Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I present a supplementary explanatory memorandum to the bill and seek leave to move amendments (2) to (10) together.

Leave granted.

I move government amendments (2) to (10):

(2) Schedule 1, item 5, page 6 (lines 11 to 19), omit subsections 133AC(4) and (5).

(3) Schedule 1, item 7, page 10 (lines 7 to 10), omit the item.

(4) Schedule 1, item 11, page 10 (lines 21 to 23), omit the item.

(5) Schedule 1, item 13, page 11 (lines 1 to 4), omit the item.

(6) Schedule 1, item 16, page 11 (lines 14 to 17), omit the item.

(7) Schedule 1, item 19, page 12 (lines 16 to 18), omit all the words from and including "Division 5" to and including "fees etc.", substitute "Division 5 provides for consumers to be notified if a credit card is used in excess of its credit limit, and restricts the charging of fees etc. for use of a credit card in excess of its credit limit.".

(8) Schedule 1, item 19, page 15 (line 32) to page 16 (line 7), omit subsections 133BD(3) and (4).

(9) Schedule 1, item 19, page 19 (line 20) to page 24 (line 30), omit Division 5, substitute:

Division 5—Use of credit card in excess of credit limit

133BH Credit provider to notify consumer of use of credit card in excess of credit limit

Regulations may require licensee to notify consumer of use of credit card in excess of credit limit

(1) The regulations may require a licensee who is the credit provider under a credit card contract to notify the consumer who is the debtor under the contract if the licensee becomes aware that the debtor has used a credit card that is linked to the contract to obtain cash, goods or services in excess of the credit limit for the contract.

(2) Without limiting subsection (1), regulations made for the purpose of that subsection may deal with:

(a) how and when the licensee must notify the consumer; and

(b) the matters that must be included in the notification.

Requirement to comply with the regulations

(3) A licensee must comply with regulations made for the purpose of subsection (1).

Civil penalty: 2,000 penalty units.

Offence

(4) A person commits an offence if:

(a) the person is subject to a requirement under subsection (3); and

(b) the person engages in conduct; and

(c) the conduct contravenes the requirement.

Criminal penalty: 50 penalty units.

133BI Credit provider not to impose fees etc. because credit card used in excess of credit limit

(1) If a credit card is used to obtain cash, goods or services in excess of the credit limit for the credit card contract, the licensee who is the credit provider under the contract must not, because the credit limit was exceeded, impose any liability to pay fees or charges, or a higher rate of interest, on the consumer who is the debtor under the contract unless:

(a) the licensee has, in accordance with this section, obtained express consent from the consumer covering the imposition of the fees or charges, or the higher rate of interest; and

(b) the consent has not been withdrawn; and

(c) any other requirements prescribed by the regulations are complied with.

Note 1: The consent must be express, and cannot be implied from the actions of the consumer or from other circumstances.

Note 2: The licensee must keep records of consents and withdrawals: see section 133BJ.

(2) The consumer may consent to the licensee imposing a liability to pay fees or charges, or a higher rate of interest, if the credit card is used to obtain cash, goods or services in excess of the credit limit.

(3) Before obtaining the consumer's consent, the licensee must, in accordance with the regulations, inform the consumer of any matters prescribed by the regulations.

(4) The consent may be obtained before or after the credit card contract is entered into, but it does not cover any fees, charges or interest imposed before the consent is obtained.

(5) The consumer may withdraw the consent at any time.

(6) The regulations may prescribe requirements to be complied with in relation to giving consent under subsection (2), or withdrawing consent under subsection (5).

(7) For the purpose of subsection 23(1) of the National Credit Code (and the other provisions of the Code that refer to, or apply in relation to, that subsection):

(a) a liability to pay a fee or charge that is imposed contrary to subsection (1) of this section is taken to be a credit fee or charge that is prohibited by the Code; and

(b) a liability to pay interest that is imposed contrary to subsection (1) of this section is taken to be an interest charge under the credit card contract exceeding the amount that may be charged consistently with the Code.

Note: For the civil and criminal consequences of contravening subsection 23(1) of the National Credit Code, see subsections 23(2) to (4), section 24, and Part 6, of the Code.

133BJ Records of consents and withdrawals to be kept

Requirement

(1) A licensee must, in accordance with the requirements prescribed by the regulations, keep a record of:

(a) consents the licensee obtains under section 133BI; and

(b) withdrawals of such consents.

Civil penalty: 2,000 penalty units.

Offence

(2) A person commits an offence if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person engages in conduct; and

(c) the conduct contravenes the requirement.

Criminal penalty: 50 penalty units.

(10) Schedule 1, item 21, page 27 (lines 25 to 27), omit note 2, substitute:

Note 2: This subsection also applies to liabilities imposed contrary to section 133BI of the National Credit Act: see subsection (7) of that section.

On behalf of the government, I move a number of minor but nonetheless important parliamentary amendments to the bill. These amendments will help minimise the cost of implementation for industry and will make things simpler for consumers while ensuring strong protections for families. Firstly, we have listened to the stakeholders and agreed with the House of Representatives Standing Committee on Economics recommendation that the commencement date for the obligation to provide a home loan key facts sheet be moved to 1 January next year. This will give lenders almost a full year and a half to implement this important reform from the time when this reform was first announced. We have also amended two offence penalty provisions: first, where a licensee does not have a website that allows the consumer to generate a home loan key facts sheet and, second, where a licensee enters into a contract without having supplied a credit card key facts sheet to the borrower. Persons who breach these provisions will be liable for civil and criminal penalties, and the strict liability of the provisions are considered no longer necessary. This reflects the fact that sometimes lenders may commit a foot fault with some small technical breach despite having made every effort in good faith to comply. It is important that in these circumstances there is some discretion available to provide them with relief.

Next, it is proposed to amend the bill to allow consents given by consumers before 1 July 2012, when the law commences, to receive unsolicited credit limit invitations, to be relied upon. This change makes these reforms more workable for industry whilst still allowing invitations to be sent only to consumers who provide informed consent. Lastly, we have simplified the operation of the overlimit buffer reform. This amendment will make things simpler and easier to understand for consumers while preserving the strong level of protection that this critical reform provides. Lenders will also be required to notify consumers when they go over their credit limits and will not be able to charge a fee unless the consumer has given their express consent to being charged a fee. These are minor amendments but important changes to minimise the costs for industry and ensure strong protection for consumers.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

We will not oppose these amendments. These amendments represent a backdown from the government after the Treasurer sought to vilify me for having the matter referred to a committee and after he tried to spin to a journalist that we were, in fact, delaying the bill. Our concern was that the bill was starting too early. In fact, the government now recognises that with amendment (1). So I would say to you, Mr Deputy Speaker Georganas: that is the form of this government—it delivers a piece of legislation and consults afterwards, not before, and it seeks to ridicule and vilify any critic and then, when it realises the critic has actually got a fair point, it claims to be engaging actively with the community. So I would say to you, Mr Deputy Speaker, that it does not surprise me that the Assistant Treasurer is in here doing the heavy lifting because the Treasurer himself has not got the courage to do it.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

What?

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

It is a fair point, mate. It is a fair point, my old china. Where is he?

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order: I think the shadow Treasurer could have finished his speech after 'we agree'.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

There is no point of order.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

You will need to be wittier than that if you want to be Prime Minister, mate.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

Order! All the remarks will be through the Deputy Speaker.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Through you, Mr Deputy Speaker: if the Assistant Treasurer wants to be witty he would need to improve his skill base if he wants to be Prime Minister. I say to you, Mr Deputy Speaker, this is an important piece of legislation; we recognise that and that is why we are not opposing it. But when it comes to some of the amendments, we are on the record as having actively encouraged some of these, and I give credit to the shadow Assistant Treasurer, Senator Mathias Cormann, who has been actively engaged in discussion on some of these matters. So we will not be opposing these amendments, because they do represent an improvement on the substantive bill. We will have more to say about the Greens amendment a little later.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

The Greens support the thrust of this bill and will be supporting amendments (1), (11) and (12), after they have been moved, because they are sensible technical amendments—for reasons that have been outlined—that make sense and will make it easier to implement this bill. But amendments (2) to (10) cannot be supported. It is another form of backdown. Amendments (2) to (10) remove some of the strict liability provisions and they also have the effect of removing default and supplementary buffers.

It is notable that the strict liability provisions were not raised once in the report of the Standing Committee on Economics. The committee did not see fit to recommend any change to these provisions and one presumes that the committee thought that these provisions were important for the enforcement of some very important protections. One can only surmise what would have happened, but in the meantime lenders have come and lobbied the government and perhaps lobbied others and successfully managed to remove some of the strict liability provisions, despite the committee never having said that these provisions should be removed. In fact, the committee supported the passage of the bill as it stood.

The minister has said that the reason for the removal of the default and supplementary buffer is that it was sought by consumer groups. The committee heard that argument and the committee heard conflicting views. The committee heard from one charity that said that the default and supplementary buffer provisions that are now proposed to be removed were important and they did not believe, on balance, they should be removed and that they did not agree with the submission of the Australian Bankers Association that these ought to be removed because they said they were important protections for consumers.

Again, what has happened is that, since the report was tabled, some lobbying has presumably gone on and the Australian Bankers Association has got its way with respect to the removal of those parts of the default and supplementary buffers that are referred to in amendments (2) to (10). For that reason, whilst we support the bill, it is disappointing that a very good, welcome and important reform is at the eleventh hour being watered down after some last-minute lobbying by the banks.

Question agreed to.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move government amendments (2) to (10) together.

An opposition member: We've done that.

I ask leave of the House to move government amendments (1), (11) and (12) together.

Leave granted.

I move:

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

(11)   Schedule 2, item 1, page 30 (line 10), after "Application", insert "and Transitional".

[pre-commencement consents for credit limit increase invitations]

(12)   Schedule 2, item 1, page 30 (after line 25), at the end of Part 1 of Schedule 4, add:

3 Pre-commencement consents for credit limit increase invitations

(1)   Subject to subitem (2), if:

(a)   before commencement, a licensee who is the credit provider under a credit card contract obtained express consent, from the consumer who is the debtor under the contract, to the licensee making credit limit increase invitations; and

(b)   the consent is expressed to relate to any credit limit increase invitations that the licensee may, from time to time, make to the consumer; and

(c)   before obtaining the consumer's consent, the licensee informed the consumer of the matters mentioned in paragraphs 133BF(4)(a), (b) and (c) of the amended Act; and

(d)   the consumer did not withdraw the consent before commencement;

then, for the purposes of Division 4 of Part 3-2B of the amended Act, the licensee is taken to have obtained the consent under, and in accordance with, section 133BF of the amended Act.

Note:   The consumer may, after commencement, withdraw the consent in accordance with section 133BF of the amended Act.

(2)   Section 133BG of the amended Act does not apply in relation to the consent, so far as that section would otherwise require a record of the consent to be kept. However that section does apply in relation to a withdrawal of the consent after commencement.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I am not going to let the minister off the hook with that. We will not be opposing these further changes, as I indicated before, but I would encourage the Assistant Treasurer to get on top of his brief.

Question agreed to.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

I move:

(1) Schedule 2, item 2, page 30 (lines 24 and 25), omit "credit card contracts entered into", substitute "transactions and payments made under a credit card contract whether the contract was entered into before, on or".

This bill contains some very important reforms and very important protections. A credit card is something that millions of Australians have and use every day. For many people who are struggling to make their daily obligations, it has become something that they will use with some regularity and often to supplement their income. Many would be surprised to know that some of the reforms in this bill are necessary. I think many people would have assumed that, when they make their payment on their credit card, it goes to pay off the highest amount. Many people might have presumed that there were some prohibitions on fees that could be charged when people came up to their limits on their credit cards. To the extent that those reforms are being introduced, we welcome that.

That comes in the context where banks who are the providers of many of the credit cards are doing very well, with combined annual profits of $20 billion in the last year. On fees alone—not just credit card fees but all fees—the revenue raised in Australia is in the order of $5 billion per annum. In that context, moves to limit unfair fees that banks can charge are welcome. But many might also be surprised to know that this bill will not apply to existing credit cards. Those parts of the bill that apply to access limits and the order of payments—so the payments going to pay off the highest interest-earning components—do not apply to existing credit cards.

In the Standing Committee on Economics inquiry and elsewhere, the point had been made by some of the banks said that it could not apply to existing credit cards. The National Australia Bank did not. They made the point—correctly in our view—that, although there might be some argument about compensation on just terms if you sought to deal with the way banks apply money for existing debts, there could be no argument made under the Constitution with respect to purchases made after the date of introduction of the bill. In other words, there is no legal constitutional barrier to having the provisions of this bill apply to purchases made after the bill comes into effect. That, of course, makes sense. These are not property rights that have accrued. It is a future transaction about which there is currently no regulation.

The amendment that we are moving would have the effect, without infringing any constitutional prohibition or without exposing the government to any claims for compensation, that most Australians would think this bill would have, and that is that it would apply to all new transactions on existing credit cards. If this amendment is not passed, although there will be some great headlines about the effects of these reforms, for the millions of Australians who currently have credit cards it will mean very little difference. They will continue to pay unfair fees and when they make their payments on their credit cards it will not necessarily go to those parts that are accruing the highest debts. It is very easily fixed. The National Australia Bank agrees that it can be done, and I would urge members of this House to support these amendments because it will make a very real difference to everyday Australians.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

The National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill increases protections for consumers by banning over-limit fees, by making payment allocations fair and by banning unsolicited credit limit increase offers. Whilst I understand the spirit of the member for Melbourne's amendments, the government has strong advice that the amendments pose a serious exposure to taxpayers. As I am sure the member for Melbourne is aware, our Constitution prohibits the compulsory acquisition of rights other than on just terms. As lenders have accrued rights invested in existing credit card contracts, any changes to those rights may be considered a breach of that clause of the Constitution. Such a breach could result in taxpayers being required to compensate lenders in huge amounts, which I am sure is not the intention of the member for Melbourne. The government is seeking to ensure that taxpayers are not exposed to this risk. That means that we cannot support the member for Melbourne's amendment.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I too oppose, on behalf of the coalition, this amendment. I would say to the member for Melbourne that it is quite stark that he has no support for any of the amendments he has moved today in the House. It should be a salient lesson for him that he cannot run with the hares and the hounds in this place. He will actually have to form some partnerships, if he really does want to get something through—

Mr Bandt interjecting—

and you cannot always rely on the Labor Party, old son. You should think about occasionally voting with us, and we might carefully consider any amendments that you are prepared to put up to the House. In this case, I would have tipped you off. But, because the element of retrospectivity is anathema to the coalition, even though it is not anathema to the Labor Party because, Lord knows, Kevin Rudd could come back, we will not be supporting this amendment. Having said that, I would say to the member for Melbourne: please feel free to enter into a constructive dialogue with the coalition. After all, you do sit on this side of the House but you always vote on that side of the House.

Question negatived.

Bill, as amended, agreed to.