Consumer Credit Legislation Amendment (Enhancements) Act 2012

Overview

The Consumer Credit Legislation Amendment (Enhancements) Act 2012 was enacted to amend the law relating to consumer credit and consumer protection, addressing issues such as the protection of debtors facing financial hardship, remedies for unfair or dishonest conduct by credit service providers, and restrictions on certain representations about credit eligibility. This Act was passed by the Parliament of Australia and received Royal Assent on 17 September 2012. The Act aims to enhance the protection of consumers by introducing measures such as the ability for debtors to notify credit providers of their hardship, imposing civil penalties for unfair or dishonest conduct, and prohibiting misleading representations about credit eligibility. The Act also introduced technical corrections and clarifications to existing legislation to ensure better enforcement and consumer protection. The Act amends the National Consumer Credit Protection Act 2009 and the National Credit Code, introducing new provisions and modifying existing ones to address specific gaps and issues identified in the consumer credit and protection framework. The changes cover various aspects, including the procedures for modifying credit contracts in cases of hardship, civil remedies for unfair or dishonest conduct, and obligations for credit providers in relation to reverse mortgages. Additionally, it seeks to streamline certain processes and clarify definitions to facilitate better compliance and enforcement of consumer credit laws.

Scope and Application

The Consumer Credit Legislation Amendment (Enhancements) Act 2012 is a Commonwealth Act that amends the National Consumer Credit Protection Act 2009 and the National Credit Code to enhance consumer protection in relation to credit contracts and consumer leases. The Act applies to various entities, including credit providers, licensees, and lessors, as well as to consumers entering into credit contracts and consumer leases. It extends to all credit contracts, consumer leases, and mortgages entered into after the commencement of the relevant provisions, which generally occurred on 1 March 2013, or 1 July 2013, for certain provisions. The Act imposes several obligations on credit providers and licensees, such as providing specific information to consumers regarding their equity projections in the case of reverse mortgages, and prohibits certain representations about credit eligibility without proper assessment. It also includes civil and criminal penalties for non-compliance with its provisions. For instance, credit providers are subject to civil penalties for providing credit assistance related to short-term credit contracts, and criminal penalties for not adhering to the requirements for giving default notices or enforcing contracts. Additionally, the Act mandates certain disclosures and procedural requirements, such as providing written statements of account and requiring consent for entry into residential premises to repossess goods under a consumer lease. Certain provisions, like those relating to reverse mortgages and lay-by agreements, have specific commencement dates, and the Act includes transitional provisions to ensure smooth implementation. The Act does not specify any exclusions or exemptions, applying broadly to all credit and consumer lease activities within its jurisdiction.

Key Provisions

• The Consumer Credit Legislation Amendment (Enhancements) Act 2012 makes several key changes to the National Consumer Credit Protection Act 2009 (NCCP Act) and the National Credit Code (Code). Firstly, it introduces new provisions for hardship notices and postponement requests by debtors and lessees, which require credit providers and lessors to follow specific procedures before enforcing their rights (sections 72 and 94 of the Code). If a debtor believes they will be unable to meet their obligations under a credit contract, they must notify the credit provider. In response, the credit provider may request information from the debtor, and if they do not receive the required information, they must give a notice to the debtor before enforcing their rights (section 72(2) to (5) of the Code). Similarly, a debtor or lessee can request a postponement of enforcement proceedings or the operation of an acceleration clause if they are unable to meet their obligations under a credit contract or consumer lease, respectively (section 94(1) and (2) of the Code). The Act also imposes obligations on licensees to assess the suitability of credit contracts and consumer leases before entering into them, and prohibits them from making certain representations to consumers about their eligibility (sections 128 and 151 of the NCCP Act). Further, it prohibits giving false or misleading information in the course of providing credit services (section 160D of the NCCP Act).
• The Act establishes civil remedies for unfair or dishonest conduct by credit service providers, allowing courts to make orders to redress unfairness or prevent profiting from such conduct (section 180A of the NCCP Act). It also introduces prohibitions on certain representations and other matters, such as using terms like "independent," "impartial," or "unbiased" in representations about credit services or licenses (section 160B of the NCCP Act). Additionally, it imposes restrictions on giving authorisations to employers for deductions from debtors' or lessees' payments and on providing certain information about credit contracts to employers (sections 160E and 160F of the NCCP Act).
• The Act includes various penalties for breaches of its provisions. Civil penalties for breaches of the NCCP Act or the Code can be up to 2,000 penalty units, while criminal penalties can be up to 100 penalty units, 2 years imprisonment, or both, depending on the offence (sections 160B to 160D and 160E(2) of the NCCP Act). The Act also specifies offences of strict liability, which means that the person committing the offence does not need to have had a guilty mind (sections 72(4), 94(3), 175C(4), and 175G(6) of the Code). For example, credit providers must not begin enforcement proceedings unless they have followed the required procedures for hardship notices and postponement requests, and lessors must not enforce consumer leases without giving a default notice and allowing time for the lessee to remedy the default (sections 72(4), 94(3), 175C(4), and 179D(1) of the Code).
• Regarding reverse mortgages, the Act requires licensees to provide projections of the debtor's equity in the property that may be covered by the reverse mortgage and make reverse mortgage information statements available on their websites and on request (sections 133DB and 133DC of the NCCP Act). It also prohibits licensees from inaccurately using terms like "reverse mortgage" in making representations about credit contracts and mortgages (section 133DE of the NCCP Act). The Act imposes civil penalties of 2,000 penalty units and criminal penalties of 50 penalty units for breaches of these requirements (sections 133DB(3) and 133DC(3) of the NCCP Act).
• For short-term and small amount credit contracts, the Act prohibits licensees from providing credit assistance in relation to short-term credit contracts and imposes requirements on licensees who make representations about small amount credit contracts (sections 124A and 133CB of the NCCP Act). It also prohibits licensees from entering into or increasing the credit limit of short-term credit contracts (section 133CA of the NCCP Act). The Act sets caps on costs and fees for small amount credit contracts, such as prohibiting certain monetary obligations and imposing limits on fees and charges (sections 23A, 31A, 31B, and 39A to 39C of the Code). It also requires an independent review of the operation of these provisions and the possibility of establishing a national database of small amount credit contracts (section 335A of the NCCP Act).
• Lastly, the Act introduces various amendments and clarifications to the NCCP Act and the Code, including changes to definitions, provisions on consumer leases, and application and transitional provisions for the new amendments (Schedules 1 to 7 of the Act).

Legal classification tags

Area of Law

Consumer Law

Instrument

Act

Concepts

Commencement Provisions

Civil Penalty Provisions

Licensing & Registration

Reporting & Disclosure Obligations

Enforcement Powers

Regulatory Standards