ASIC Class Order [CO 15/130]

Administered by Department of the Treasury

Legislation au F2015L00195 Not in force Legislative Instrument

Legislation content

ASIC CLASS ORDER [CO 15/130]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

National Credit Code

The Australian Securities and Investments Commission (ASIC) makes Class Order [CO 15/130] under subsection 203A(3) of the National Credit Code (the Code).

Under subsection 203A(3) ASIC may exempt a class of persons, credit contracts or consumer leases from all or specified provisions of the Code.

 

  1. Background

 

The Consumer Credit Legislation Amendment (Enhancements) Act 2012 (the Amendment Act) amended the National Consumer Credit Protection Act 2009 (the Credit Act), including the Code, to introduce a number of reforms to the regulation of hardship variations. Where a consumer is experiencing financial difficulties in repaying their loan, a consumer may ask their credit provider to vary or change their loan repayments under the hardship provisions of the Credit Act.

 

The Amendment Act introduced changes to the pre-existing hardship application processes, with the relevant provisions in effect from 1 March 2013.  The procedures for processing hardship variation applications require credit providers and lessors to record any changes to the contract and provide written notice to the debtor or lessee, even where the parties come to an agreement for a simple arrangement (that is, any agreement that defers or reduces the obligations of a debtor or lessee for a period of no more than 90 days). 

 

Contracts that were entered into prior to 1 March 2013 remain subject to the pre-existing hardship variation provisions.  This has the effect of creating two hardship systems.

 

To minimise the administrative burden on industry, the National Consumer Credit Protection Amendment Regulations 2013 (No. 1) (the Amendment Regulations) amended the National Consumer Credit Protection Regulations 2010 (the Principal Credit Regulations). The new regulations 69A and 69B in the Principal Credit Regulations provided transitional exemptions for credit providers and lessors to:

  • record the fact that the credit provider and debtor (or lessor and lessee) have agreed to change the contract (or consumer lease) in a hardship variation; and
  • provide written notice setting out the particulars of any changes in the terms of the contract (or consumer lease) in the case of simple arrangements.

 

 

 

 

The exemptions lasted until 1 March 2014. They were then extended for 12 months by ASIC through ASIC Class Order [CO 14/41] (CO 14/41). The exemptions were extended to allow ASIC time to consult with stakeholders to develop a recommendation to Treasury regarding what obligations credit providers and lessors should have to record any contractual changes and provide written notice to debtors and lessors where the parties come to an agreement for a simple arrangement.

A key issue that emerged during ASIC's stakeholder consultations was the need for regulatory guidance from ASIC on what constitutes a hardship notice in the new hardship process (in s72 of the Code).  Stakeholders agreed that this guidance should be settled before ASIC finalised its recommendation to Treasury regarding simple arrangements. This is because providing clarity on the meaning on s72 of the Code would also deal in part with the administrative issues currently the subject of the transitional exemptions.

 

 

2.      Purpose of the class order

 

The purpose of this class order is to extend the relief given by CO 14/41 (which extended the transitional exemptions in regulations 69A and 69B) for a further interim period in order to allow:

  • ASIC to:
    • settle its guidance for industry relating to section 72 of the Code; and
    • provide its recommendation to Treasury regarding the transitional exemptions;
  • Treasury to consider ASIC's recommendations and reform the law if and as it considers appropriate; and
  • Credit providers and lessors to update their systems in accordance with any amendments made

 

3.      Operation of the class order

 

This class order amends CO 14/41 to extend the relief given by that instrument for 12 months.  CO 14/41 as amended will provide relief from requirements in the Code for a credit provider or lessor to:

  • record the fact that the credit provider and debtor (or lessor and lessee) have agreed to change the contract (or consumer lease) in a hardship variation; and
  • provide written notice setting out the particulars of any changes in the terms of the contract (or consumer lease) in the case of simple arrangements.

 

The relief has effect to 1 March 2016.

 

4.      Consultation

 

Treasury conducted extensive consultation with stakeholders (including ASIC, individual credit providers and industry bodies) as part of the development and implementation of the Amendment Act.  The problems addressed by the Amendment Regulations were identified by industry stakeholders during this consultation process.

 

In 2014 ASIC consulted with stakeholders (including industry bodies, individual credit providers and consumer advocates) in relation to the transitional exemptions included in the Amendment Regulations and in relation to the need for guidance on the hardship process outlined in section 72 of the Code.   

 

ASIC has also consulted with Treasury on the need to extend the relief provided by CO 14/41.  Treasury agrees with the need to extend the relief.

 

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

ASIC Class Order [CO 15/130]

This class order is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the class order

 

This class order extends until 1 March 2016 the relief provided by ASIC Class Order [CO 14/41] from requirements in the National Credit Code for a credit provider or lessor to:

  • record the fact that the credit provider and debtor (or lessor and lessee) have agreed to change the contract (or consumer lease) in a hardship variation; and
  • provide written notice setting out the particulars of any changes in the terms of the contract (or consumer lease) in the case of simple arrangements.

 

Relief to the same effect was given regulations 69A and 69B of the National Consumer Credit Protection Regulations 2010 until 1 March 2014.

 

Human rights implications

 

This class order does not engage any of the applicable rights or freedoms.

 

Conclusion

 

This class order is compatible with human rights as it does not raise any human rights issues.

Overview

The ASIC Class Order [CO 15/130] was introduced in 2015 under the authority of the National Credit Code (the Code) to address the administrative burden faced by credit providers and lessors due to the transitional provisions introduced by the Consumer Credit Legislation Amendment (Enhancements) Act 2012. This Act aimed to reform the regulation of hardship variations in consumer credit contracts, resulting in a temporary dual system where different rules applied to contracts entered into before and after 1 March 2013. To ease the transition, the National Consumer Credit Protection Amendment Regulations 2013 (No. 1) provided transitional exemptions that were later extended by ASIC through CO 14/41. The current class order extends these exemptions until 1 March 2016 to allow ASIC to finalise its guidance on the new hardship process and make recommendations to Treasury. This extension aims to provide clarity on what constitutes a hardship notice, address administrative issues, and facilitate system updates by credit providers and lessors.

Scope and Application

The ASIC Class Order [CO 15/130] pertains to the application of the National Credit Code and is intended to alleviate the administrative burden on credit providers and lessors during a transitional period. The Class Order extends until 1 March 2016 the relief provided by the earlier ASIC Class Order [CO 14/41], which exempted credit providers and lessors from certain record-keeping and notification obligations under the Code for hardship variations in credit contracts and consumer leases. This extension was made to allow the Australian Securities and Investments Commission (ASIC) time to settle industry guidance on the new hardship notice requirements, consult with stakeholders, and provide recommendations to the Treasury regarding these transitional exemptions. The Class Order applies to credit providers and lessors within the Commonwealth of Australia and does not specify any exclusions or thresholds, but rather focuses on the relief from administrative duties to streamline the transitional period effectively.

Key Provisions

The ASIC Class Order [CO 15/130] primarily extends the transitional relief provided under the previous Class Order [CO 14/41], granting credit providers and lessors a further 12-month period of exemption from specific requirements under the National Credit Code. This extension is intended to allow the Australian Securities and Investments Commission (ASIC) to provide regulatory guidance on hardship notices and to finalize recommendations to Treasury on the appropriate obligations for credit providers and lessors in such circumstances. The relief applies to the requirements of recording changes agreed upon in hardship variations and providing written notice for simple arrangements (s.1). Credit providers and lessors under this class order are temporarily exempt from the obligations to record any changes to a credit contract or consumer lease due to a hardship variation and to issue written notice detailing the specifics of any changes for simple arrangements (s.3). This exemption is designed to alleviate the administrative burden on these entities while ASIC works on the regulatory guidance and Treasury considers the recommendations. Failure to comply with the requirements of the National Credit Code, including the provisions temporarily exempted by this class order, may result in various consequences. Although specific penalties are not detailed within the explanatory statement, breaches of the Code generally may incur civil or criminal penalties. Civil penalties can include fines up to a substantial amount as prescribed by the regulations, and in severe cases, criminal penalties may be applicable, including imprisonment, depending on the nature and severity of the breach. The detailed penalties would be found within the relevant sections of the National Credit Code itself. ASIC’s role in providing regulatory guidance and Treasury’s role in considering the recommendations are crucial steps in the legislative process aimed at ensuring that the final obligations imposed on credit providers and lessors are both fair and practical. This class order ensures that these entities have sufficient time to align their systems and practices with any future legislative amendments.

Legal classification tags

Area of Law
Consumer Law
Instrument
Class Order
Concepts
Regulatory Standards
Transitional Provisions
Reporting & Disclosure Obligations

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.