting leases before 28 February 2013 are exempt from subsections 73(1) and 72(3)(a) of the Code, and those granting leases from 1 March 2013 are exempt from paragraphs 177B(4)(a) and 177C(1) of the Code for simple arrangements. These exemptions remain in effect until 1 April 2024. Under this Class Order, credit providers and lessors are obligated to adhere to the specific periods outlined for the exemptions to apply. Credit providers must ensure that any credit contracts entered into during the specified periods fall under the exemptions mentioned. Similarly, lessors must verify that leases granted during the specified periods are covered by the exemptions. Failure to correctly identify the applicable periods could result in non-compliance with the exemptions provided by the Class Order. Additionally, credit providers and lessors must maintain records and documentation to demonstrate compliance with the exemption provisions and be prepared to provide this information if required by the Australian Securities and Investments Commission (ASIC). The Class Order does not explicitly state specific penalties for non-compliance. However, breaches of the National Credit Code, from which this Class Order is derived, can result in civil and criminal penalties. Civil penalties for serious breaches can include fines of up to $1.1 million for corporations and $220,000 for individuals, as per section 1311(1) of the Corporations Act 2001. Criminal penalties can include imprisonment for up to five years for individuals and fines for corporations, as outlined in sections 1311(2) and 1312 of the Corporations Act 2001. These penalties underscore the importance of adhering to the notice requirements and the exemptions provided by the Class Order.