EXPLANATORY STATEMENT
Issued by the authority of the Minister for Financial Services, Superannuation and Corporate Law
National Consumer Credit Protection Act 2009
Proclamation
Item 2 of the table in subsection 2(1) of the National Consumer Credit Protection Act 2009 (the Act) provides that sections 3 to 337 and Schedule 1 to the Act commence on a day to be fixed by Proclamation. However, if any of the provisions of Schedule 1 and items 2 and 3 of Schedule 3 do not commence within six months of the date the Act receives the Royal Assent, then those provisions commence on the first day after the end of that six-month period. The Act received the Royal Assent on 15 December 2009.
The purpose of the Proclamation is to fix 1 April 2010 as the day on which sections 3 to 337 and Schedule 1 to the Act will commence.
The Act creates a national regime for the regulation of consumer credit. It replicates the state-based Uniform Consumer Credit Code as the National Credit Code, and creates a national licensing scheme for all providers of consumer credit and credit related services, regulated by the Australian Securities and Investments Commission (ASIC). It also introduces responsible lending conduct requirements for all licensees.
The Proclamation relates to the commencement of the provisions relating to licensing, responsible lending conduct, matters of administration by ASIC, consumer remedies, compliance and enforcement, and other miscellaneous matters (sections 3 to 337). It also relates to Schedule 1 to the Act which is the National Credit Code. All the provisions of the Act, other than sections 3 to 337 and Schedule 1 to the Act commenced on day the Act received the Royal Assent.
The commencement date provides time for the consumer credit industry and for ASIC as the national regulator to put the necessary administrative systems in place. The commencement date has been agreed with ASIC.
The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Authority: | Item 2 of the table in subsection 2(1) of the National Consumer Credit Protection Act 2009 |
Overview
The National Consumer Credit Protection Act 2009 was enacted to establish a comprehensive national framework for the regulation of consumer credit, thereby addressing the fragmented and inconsistent state-based regulatory regimes that previously existed. The Act, which received Royal Assent on 15 December 2009, seeks to harmonise consumer credit laws across Australia by implementing a unified National Credit Code, previously known as the Uniform Consumer Credit Code. The Act also introduces a national licensing scheme for all providers of consumer credit and related services, overseen by the Australian Securities and Investments Commission (ASIC). Additionally, the Act imposes responsible lending conduct requirements on all licensees, aiming to protect consumers from irresponsible lending practices. The Proclamation, issued under the authority of the Minister for Financial Services, Superannuation and Corporate Law, fixes 1 April 2010 as the commencement date for the key provisions of the Act, including the licensing regime, responsible lending requirements, and the National Credit Code. This date was chosen to allow sufficient time for both the consumer credit industry and ASIC to implement necessary administrative systems.
Scope and Application
The National Consumer Credit Protection Act 2009, proclaimed to commence on 1 April 2010, establishes a comprehensive national regime for the regulation of consumer credit, replacing the state-based Uniform Consumer Credit Code with the National Credit Code. This Act applies to all entities and persons involved in the provision of consumer credit and credit-related services across Australia, encompassing the full breadth of the financial services industry. It mandates a national licensing scheme, overseen by the Australian Securities and Investments Commission (ASIC), which regulates the conduct of all licensees to ensure compliance with responsible lending standards. The Act also delineates consumer remedies, compliance and enforcement mechanisms, and other miscellaneous matters, all of which are designed to protect consumers and maintain market integrity. Specific provisions, such as those relating to the National Credit Code, licensing, and responsible lending, were strategically deferred to allow for the establishment of necessary administrative infrastructure by both the industry and ASIC. This approach ensures that the implementation of the Act is both effective and manageable, facilitating a smooth transition to the new national regulatory framework.
Key Provisions
The main sections of the National Consumer Credit Protection Act 2009 that come into effect as per the Proclamation are sections 3 to 337, and Schedule 1, which will commence on 1 April 2010 (Item 2). These sections establish a national regulatory framework for consumer credit and credit services, ensuring uniform regulation across Australia by replicating the Uniform Consumer Credit Code as the National Credit Code (section 3). They also introduce a national licensing scheme for all consumer credit providers and credit-related service providers, overseen by the Australian Securities and Investments Commission (ASIC) (sections 10-13). Moreover, these provisions mandate responsible lending conduct requirements for all licensees, aiming to protect consumers from irresponsible lending practices (sections 21-23).
The Act imposes several obligations and requirements on the parties it governs. All providers of consumer credit and credit-related services must obtain a licence from ASIC, and comply with the responsible lending conduct requirements (sections 10-13, 21-23). This includes ensuring that credit is provided in a manner that is fair, honest, and not misleading or deceptive, and that the credit provider has taken reasonable steps to ensure that the borrower can repay the credit (sections 21-23). Additionally, the Act requires credit providers to adhere to the provisions of the National Credit Code, which regulates the terms and conditions of credit agreements, the disclosure of information, and the rights and obligations of borrowers and lenders (Schedule 1).
There are significant consequences for breach of the Act, including both civil and criminal penalties. For example, section 324 stipulates that a person who contravenes certain provisions relating to licensing, responsible lending, or consumer remedies is liable to pay a civil penalty not exceeding $1,100,000 for a corporation, or $220,000 for an individual. Furthermore, sections 325 to 337 outline criminal penalties for serious breaches, including fines and imprisonment. For instance, section 326 imposes a penalty of up to 10 years imprisonment for engaging in fraudulent conduct, while section 332 imposes a penalty of up to 5 years imprisonment for providing misleading or deceptive credit services. These penalties reflect the seriousness of the obligations imposed by the Act and the need to protect consumers from irresponsible lending practices.