I present a supplementary...: 26 Jun 2012: House debates (OpenAustralia.org)

House debates

Tuesday, 26 June 2012

Bills

Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011; Consideration in Detail

5:04 pm

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Hansard source

I present a supplementary explanatory memorandum to the bill and seek leave to move government amendments (1) to (20) and (22) to (70) on sheet BV249 and government amendment (1) on sheet BV273 together.

Leave granted.

I move:

(1) Title, page 1 (line 2), omit "corporations", substitute "consumer protection".

(2) Clause 1, page 1 (line 6), omit "and Corporations".

(3) Clause 2, page 2 (table item 2), omit the table item, substitute:

(4) Clause 2, page 2 (table item 3), omit the table item, substitute:

(5) Clause 2, page 2 (table item 4), omit the table item, substitute:

(6) Clause 2, page 2 (table item 5), omit the table item, substitute:

(7) Schedule 1, item 1, page 3 (line 12) to page 4 (line 5), omit subsections 72(2) to (4), substitute:

Note: If the debtor gives the credit provider a hardship notice, there may be requirements (beyond those in section 88) that the credit provider must comply with before beginning enforcement proceedings—see section 89A.

Further information

(2) Within 21 days after the day of receiving the debtor's hardship notice, the credit provider may give the debtor notice, orally or in writing, requiring the debtor to give the credit provider specified information within 21 days of the date of the notice stated in the notice. The information specified must be relevant to deciding:

(a) whether the debtor is or will be unable to meet the debtor's obligations under the contract; or

(b) how to change the contract if the debtor is or will be unable to meet those obligations.

(3) The debtor must comply with the requirement.

Note: The credit provider need not agree to change the credit contract, especially if the credit provider:

(a) does not believe there is a reasonable cause (such as illness or unemployment) for the debtor's inability to meet his or her obligations; or

(b) reasonably believes the debtor would not be able to meet his or her obligations under the contract even if it were changed.

Notice of decision on changing credit contract

(4) The credit provider must, before the end of the period identified under subsection (5), give the debtor a notice:

(a) that is in the form (if any) prescribed by the regulations and records the fact that the credit provider and the debtor have agreed to change the credit contract; or

(b) that is in the form (if any) prescribed by the regulations and states:

(i) the credit provider and the debtor have not agreed to change the credit contract; and

(ii) the reasons why they have not agreed; and

(iii) the name and contact details of the approved external dispute resolution scheme of which the credit provider is a member; and

(iv) the debtor's rights under that scheme.

Civil penalty: 2,000 penalty units.

(5) The credit provider must give the notice before the end of the period identified using the table.

Regulations may prescribe shorter periods for credit contracts

(6) The regulations may provide for subsections (2), (3), (4) and (5) to have effect in relation to credit contracts prescribed by the regulations as if a particular reference in subsection (2) or (5) to a number of days were a reference to a lesser number of days prescribed by the regulations.

(8) Schedule 1, item 6, page 5 (lines 17 to 19), omit "paragraph 72(2)(b), in response to the current hardship notice, stating that the credit provider does not agree to negotiate a change to", substitute "paragraph 72(4)(b), in response to the current hardship notice, stating that the credit provider and debtor have not agreed to change".

(9) Schedule 1, item 6, page 5 (lines 20 and 21), omit "lessor gives the notice under paragraph 72(2)(b)", substitute "credit provider gives the notice under paragraph 72(4)(b)".

(10) Schedule 1, item 15, page 12 (line 16), omit "represent", substitute "make an unconditional representation".

(11) Schedule 1, item 16, page 12 (line 21), omit "represent", substitute "make an unconditional representation".

(12) Schedule 1, item 19, page 13 (line 8), omit "represent", substitute "make an unconditional representation".

(13) Schedule 1, item 25, page 14 (line 17) to page 15 (line 3), omit section 160A, substitute:

160A Guide to this Part

(14) Schedule 1, item 25, page 17 (after line 27), at the end of Part 3-6A, add:

Division 4—Giving authorisation for deductions by employer of debtor or lessee

160E Requirements for giving authorisation to employer

(1) This section applies to a credit provider or lessor giving, or intending to give, an employer of a debtor or lessee who is party to a credit contract or consumer lease with the credit provider or lessor an instrument that:

(a) was made by the debtor or lessee; and

(b) authorises the employer to:

(i) make one or more deductions from one or more amounts payable by the employer in relation to the performance of work by the debtor or lessee; and

(ii) pay the deductions to the credit provider or lessor.

Credit provider or lessor must give statement to employer

(2) If the credit contract or consumer lease is of a kind prescribed by the regulations, the credit provider or lessor must give the employer a statement, in the form prescribed by the regulations for that kind of contract or lease, with the instrument.

Civil penalty: 2,000 penalty units.

Credit provider or lessor must give 7 days' notice to defaulting debtor or lessee

(3) If the debtor or lessee is in default under the credit contract or consumer lease, the credit provider or lessor must give the debtor or lessee at least 7 days' notice, in a form prescribed by the regulations, of the intention of the credit provider or lessor to give the instrument to the employer.

Civil penalty: 2,000 penalty units.

(4) To avoid doubt, subsection (3) does not apply if there are not regulations in force prescribing a form for the purposes of that subsection.

Subsections (2) and (3) do not apply to some credit contracts

(5) Subsections (2) and (3) do not apply in relation to a credit contract for the provision of credit relating to the provision of goods or services to the debtor in connection with the debtor's remuneration, or other benefits, for the debtor's employment.

[employer payment authorisation]

(15) Schedule 2, item 2, page 25 (line 25), omit "less than", substitute "or below".

(16) Schedule 2, item 5, page 26 (after line 26), after paragraph (a) of the definition of bridging finance contract in subsection 204(1), insert:

(aa) the term of the contract is 2 years or less; and

(17) Schedule 2, item 10, page 29 (line 8), after "show the consumer in person", insert ", or give the consumer in a way prescribed by the regulations,".

(18) Schedule 2, item 13, page 36 (line 15), after "failing", insert ", when the debtor occupies the reverse mortgaged property,".

(19) Schedule 2, item 13, page 36 (line 23), at the end of paragraph 18A(3)(d), add "within 3 years after the payment became due".

(20) Schedule 2, item 20, page 41 (lines 1 to 4), omit paragraph 86E(a).

(22) Schedule 4, page 53 (before line 5), before item 1, insert:

1A At the end of paragraph 335A(1)(a)

Add:

(iv) sections 23A, 31A, 31B, 39A and 39B of the National Credit Code;

(23) Schedule 4, item 12, page 55 (line 29) to page 56 (line 2), omit paragraph 31A(1)(a), substitute:

(a) a permitted establishment fee;

(24) Schedule 4, item 12, page 56 (lines 11 to 15), omit subsection 31A(2), substitute:

(1A) Despite subsection (1), a small amount credit contract must not impose or provide for a permitted establishment fee if any of the amount of credit to be provided under the contract is to refinance any of the amount of credit provided to the debtor under another small amount credit contract.

Permitted establishment fee

(2) A permitted establishment fee is a fee or charge the amount of which must not exceed 20% of the adjusted credit amount in relation to the small amount credit contract.

(25) Schedule 4, item 12, page 56 (line 19), omit "2% of", substitute "4% of".

(26) Schedule 4, item 12, page 56 (after line 19), after section 31A, insert:

31B Credit provider or prescribed person must not require or accept payment of a fee or charge in relation to a small amount credit contract etc.

(1) A credit provider, or a person prescribed by the regulations, must not require or accept payment by the debtor of a fee or charge in relation to:

(a) a small amount credit contract; or

(b) the provision of the amount of credit under a small amount credit contract; or

(c) a thing that is connected with a small amount credit contract or the provision of the amount of credit under such a contract.

Criminal penalty: 100 penalty units.

(2) Subsection (1) does not apply if the fee or charge is:

(a) a fee or charge that may be imposed or provided for by the small amount credit contract under section 31A; or

(b) a fee or charge prescribed by the regulations.

(3) If a credit provider or person contravenes subsection (1):

(a) the debtor is not liable (and is taken never to have been liable) to make the payment to the credit provider or person; and

(b) the debtor may recover as a debt due to the debtor the amount of any payment made by the debtor to the credit provider or person.

(27) Schedule 4, item 13, page 57 (after line 22), after section 32A, insert:

32AA Prohibition relating to the annual cost rate of credit contracts—later increases of the annual percentage rate etc.

(1) If:

(a) a credit provider is a party to a credit contract (other than a small amount credit contract or bridging finance contract); and

(b) the credit provider is not an ADI; and

(i) the annual percentage rate under the contract increases;

(ii) an amount referred to in subsection 32B(3) that is prescribed by the regulations increases;

the credit provider contravenes this subsection if the annual cost rate of the contract would have exceeded 48% at the time the contract was entered into if that or those varied matters had been taken into account at that time for the purposes of calculating the annual cost rate of the contract.

(2) A credit provider must not contravene subsection (1).

Criminal penalty: 50 penalty units.

(28) Schedule 4, item 13, page 58 (line 8), omit the formula, substitute:

(29) Schedule 4, item 13, page 58 (after line 14), after the definition of Cj in subsection 32B(2), insert:

F is:

(a) if the credit contract is a medium amount credit contract—$400 (or such other amount as is prescribed by the regulations); or

(b) if the credit contract is not a medium amount credit contract and an amount is prescribed by the regulations in relation to the contract—that amount; or

(30) Schedule 4, item 13, page 58 (line 15), omit "necessary", substitute "necessarily".

(31) Schedule 4, item 13, page 59 (after line 22), after subsection 32B(4), insert:

(4A) Despite subsection (3), the regulations may provide that a specified amount, or an amount included in a specified class, is not an amount referred to in paragraph (3)(a) or (b).

(32) Schedule 4, item 15, page 61 (after line 5), after paragraph 39A(2)(b), insert:

(ba) if some or all of the amount of credit (the refinanced amount) is to refinance some or all of the amount of credit provided by the credit provider to the debtor under another small amount credit contract—the refinanced amount; or

(33) Schedule 4, item 15, page 61 (after line 26), after section 39B, insert:

39C Credit provider must do prescribed things if a default in payment by direct debit occurs

(1) If:

(a) the amount of repayments under a small amount credit contract are to be paid by way of direct debit; and

(b) the direct debit has been authorised by the debtor; and

the credit provider must do the things prescribed by the regulations.

Criminal penalty: 50 penalty units.

(2) In this section, direct debit has the same meaning as in section 87.

(34) Schedule 4, items 16 and 17, page 61 (lines 27 to 33), omit the items, substitute:

16 At the end of subsection 111(1) of the National Credit Code

Add:

; (j) subsection 32A(1);

(k) subsection 32AA(2).

17 After paragraph 111(2)(f) of the National Credit Code

Insert:

(fa) subsection 32A(1);

(fb) subsection 32AA(2);

(35) Schedule 4, item 20, page 62 (lines 18 to 25), omit the definition of adjusted credit amount in subsection 204(1), substitute:

adjusted credit amount, in relation to a small amount credit contract, means the first amount of credit that is, or is to be, provided under the contract.

Note: Some amounts are to be disregarded in working out the first amount of credit (see subsection (3)).

(36) Schedule 4, page 62 (after line 32), after item 22, insert:

22A Subsection 204(1) of the National Credit Code

Insert:

medium amount credit contract: a credit contract is a medium amount credit contract if:

(a) the contract is not a continuing credit contract; and

(b) the credit provider under the contract is not an ADI; and

(i) at least $2,001 (or such other amount as is prescribed by the regulations); but

(ii) not more than $5,000 (or such other amount as is prescribed by the regulations); and

(d) the term of the contract is at least 16 days but not longer than 2 years (or such other number of years as is prescribed by the regulations); and

(e) the contract meets any other requirements prescribed by the regulations.

(37) Schedule 4, page 63 (after line 13), at the end of the Schedule, add:

27 At the end of section 204 of the National Credit Code

Add:

(3) In working out the first amount of credit that is, or is to be, provided under a small amount credit contract for the purposes of the definition of adjusted credit amount in subsection (1), the following amounts are to be disregarded:

(a) if some or all of the amount of a fee or charge (the fee amount) payable in relation to the contract forms, or is to form, part of the first amount of credit that is, or is to be, provided under the contract—the fee amount;

(b) if subsection 39A(1) is contravened in relation to the contract—the prohibited credit amount;

(38) Schedule 4, item 24, page 63 (line 6), omit "paragraph 31A(1)(b)", substitute "subsection 31A(2)".

(39) Schedule 5, item 18, page 73 (lines 9 to 31), omit subsections 177B(2) to (4), substitute:

Note: If the lessee has given the lessor a hardship notice, there may be extra requirements (beyond those in section 179D) that the lessor must comply with before beginning enforcement proceedings—see section 179F.

Further information

(2) Within 21 days after the day of receiving the lessee's hardship notice, the lessor may give the lessee notice, orally or in writing, requiring the lessee to give the lessor specified information within 21 days of the date of the notice stated in the notice. The information specified must be relevant to deciding:

(a) whether the lessee is or will be unable to meet the lessee's obligations under the lease; or

(b) how to change the lease if the lessee is or will be unable to meet those obligations.

(3) The lessee must comply with the requirement.

Note: The lessor need not agree to change the consumer lease, especially if the lessor:

(a) does not believe there is a reasonable cause (such as illness or unemployment) for the lessee's inability to meet his or her obligations; or

(b) reasonably believes the lessee would not be able to meet his or her obligations under the lease even if it were changed.

Notice of decision on changing consumer lease

(4) The lessor must, before the end of the period identified under subsection (5), give the lessee a notice:

(a) that is in the form (if any) prescribed by the regulations and records the fact that the lessor and the lessee have agreed to change the consumer lease; or

(b) that is in the form (if any) prescribed by the regulations and states:

(i) the lessor and the lessee have not agreed to change the consumer lease; and

(ii) the reasons why they have not agreed; and

(iii) the name and contact details of the approved external dispute resolution scheme of which the lessor is a member; and

(iv) the lessee's rights under that scheme.

Civil penalty: 2,000 penalty units.

(5) The lessor must give the notice before the end of the period identified using the table.

Regulations may prescribe shorter periods for consumer leases

(6) The regulations may provide for subsections (2), (3), (4) and (5) to have effect in relation to consumer leases prescribed by the regulations as if a particular reference in subsection (2) or (5) to a number of days were a reference to a lesser number of days prescribed by the regulations.

(40) Schedule 5, item 24, page 84 (lines 18 to 20), omit "paragraph 177B(2)(b), in response to the current hardship notice; stating that the lessor does not agree to negotiate a change to", substitute "paragraph 177B(4)(b), in response to the current hardship notice, stating that the lessor and the lessee have not agreed to change".

(41) Schedule 5, item 24, page 84 (line 23), omit "paragraph 177B(2)(b)", substitute "paragraph 177B(4)(b)".

(42) Schedule 6, item 4, page 97 (line 18), omit "and Corporations".

(43) Schedule 6, item 4, page 97 (line 24), omit "and Corporations".

(44) Schedule 6, item 4, page 99 (line 4), omit "inserted by", substitute "added by item11 of".

(45) Schedule 6, item 4, page 99 (line 6), omit "that Schedule", substitute "that item".

(46) Schedule 6, item 4, page 99 (line 8), after "inserted by", insert "item12 of".

(47) Schedule 6, item 4, page 99 (line 10), omit "that Schedule", substitute "that item".

(48) Schedule 6, item 4, page 99 (line 12), after "inserted by", insert "item13 of".

(49) Schedule 6, item 4, page 99 (line 14), omit "that Schedule", substitute "that item".

(50) Schedule 6, item 4, page 99 (line 16), after "added by", insert "item15 of".

(51) Schedule 6, item 4, page 99 (line 18), omit "that Schedule", substitute "that item".

(52) Schedule 6, item 4, page 99 (line 20), after "made by", insert "items16 and 17 of".

(53) Schedule 6, item 4, page 99 (line 22), omit "the Schedule", substitute "those items".

(54) Schedule 6, item 4, page 99 (line 24), after "inserted by", insert "item18 of".

(55) Schedule 6, item 4, page 99 (line 26), omit "that Schedule", substitute "that item".

(56) Schedule 6, item 4, page 99 (line 30), after "inserted by", insert "item20 of".

(57) Schedule 6, item 4, page 99 (line 32), omit "that Schedule", substitute "that item".

(58) Schedule 6, item 4, page 100 (line 3), after "made by", insert "item21 of".

(59) Schedule 6, item 4, page 100 (lines 4 and 5), omit "that Schedule", substitute "that item".

(60) Schedule 6, item 4, page 100 (line 7), after "inserted by", insert "item22 of".

(61) Schedule 6, item 4, page 100 (line 9), omit "that Schedule", substitute "that item".

(62) Schedule 6, item 4, page 100 (line 11), after "added by", insert "item23 of".

(63) Schedule 6, item 4, page 100 (line 13), omit "that Schedule", substitute "that item".

(64) Schedule 6, item 4, page 100 (line 15), after "inserted by", insert "item26 of".

(65) Schedule 6, item 4, page 100 (line 17), omit "that Schedule", substitute "that item".

(66) Schedule 6, item 4, page 100 (lines 18 to 24), omit Part 4, substitute:

Part 4—Schedule 3 (short-term and small amount credit contracts) to the amending Act

20 Paragraphs 124A(1)(b) and 133CA(1)(b) of the National Credit Act

Paragraphs 124A(1)(b) and 133CA(1)(b) of the National Credit Act, as inserted by Schedule 3 to the amending Act, apply in relation to short-term credit contracts entered into before, on or after the commencement of that Schedule.

(67) Schedule 6, item 4, page 100 (line 27), omit "31A, 39A and 39B", substitute "31A, 31B, 39A, 39B and 39C".

(68) Schedule 6, item 4, page 101 (line 1), omit "31A, 39A and 39B", substitute "31A, 31B, 39A, 39B and 39C".

(69) Schedule 6, item 4, page 101 (after line 4), at the end of Part 5, add:

21A Section 32AA and paragraphs 111(1)(k) and (2)(fb) of the new Credit Code

Section 32AA and paragraphs 111(1)(k) and (2)(fb) of the new Credit Code, as inserted by Schedule 4 to the amending Act, apply in relation to credit contracts entered into on or after the commencement of that Schedule.

(70) Schedule 7, page 102 (lines 1 to 20), omit the Schedule, substitute:

Schedule 7—Lay-by agreements etc.

Competition and Consumer Act 2010

1 Subsection 96(1) of Schedule 2