Commonwealth: Consumer Credit Legislation Amendment (Enhancements) Act 2012 (Cth)

Consumer Credit Legislation Amendment (Enhancements) Act 2012 No. 130, 2012 An Act to amend the law relating to consumer credit and consumer protection, and for related purposes Contents 1 Short title 2 Commencement 3 Schedule(s) Schedule 1—Enhancements Part 1—Protection of debtor in cases of hardship National Consumer Credit Protection Act 2009 Part 2—Remedies for unfair or dishonest conduct by credit service providers National Consumer Credit Protection Act 2009 Part 3—Representations about eligibility to enter credit contracts, consumer leases etc. without assessing unsuitability National Consumer Credit Protection Act 2009 Part 4—Prohibition on certain representations and other matters National Consumer Credit Protection Act 2009 Part 5—Civil remedies for contravention of the National Credit Code National Consumer Credit Protection Act 2009 Part 6—Miscellaneous amendments National Consumer Credit Protection Act 2009 Part 7—Technical corrections National Consumer Credit Protection Act 2009 Schedule 2—Reverse mortgages Part 1—Definitions Division 1—Definition of reverse mortgage National Consumer Credit Protection Act 2009 Division 2—Other definitions National Consumer Credit Protection Act 2009 Part 2—Provisions applying to licensees National Consumer Credit Protection Act 2009 Part 3—Provisions applying to credit providers generally National Consumer Credit Protection Act 2009 Schedule 3—Short‑term and small amount credit contracts National Consumer Credit Protection Act 2009 Schedule 4—Caps on costs etc. for credit contracts National Consumer Credit Protection Act 2009 Schedule 5—Consumer leases National Consumer Credit Protection Act 2009 Schedule 6—Application provisions National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 Schedule 7—Lay‑by agreements etc. Competition and Consumer Act 2010 Consumer Credit Legislation Amendment (Enhancements) Act 2012 No. 130, 2012 An Act to amend the law relating to consumer credit and consumer protection, and for related purposes [Assented to 17 September 2012] The Parliament of Australia enacts: 1 Short title This Act may be cited as the Consumer Credit Legislation Amendment (Enhancements) Act 2012. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day this Act receives the Royal Assent. 17 September 2012 2. Schedule 1 1 March 2013. 1 March 2013 2A. Schedule 2, Part 1 The day after this Act receives the Royal Assent. 18 September 2012 2B. Schedule 2, Part 2 1 March 2013. 1 March 2013 2C. Schedule 2, items 12 to 14 1 March 2013. 1 March 2013 2D. Schedule 2, item 15 The day after this Act receives the Royal Assent. 18 September 2012 2E. Schedule 2, items 16 to 18 1 March 2013. 1 March 2013 2F. Schedule 2, items 19 and 20 The day after this Act receives the Royal Assent. 18 September 2012 2G. Schedule 2, items 21 and 22 1 March 2013. 1 March 2013 2H. Schedule 2, item 23 The day after this Act receives the Royal Assent. 18 September 2012 2J. Schedule 2, items 24 to 26 1 March 2013. 1 March 2013 2K. Schedule 3 1 March 2013. 1 March 2013 3. Schedule 4 1 July 2013. 1 July 2013 4. Schedule 5 1 March 2013. 1 March 2013 4A. Schedule 6 The day after this Act receives the Royal Assent. 18 September 2012 5. Schedule 7 A single day to be fixed by Proclamation. 17 September 2013 However, if the provision(s) do not commence within the period of 12 months beginning on the day this Act receives the Royal Assent, they commence on the day after the end of that period. Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act. (2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act. 3 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Enhancements Part 1—Protection of debtor in cases of hardship National Consumer Credit Protection Act 2009 1 Section 72 of the National Credit Code Repeal the section, substitute: 72 Changes on grounds of hardship Hardship notice (1) If a debtor considers that he or she is or will be unable to meet his or her obligations under a credit contract, the debtor may give the credit provider notice (a hardship notice), orally or in writing, of the debtor's inability to meet the obligations. 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. Period for giving notice If: The period is: 1 The credit provider does not require information under subsection (2) 21 days after the day of receiving the hardship notice 2 The credit provider requires information under subsection (2) but does not receive any information in compliance with the requirement 28 days after the stated date of the notice under subsection (2) 3 The credit provider requires information under subsection (2) and receives information in compliance with the requirement 21 days after the day of receiving the information 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. 2 Subsection 73(1) of the National Credit Code Omit "on any such application", substitute "to change the credit contract as a result of a hardship notice by the debtor". 3 Subsection 74(1) of the National Credit Code Omit "in accordance with the application", substitute "as a result of a hardship notice by the debtor". 4 Subsection 74(2) of the National Credit Code Repeal the subsection, substitute: (2) The court may, after allowing the applicant, the credit provider and any guarantor a reasonable opportunity to be heard: (a) by order change the credit contract (but not so as to reduce the amount ultimately payable by the debtor to the credit provider under the contract), and make such other orders as it thinks fit; or (b) refuse to change the credit contract. 5 Subparagraphs 88(3)(f)(i) and (ii) of the National Credit Code Repeal the subparagraphs, substitute: (i) give a hardship notice under section 72; or (ii) give a postponement request under section 94; or 6 After section 89 of the National Credit Code Insert: 89A Effect of hardship notices on enforcement (1) This section applies if: (a) a credit provider is required to give a default notice under section 88 before beginning enforcement proceedings; and (b) before or after the credit provider gives the default notice, the debtor gives the credit provider a hardship notice (the current hardship notice) under section 72; and (c) either: (i) in the 4 months before the day the current hardship notice is given, the debtor had not given the credit provider another hardship notice; or (ii) in that 4‑month period, the debtor had given the credit provider one or more other hardship notices, but the credit provider reasonably believes that the basis on which the current hardship notice was given is materially different from the bases on which the other hardship notices were given. (2) The credit provider must not begin enforcement proceedings against the debtor unless: (a) the credit provider has given the debtor a notice under paragraph 72(4)(b), in response to the current hardship notice, stating that the credit provider and debtor have not agreed to change the credit contract; and (b) the period of 14 days, starting on the day the credit provider gives the notice under paragraph 72(4)(b), has expired. Criminal penalty: 50 penalty units. Note: The credit provider must allow the debtor at least 30 days from the date of the default notice to remedy the default—see section 88. The 14‑day period in subsection (2) may end before, at the same time as, or after the end of the period for remedying the default specified in the default notice. (3) However, the credit provider may take possession of mortgaged goods if the credit provider reasonably believes that: (a) the debtor or mortgagor has removed or disposed of the mortgaged goods, or intends to remove or dispose of them, without the credit provider's permission; or (b) urgent action is necessary to protect the goods. (4) Subsection (2) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 7 Subsection 94(1) of the National Credit Code Repeal the subsection, substitute: Postponement request (1) A debtor, mortgagor or guarantor who has been given a default notice under section 88 or a demand for payment under section 90 may, at any time before the end of the period specified in the notice or demand, request (a postponement request), orally or in writing, that the credit provider negotiate a postponement of: (a) the enforcement proceedings; or (b) any action taken under such proceedings; or (c) the operation of any applicable acceleration clause. 8 Subsection 94(2) of the National Credit Code Omit "makes the request", substitute "gives the postponement request". 9 Subsections 94(3) and (4) of the National Credit Code Repeal the subsections, substitute: Enforcement proceedings (3) If the debtor, mortgagor or guarantor gives the postponement request, the credit provider must not begin enforcement proceedings unless: (a) the credit provider has given the debtor, mortgagor or guarantor a notice under subsection (2) in response to the postponement request; and (b) the period of 14 days, starting on the day the credit provider gives the notice under subsection (2), has expired. Criminal penalty: 50 penalty units. Note: The credit provider must allow the debtor or mortgagor at least 30 days from the date of the default notice to remedy the default—see section 88. The 14‑day period in subsection (3) may end before, at the same time as, or after the end of the period for remedying the default specified in the default notice. (4) However, the credit provider may take possession of mortgaged goods if the credit provider reasonably believes that: (a) the debtor or mortgagor has removed or disposed of the mortgaged goods, or intends to remove or dispose of them, without the credit provider's permission; or (b) urgent action is necessary to protect the goods. (5) Subsections (2) and (3) are offences of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. Part 2—Remedies for unfair or dishonest conduct by credit service providers National Consumer Credit Protection Act 2009 10 After section 180 Insert: 180A Orders to remedy unfair or dishonest conduct by credit service providers (1) The court may make one or more of the orders described in subsection (2) if the court is satisfied that: (a) a person (the defendant) provided a credit service to a consumer (the plaintiff); and (b) the defendant engaged in conduct that: (i) was connected with the provision of the service; and (ii) was unfair or dishonest; and (c) the conduct had one or more of the following results: (i) the plaintiff entered a credit contract, consumer lease, mortgage or guarantee that the plaintiff would not have entered apart from the conduct; (ii) the plaintiff entered a credit contract, consumer lease, mortgage or guarantee whose terms were different from a credit contract, consumer lease, mortgage or guarantee the plaintiff would have entered apart from the conduct; (iii) the plaintiff became liable to pay fees, costs or charges to the defendant or someone else. (2) The orders are as follows: (a) an order that the defendant take, or refrain from taking, specified action; (b) an order that the defendant pay the plaintiff a specified amount; (c) an order that a specified amount is not due or owing by the plaintiff to the defendant; (d) any other order the court considers appropriate to: (i) redress the unfairness or dishonesty; or (ii) prevent the defendant from profiting from the plaintiff by engaging in the conduct; except an order that affects a credit contract, consumer lease, mortgage or guarantee to which the conduct related. Determining whether conduct was unfair or dishonest (3) In determining whether conduct was unfair or dishonest, the court: (a) must have regard to the extent (if any) to which one or more of the circumstances described in subsection (4) existed; and (b) must consider it more likely that the conduct was unfair or dishonest the more any of those circumstances existed and the more any of them affected the plaintiff's interests. This does not limit the matters to which the court may have regard. (4) The circumstances are as follows: (a) the plaintiff was at a special disadvantage in dealing with the defendant in relation to the transaction involving: (i) the conduct; and (ii) a credit contract, consumer lease, mortgage or guarantee to which the conduct related; and (iii) any other contract requiring the plaintiff to make payments for the purposes of which it is reasonable to expect the plaintiff would or did enter such a credit contract, consumer lease, mortgage or guarantee; (b) the plaintiff was a member of a class whose members were more likely than people who were not members of the class to be at such a disadvantage; (c) if the plaintiff was a member of a class referred to in paragraph (b)—a reasonable person would consider that the conduct was directed at that class; (d) the plaintiff was unable, or considered himself or herself unable, to make: (i) a credit contract with a credit provider other than the credit provider to which the conduct related; or (ii) a consumer lease with a lessor other than the lessor to which the conduct related; or (iii) a mortgage with a mortgagee other than the mortgagee to which the conduct related; or (iv) a guarantee with a beneficiary other than the beneficiary to which the conduct related; (e) the conduct involved a technique that: (i) should not in good conscience have been used; or (ii) manipulated the plaintiff; (f) the defendant could determine or significantly influence the terms of a contract covered by subparagraph (a)(ii) or (iii); (g) the terms of the transaction described in paragraph (a) were less favourable to the plaintiff than the terms of a comparable transaction. When order may be made (5) The court may make the order only if: (a) the plaintiff or ASIC (on behalf of the plaintiff) applies for an order under this section; and (b) the application is made within 6 years of the day the defendant first started engaging in the conduct. Applications for order (6) For the purposes of paragraph (5)(a), ASIC may make an application on behalf of the plaintiff, but only if the plaintiff has given consent in writing before the application is made. Recovery of amount as a debt (7) If the court makes an order that the defendant pay an amount specified in the order to the plaintiff, the plaintiff may recover the amount as a debt due to the plaintiff. When this section does not apply (8) This section does not apply to the provision of credit assistance by a person who is (or after the provision of the assistance becomes): (a) a credit provider under the credit contract to which the assistance relates; or (b) a lessor under the consumer lease to which the assistance relates; or (c) a mortgagee under a mortgage in relation to the credit contract to which the assistance relates; or (d) a beneficiary of a guarantee in relation to the credit contract to which the assistance relates. 11 Section 184 Add at the end "or another Act". Part 3—Representations about eligibility to enter credit contracts, consumer leases etc. without assessing unsuitability National Consumer Credit Protection Act 2009 12 Section 125 (paragraph relating to Division 3) Omit "entering or increasing the credit limit of a credit contract", substitute "doing particular things (such as entering a credit contract)". 13 Division 3 of Part 3‑2 (heading) Repeal the heading, substitute: Division 3—Obligation to assess unsuitability 14 Section 128 (heading) Repeal the heading, substitute: 128 Obligation to assess unsuitability 15 After paragraph 128(a) Insert: (aa) make an unconditional representation to a consumer that the licensee considers that the consumer is eligible to enter a credit contract with the licensee; or 16 After paragraph 128(b) Insert: ; or (ba) make an unconditional representation to a consumer that the licensee considers that the credit limit of credit contract between the consumer and the licensee will be able to be increased; 17 Section 148 (paragraph relating to Division 3) Omit "entering a consumer lease", substitute "doing particular things (such as entering a consumer lease)". 18 Division 3 of Part 3‑4 (heading) Repeal the heading, substitute: Division 3—Obligation to assess unsuitability 19 Section 151 Repeal the section, substitute: 151 Obligation to assess unsuitability A licensee must not: (a) enter a consumer lease with a consumer who will be the lessee under the lease; or (b) make an unconditional representation to a consumer that the licensee considers that the consumer is eligible to enter a consumer lease with the licensee; on a day (the lease day) unless the licensee has, within 90 days (or other period prescribed by the regulations) before the lease day: (c) made an assessment that: (i) is in accordance with section 152; and (ii) covers a period in which the lease day occurs; and (d) made the inquiries and verification in accordance with section 130. Civil penalty: 2,000 penalty units. 20 Section 152 Omit "paragraph 151(a)", substitute "paragraph 151(c)". 21 Subsection 153(1) Omit "paragraph 151(b)", substitute "paragraph 151(d)". Part 4—Prohibition on certain representations and other matters National Consumer Credit Protection Act 2009 22 Section 27 (paragraph relating to Division 3) Omit ", charging fees for unlicensed conduct, and giving misleading information", substitute ", and charging fees for unlicensed conduct". 23 Division 3 of Part 2‑1 (heading) Repeal the heading, substitute: Division 3—Other prohibitions relating to the requirement to be licensed 24 Section 33 Repeal the section. 25 After Part 3‑6 Insert: Part 3‑6A—Miscellaneous rules Division 1—Introduction 160A Guide to this Part This Part has a number of miscellaneous rules that require responsible lending conduct when engaging in credit activities or particular types of credit activities. Some of these rules apply to a person even if the person is not required to be licensed. Division 2 prohibits licensees from making particular representations when providing a credit service to a consumer. Division 3 prohibits a person (whether licensed or not) from giving false or misleading information in the course of engaging in a credit activity. Division 4 may require a credit provider or lessor (whether licensed or not) to give notice when, and in some cases before, giving an employer of a debtor or lessee an authorisation by the debtor or lessee to make deductions from amounts payable by the employer to the debtor or lessee. Division 2—Representations 160B "Independent", "impartial" or "unbiased" etc. (1) A licensee must not, in providing or offering to provide a credit service to a consumer, use any of the following terms (either alone or in combination with other words or letters) in a representation to the consumer about the licensee, the service or the licensee's actions in providing the service: (a) the word "independent"; (b) the word "impartial"; (c) the word "unbiased"; (d) another term (whether or not in English) that is of similar import to a word mentioned in paragraph (a), (b) or (c). Civil penalty: 2,000 penalty units. Defences (2) For the purposes of subsection (1), it is a defence if: (a) the licensee does not receive any of the following: (i) commissions (apart from commissions that are rebated in full to the licensee's clients); (ii) other gifts or benefits from a credit provider or a lessor that may reasonably be expected to influence the licensee; and (b) in providing a credit service, the licensee operates free from direct or indirect restrictions relating to the credit contracts and consumer leases to which the service relates (except restrictions imposed on the licensee by this Act or by an Australian credit licence); and (c) in providing a credit service, the licensee operates without any conflicts of interest that might: (i) arise from the licensee's associations or relationships with credit providers and lessors; and (ii) reasonably be expected to influence the licensee in providing the service; and (d) neither of the following persons receives any commission, gift, or benefit, covered by paragraph (a): (i) the licensee's employer (if any); (ii) any other person prescribed (whether by reference to a class of person or otherwise) by the regulations. (3) For the purposes of subsection (1), it is a defence if the representation uses any of the terms in the negative (for example, a representation that the licensee is not independent). 160C "Financial counsellor" etc. (1) A licensee must not, in providing or offering to provide a credit service to a consumer, use any of the following terms (either alone or in combination with other words or letters) in a representation to the consumer about the licensee, the service or the licensee's actions in providing the service: (a) the phrase "financial counsellor"; (b) the phrase "financial counselling"; (c) another term (whether or not in English) that: (i) is of similar import to a phrase mentioned in paragraph (a) or (b); and (ii) is prescribed by the regulations. Civil penalty: 2,000 penalty units. Defences (2) For the purposes of subsection (1), it is a defence if regulations made for the purposes of paragraph 110(a) exempt the licensee from section 29 in relation to a credit activity because the licensee engages in the activity as part of a financial counselling service. (3) For the purposes of subsection (1), it is a defence if: (a) the licensee is providing, or offering to provide, the credit service on behalf of another person (the principal); and (b) the licensee is a representative of the principal; and (c) regulations made for the purposes of paragraph 110(a) exempt the principal from section 29 in relation to a credit activity because the principal engages in the activity as part of a financial counselling service; and (d) the licensee's actions in providing or offering to provide the credit service are within the authority of the principal. (4) For the purposes of subsection (1), it is a defence if the representation uses any of the terms in the negative (for example, a representation that the licensee is not a financial counsellor). Division 3—Giving misleading information 160D Prohibition on giving misleading information etc. Prohibition on giving misleading information etc. (1) A person (the giver) must not, in the course of engaging in a credit activity, give information or a document to another person if the giver knows, or is reckless as to whether, the information or document is: (a) false in a material particular; or (b) materially misleading. Civil penalty: 2,000 penalty units. Offence (2) A person commits an offence if: (a) the person gives information or a document to another person; and (b) the person does so in the course of engaging in a credit activity; and (c) the information or document is false in a material particular or materially misleading. Criminal penalty: 100 penalty units, or 2 years imprisonment, or both. 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. Part 5—Civil remedies for contravention of the National Credit Code National Consumer Credit Protection Act 2009 26 Section 124 of the National Credit Code (heading) Repeal the heading, substitute: 124 Civil effect of contraventions 27 Subsection 124(1) of the National Credit Code Omit "(other than one for which a civil effect is specifically provided by Division 1 or by any other provision of this Code)". 28 Subsection 124(2) of the National Credit Code Repeal the subsection, substitute: (2) An application for the exercise of the court's powers under this section may be made by: (a) a person affected by the contravention; or (b) ASIC on behalf of a person affected by the contravention, if the person has consented in writing to ASIC making the application; or (c) ASIC (on its own behalf). Part 6—Miscellaneous amendments National Consumer Credit Protection Act 2009 29 Subsection 19(1) of the National Credit Code Omit "a contract document", substitute "a new contract document". 30 Section 32 of the National Credit Code Repeal the section, substitute: 32 Fees or charges in relation to third parties When this section applies (1) This section applies if a fee or charge is payable by a debtor to the credit provider for an amount (the third party amount) payable or paid by the credit provider to another person, body or agency. Third party amount ascertainable at time of debtor payment (2) If, when the fee or charge is paid by the debtor to the credit provider, the third party amount is ascertainable, then the amount of the fee or charge must not exceed the third party amount. Third party amount not ascertainable at time of debtor payment (3) If: (a) when the fee or charge is paid by the debtor to the credit provider, the third party amount is not ascertainable; and (b) after the fee or charge is paid, the credit provider ascertains the third party amount; and (c) the third party amount is less than the amount of the fee or charge paid; then the credit provider must refund or credit the difference to the debtor. Determining third party amount (4) The third party amount is to be determined by: (a) taking into account any discount, rebate or other allowance that is received or receivable by the credit provider or a related body corporate (within the meaning of the Corporations Act 2001); and (b) disregarding any rebate on tax payable by the credit provider or a related body corporate (within the meaning of that Act). 31 Paragraph 36(1)(c) of the National Credit Code Repeal the paragraph, substitute: (c) any amounts currently overdue and the dates they became due; 32 Paragraph 36(1)(d) of the National Credit Code Omit "became due", substitute "becomes due". 33 Subsection 38(4) of the National Credit Code Omit "of receiving the statement of account in which the amount, or part of that amount, was first shown", substitute "after the day the debtor receives the statement of account in which the amount, or part of that amount, is first shown". 34 Subsection 38(5) of the National Credit Code Omit "after the end of the contract", substitute "after the day the contract ends". 35 Subsection 38(6) of the National Credit Code Omit "at least 30 days have elapsed from the time the written explanation or advice as to agreement was given", substitute "the period of 30 days, starting on the day the credit provider gives the written explanation or advice as to agreement, has expired". 36 At the end of subsection 38(6) of the National Credit Code Add: Criminal penalty: 50 penalty units. 37 Subsection 38(9) of the National Credit Code Omit "Subsection (8) is an offence", substitute "Subsections (6) and (8) are offences". 38 Division 6 of Part 2 of the National Credit Code Repeal the Division, substitute: Division 6—Certain transactions not to be treated as new contracts 40 Changes etc. under contracts If: (a) there is: (i) a change to an existing credit contract that results in further credit being provided; or (ii) a deferral or waiver of an amount under an existing credit contract; or (iii) a postponement relating to an existing credit contract; and (b) the change, deferral, waiver or postponement is made in accordance with this Code or the existing credit contract; then the change, deferral, waiver or postponement is not to be treated as creating a new credit contract for the purposes of this Code. 39 Subsection 71(1) of the National Credit Code Omit "under a credit contract", substitute "under an existing credit contract". 40 Subsection 83(1) of the National Credit Code (penalty) Repeal the penalty. 41 Subsection 83(3) of the National Credit Code Omit "after the request", substitute "after the day the request". 42 Subsection 83(5) of the National Credit Code Repeal the subsection (not including the note), substitute: (5) Subsection (3) is an offence of strict liability. 43 Subsection 87(2) of the National Credit Code Omit "direct debit default notice under this section within 10 business days", substitute "notice, complying with this section, within 14 days". 44 Subsection 87(3) of the National Credit Code Omit "direct debit default". 45 Paragraphs 88(5)(a) and (d) of the National Credit Code Omit "believes on reasonable grounds", substitute "reasonably believes". 46 Subsection 88(6) of the National Credit Code Omit "believes on reasonable grounds", substitute "reasonably believes". 47 Subsection 89(1) of the National Credit Code After "a default notice", insert "under section 88". 48 Paragraphs 93(1)(c), (2)(a) and (2)(d) of the National Credit Code Omit "believes on reasonable grounds", substitute "reasonably believes". 49 Subsection 95(1) of the National Credit Code Omit "The default notice or demand for payment", substitute "A default notice under section 88 or a demand for payment under section 90". 50 Subsection 98(1) of the National Credit Code Omit "within 7 days", substitute ", within 7 days after the day the notice is given to the mortgagor,". 51 Section 206 of the National Credit Code Repeal the section. Part 7—Technical corrections National Consumer Credit Protection Act 2009 52 Section 129 Omit "128(1)(c)", substitute "128(c)". Note: This item fixes an incorrect cross‑reference. 53 Subsection 130(1) Omit "128(1)(d)", substitute "128(d)". Note: This item fixes an incorrect cross‑reference. 54 Paragraph 181(b) After "order under", insert "section". 55 Subparagraph 88(3)(g)(i) of the National Credit Code Omit "or", substitute "and". 56 Subsection 127(2) of the National Credit Code Omit "tied continuing credit contract", substitute "tied continuing credit contract". 57 Section 129 of the National Credit Code (heading) Repeal the heading, substitute: 129 Right to damages under sale contract against both supplier and linked credit provider Note: This item removes a reference to a repealed provision. 58 Section 130 of the National Credit Code (heading) Repeal the heading, substitute: 130 Limits on debtor's right of action against linked credit provider Note: This item removes a reference to a repealed provision. 59 Section 131 of the National Credit Code (heading) Repeal the heading, substitute: 131 Liability of supplier to linked credit provider Note: This item removes a reference to a repealed provision. 60 Section 132 of the National Credit Code (heading) Repeal the heading, substitute: 132 Interest may be awarded Note: This item removes a reference to a repealed provision. 61 Section 133 of the National Credit Code (heading) Repeal the heading, substitute: 133 Subrogation of credit provider Note: This item removes a reference to a repealed provision. 62 Subsection 204(1) of the National Credit Code (definition of approved external dispute resolution scheme) After "has", insert "the". Schedule 2—Reverse mortgages Part 1—Definitions Division 1—Definition of reverse mortgage National Consumer Credit Protection Act 2009 1 Subsection 5(1) Insert: reverse mortgage has the same meaning as in section 13A of the National Credit Code. 2 At the end of Part 1 of the National Credit Code Add: 13A Reverse mortgages (1) For the purposes of this Code, an arrangement is a reverse mortgage if the arrangement involves a credit contract, except a bridging finance contract, and a mortgage over a dwelling or land securing a debtor's obligations under the contract and either: (a) the conditions in subsections (2) and (3) are met; or (b) the arrangement is of a kind declared by ASIC under subsection (4) and is made on or after the commencement of that declaration. Conditions (2) The first condition is that the debtor's total liability under the credit contract or mortgage may exceed (to a limited or unlimited extent) the maximum amount of credit that may be provided under the contract without the debtor being obliged to reduce that liability to or below that maximum amount. Note: The debtor's total liability can exceed the maximum amount of credit because interest and some other fees and charges are not included in an amount of credit: see subsection 3(2). (3) The second condition is that, if the regulations prescribe any prerequisites for the arrangement to be a reverse mortgage, those prerequisites are met. Declarations by ASIC (4) ASIC may by legislative instrument declare specified kinds of arrangements involving a credit contract and a mortgage over a dwelling or land securing a debtor's obligations under the contract to be reverse mortgages. 3 Subsection 204(1) of the National Credit Code Insert: reverse mortgage: see section 13A. Division 2—Other definitions National Consumer Credit Protection Act 2009 4 Subsection 5(1) Insert: reverse mortgage information statement means a document relating to reverse mortgages that complies with the regulations. 5 Subsection 204(1) of the National Credit Code Insert: bridging finance contract: a credit contract is a bridging finance contract if: (a) when the contract is made, the debtor: (i) reasonably expects to receive a lump sum before the term of the contract ends; and (ii) intends to discharge the debtor's obligations under the contract so far as possible with that sum; and (aa) the term of the contract is 2 years or less; and (b) the conditions (if any) prescribed by the regulations are met. 6 Subsection 204(1) of the National Credit Code Insert: engage in conduct means: (a) do an act; or (b) omit to perform an act. 7 Subsection 204(1) of the National Credit Code Insert: practising lawyer means a person who is admitted to the legal profession by a federal court or a Supreme Court of a State or Territory and holds a practising certificate (however described) entitling the person to practise that profession. 8 Subsection 204(1) of the National Credit Code Insert: reverse mortgaged property, in relation to a credit contract for a reverse mortgage, means a dwelling or land that has been mortgaged to secure a debtor's obligations under the contract. Part 2—Provisions applying to licensees National Consumer Credit Protection Act 2009 9 At the end of section 133 Add: Note: Sections 178 and 179 provide for remedies for anyone who suffers, or is likely to suffer, loss or damage because of a breach of this section. For example, if a consumer makes an unsuitable credit contract with a licensee, rather than making a not unsuitable credit contract for a reverse mortgage, a person who suffered, or is likely to suffer, loss as a result may be able to get court orders under section 178 or 179 to put the person in a position like the one they would have been in had the consumer entered into the contract for the reverse mortgage. 10 Before Part 3‑3 Insert: Part 3‑2D—Licensees and reverse mortgages 133DA Guide to this Part This Part has rules that apply to licensees that provide credit services or are credit providers. Before providing credit assistance, or entering into a credit contract, for a reverse mortgage, licensees must provide projections of the debtor's equity in the property that may be covered by the reverse mortgage. Licensees must also make reverse mortgage information statements available on their websites and on request. Licensees must not inaccurately use terms like "reverse mortgage" in making representations about credit contracts and mortgages. 133DB Giving projections of equity before providing credit assistance or entering credit contract Requirement to give projections (1) Before a licensee makes a preliminary assessment for the purposes of paragraph 115(1)(c) or (2)(a), or an assessment for the purposes of paragraph 128(c), in connection with a credit contract with a consumer for a reverse mortgage, the licensee must: (a) show the consumer in person, or give the consumer in a way prescribed by the regulations, projections that: (i) relate to the value of the dwelling or land that may become reverse mortgaged property, and the consumer's indebtedness, over time if the consumer were to enter into a contract for a reverse mortgage; and (ii) are made in accordance with the regulations by using a website approved by ASIC; and (b) give the consumer a printed copy of the projections; and (c) tell the consumer in person the things (if any) that relate to reverse mortgages and are prescribed by the regulations; and (d) give the consumer a reverse mortgage information statement. 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 person's conduct breaches the requirement. Criminal penalty: 50 penalty units. Defences for not giving projections (3) For the purposes of paragraphs (1)(a) and (b), and of subsection (2) so far as it relates to either of those paragraphs, it is a defence if the licensee reasonably believes that: (a) another person has: (i) shown the consumer in person projections described in paragraph (1)(a); and (ii) given the consumer a printed copy of the projections; and (b) the projections are the same, or substantially the same, as those paragraph (1)(a) requires the licensee to show the consumer. Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (3) (see subsection 13.3(3) of the Criminal Code). (4) For the purposes of paragraphs (1)(a) and (b), and of subsection (2) so far as it relates to either of those paragraphs, it is a defence if the circumstances prescribed by the regulations exist. Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code). Defence for not giving reverse mortgage information statement (5) For the purposes of paragraph (1)(d), and of subsection (2) so far as it relates to that paragraph, it is a defence if the licensee reasonably believes that another person has given the consumer a reverse mortgage information statement in the last 90 days. Note: For the purposes of subsection (2), a defendant bears an evidential burden in relation to the matter in subsection (5) (see subsection 13.3(3) of the Criminal Code). 133DC Making reverse mortgage information statement available on website of credit provider or credit assistance provider When this section applies (1) This section applies if a licensee: (a) is: (i) a person who provides, or holds himself or herself out as able to provide, credit assistance relating to credit contracts for reverse mortgages; or (ii) a credit provider under one or more credit contracts for a reverse mortgages; and (b) has a website that provides information about such contracts. Requirement (2) The licensee must make available through the website a reverse mortgage information statement. Civil penalty: 2,000 penalty units. Offence (3) A person commits an offence if: (a) the person is subject to a requirement under subsection (2); and (b) the person engages in conduct; and (c) the person's conduct breaches the requirement. Criminal penalty: 50 penalty units. 133DD Making reverse mortgage information statement available in other situations When this section applies (1) This section applies if: (a) a licensee is: (i) a person who provides, or holds himself or herself out as able to provide, credit assistance relating to credit contracts for reverse mortgages; or (ii) a credit provider under one or more credit contracts for reverse mortgages; and (b) either: (i) a consumer asks the licensee (otherwise than by using a website of the licensee) for a reverse mortgage information statement; or (ii) the regulations require a consumer, in circumstances prescribed by the regulations, to be given a reverse mortgage information statement; and (c) the consumer gives the licensee the consumer's name, and the contact details required by the regulations. Requirement (2) The licensee must, in accordance with any requirements prescribed by the regulations, give the consumer a reverse mortgage information statement. Civil penalty: 2,000 penalty units. Offence (3) A person commits an offence if: (a) the person is subject to a requirement under subsection (2); and (b) the person engages in conduct; and (c) the conduct contravenes the requirement. Criminal penalty: 50 penalty units. Defences (4) For the purposes of subsections (2) and (3), it is a defence if: (a) the licensee has given the consumer, or reasonably believes that someone else has given the consumer, a reverse mortgage information statement; or (b) the licensee: (i) is a credit provider under one or more credit contracts for reverse mortgages; and (ii) reasonably believes that the consumer would not be eligible to make a credit contract with the licensee for a reverse mortgage; or (c) there exist circumstances prescribed by regulations as circumstances in which the licensee is not required to give the consumer a reverse mortgage information statement. Note: For the purposes of subsection (3), a defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code). 133DE Representations that use the term "reverse mortgage" etc. Credit service providers (1) A licensee must not, in providing or offering to provide a credit service to a consumer, use either of the following terms (either alone or in combination with other words or letters) in a representation to the consumer about an actual or proposed credit contract or mortgage: (a) the phrase "reverse mortgage"; (b) another term (whether or not in English) of similar import to the phrase "reverse mortgage". Civil penalty: 2,000 penalty units. Credit providers (2) A licensee that is a credit provider must not use either of the following terms (either alone or in combination with other words or letters) in a representation to a consumer about an actual or proposed credit contract or mortgage: (a) the phrase "reverse mortgage"; (b) another term (whether or not in English) of similar import to the phrase "reverse mortgage". Civil penalty: 2,000 penalty units. Defence (3) For the purposes of subsections (1) and (2), it is a defence if: (a) the representation truly represents that a credit contract: (i) is or will be a credit contract for a reverse mortgage; or (ii) is not or will not be a credit contract for a reverse mortgage; or (b) the representation truly represents that a mortgage: (i) is or will be part of a reverse mortgage; or (ii) is not or will not be part of a reverse mortgage. 11 At the end of section 179 Add: Presumption in favour of certain orders (6) Subsection (7) applies if: (a) the defendant is a credit provider who has contravened section 133 by entering into, or increasing the credit limit of, a credit contract (the illegal contract) that is not a credit contract for a reverse mortgage; and (b) the debtor's obligations under the illegal contract are secured by a mortgage over the debtor's principal place of residence; and (c) the court is satisfied that, at any time in the period in which an assessment needed to be made to comply with section 128 in relation to the illegal contract: (i) there was a credit provider (whether the defendant or not) offering credit through a reverse mortgage (whether or not the credit provider actually made such an offer to the debtor); and (ii) the debtor would have been eligible to enter into a credit contract for the reverse mortgage; and (iii) the credit contract for the reverse mortgage would not have been unsuitable for the debtor under section 133; and (d) the plaintiff, or ASIC on behalf of the plaintiff, applies for an order under this section to let the plaintiff reside in the place to prevent or reduce loss or damage suffered or likely to be suffered by the plaintiff vacating the place. (7) The court must consider the order appropriate to prevent or reduce the loss or damage and make the order unless the court is satisfied that the order would adversely affect a person other than the debtor and the defendant. Part 3—Provisions applying to credit providers generally National Consumer Credit Protection Act 2009 12 After subsection 17(15) of the National Credit Code Insert: Provisions for person other than debtor to occupy reverse mortgaged property (15A) If the credit contract for a reverse mortgage is to make provision for a person other than the debtor to occupy the reverse mortgaged property, the contract document must contain provisions that have the following effect (whether or not the document also contains other provisions relating to such occupation by such a person): (a) the debtor may at any time (before, when or after the contract is made): (i) nominate to the credit provider a person who is to be allowed to occupy the property (whether alone or with other persons); and (ii) revoke such a nomination by notice given to the credit provider; (b) while a nomination described in paragraph (a) is in force, the nominated person has the same rights (against the credit provider) to occupy the property as the debtor has or would have apart from the death of the debtor or vacation of the property by the debtor. Note: Other provisions contained in the contract document may, for example, limit the kinds of persons whom the debtor may nominate to the credit provider as persons who are to be allowed to occupy the property. 13 After section 18 of the National Credit Code Insert: 18A Provisions that must not be included in credit contract for reverse mortgage (1) A credit provider must not enter into a credit contract for a reverse mortgage that provides a basis for beginning enforcement proceedings relating to the contract for an event described in subsection (3). (2) A credit provider must not agree to change, or unilaterally change, a credit contract for a reverse mortgage so that it provides a basis for beginning enforcement proceedings relating to the contract for an event described in subsection (3). (3) For the purposes of subsections (1) and (2), the events are as follows: (a) the debtor failing to inform the credit provider that another person occupies the reverse mortgaged property; (b) the debtor failing, when the debtor occupies the reverse mortgaged property, to give the credit provider evidence that the debtor, or another person nominated by the debtor to the credit provider, occupies or occupied the reverse mortgaged property; (c) the debtor leaving the reverse mortgaged property unoccupied while it is the debtor's principal place of residence; (d) the debtor failing to pay a cost to a person other than the credit provider within 3 years after the payment became due; (e) the debtor failing to comply with a provision of the credit contract if the contract does not make it clear how the debtor is to comply with the provision; (f) the debtor breaching another credit contract with the credit provider; (g) an event that involves an act or omission by the debtor and is prescribed by the regulations. 18B Disclosure if credit contract for reverse mortgage does not protect tenancy of person other than debtor (1) This section applies if a proposed credit contract for a reverse mortgage does not include a provision (a tenancy protection provision) for a person other than the debtor to have a right against the credit provider to occupy the reverse mortgaged property. (2) A person must not provide a credit service relating to the contract unless the person has told the debtor, in writing in the form (if any) prescribed by the regulations, that the contract does not include a tenancy protection provision. Criminal penalty: 50 penalty units. (3) Subsection (2) does not apply if the person is or will be the credit provider under the contract. (4) The credit provider must not enter into the contract unless the credit provider has told the debtor, in writing in the form (if any) prescribed by the regulations, that the contract does not include a tenancy protection provision. Criminal penalty: 50 penalty units. (5) An offence against subsection (2) or (4) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 18C Independent legal advice before entry into credit contract for reverse mortgage (1) The regulations may regulate or prohibit the entry by a credit provider into a credit contract for a reverse mortgage if the debtor has not obtained legal advice, in accordance with the regulations, about the contract or reverse mortgage. (2) The regulations may provide for offences and civil penalties for contraventions of regulations made for the purposes of subsection (1). (3) The penalties for offences described in subsection (2) must not be more than 50 penalty units for an individual or 250 penalty units for a body corporate. (4) The civil penalties described in subsection (2) must not be more than 500 penalty units for an individual or 2,500 penalty units for a body corporate. 14 At the end of section 22 of the National Credit Code Add: (3) Subsection (1) does not apply to a contravention of a requirement of section 18B. 15 At the end of section 26 of the National Credit Code Add: (6) A credit contract for a reverse mortgage may not prohibit an early payment that: (a) is made in the circumstances described in paragraph 86A(1)(a); and (b) is of the amount described in paragraph 86A(1)(b). 16 After paragraph 33(2)(a) of the National Credit Code Insert: (aa) in the case of a continuing credit contract for a reverse mortgage—12 months; or 17 After paragraph 33(2)(b) of the National Credit Code Insert: (ba) in the case of a reverse mortgage not involving a continuing credit contract—12 months; or 18 After section 67 of the National Credit Code Insert: 67A Changes to tenancy protection in credit contracts for reverse mortgages A purported change to a credit contract for a reverse mortgage that makes provision for a person other than the debtor to occupy the reverse mortgaged property is void so far as the change purports to: (a) remove a provision required by subsection 17(15A) to be contained in the contract document; or (b) vary the contract so as to limit: (i) the ability of the debtor to nominate to the credit provider a person who is to be allowed to occupy the reverse mortgaged property (whether alone or with other persons); or (ii) the rights of a person nominated by the debtor to the credit provider to occupy the property. 19 Division 1 of Part 5 of the National Credit Code (heading) Repeal the heading, substitute: Division 1—Ending of credit contract by debtor etc. Subdivision A—Paying out contract etc. 20 After section 86 of the National Credit Code Insert: Subdivision B—Ending of reverse mortgage by credit provider receiving value of reverse mortgaged property 86A Application of this Subdivision (1) This Subdivision applies in relation to a credit contract for a reverse mortgage and a mortgage securing the debtor's obligations under the contract if: (a) the debtor's accrued liability (whether or not due and payable) under the contract is more than the amount (the adjusted market value) worked out under subsection (2) for the reverse mortgaged property; and (b) the credit provider receives an amount at least equal to the adjusted market value for the reverse mortgaged property either: (i) as a payment accepted from the debtor under the credit contract; or (ii) as proceeds of the sale by the credit provider of the reverse mortgaged property. (2) The adjusted market value for the reverse mortgaged property is the amount worked out by: (a) working out the market value of the property in accordance with the regulations (if any); and (b) adjusting that value in accordance with the regulations (if any). Regulations for the purposes of paragraph (b) may prescribe different adjustments to be made in different circumstances. 86B Discharge of debtor's obligations under credit contract and discharge of mortgage (1) The debtor's obligations under the credit contract are discharged by force of this subsection. (2) The mortgage securing those obligations is discharged by force of this subsection. Note: This section does not apply in some cases: see section 86E. 86C Credit provider must pay debtor excess of receipt over adjusted market value for reverse mortgaged property If the amount received by the credit provider exceeds the adjusted market value for the reverse mortgaged property, the credit provider must pay the excess to the debtor. Note 1: If the credit provider contravenes this requirement, the court may order the credit provider to compensate anyone affected by the contravention: see section 124. Note 2: This section does not apply in some cases: see section 86E. 86D Credit provider must not demand or accept further payments (1) The credit provider must not: (a) purport to require payment under the credit contract; or (b) accept a payment purportedly under the credit contract. Note 1: If the credit provider contravenes this requirement, the court may order the credit provider to compensate anyone affected by the contravention: see section 124. Note 2: This section does not apply in some cases: see section 86E. (2) To avoid doubt, subsection (1) does not apply to the payment (if any) that is described in subparagraph 86A(1)(b)(i) and caused this Subdivision to apply. 86E Cases in which sections 86B, 86C and 86D do not apply Sections 86B, 86C and 86D do not apply if: (b) the debtor engaged in fraud, or made a misrepresentation, relating to the reverse mortgage before, at or after the time the credit contract was made; or (c) circumstances prescribed by the regulations exist. 86F Relationship between this Subdivision and other provisions This Subdivision does not limit any of the other provisions of this Division. Subdivision C—Notice of first direct debit default 21 Subsections 88(1) and (2) of the National Credit Code Repeal the subsections, substitute: Enforcement of credit contract (1) A credit provider must not begin enforcement proceedings against a debtor in relation to a credit contract unless: (a) the debtor is in default under the credit contract; and (b) the credit provider has given the debtor, and any guarantor, a default notice, complying with this section, allowing the debtor a period of at least 30 days from the date of the notice to remedy the default; and (c) the default has not been remedied within that period; and (d) if the credit contract is for a reverse mortgage, the credit provider has spoken to one of the following persons by telephone or in person in that period and has thus both confirmed that the debtor received the default notice and informed the person of the consequences of failure to remedy the default, or has made reasonable efforts to do so: (i) the debtor; (ii) a practising lawyer representing the debtor; (iii) a person with a power of attorney relating to the debtor's financial affairs. Criminal penalty: 50 penalty units. Note: If a debtor or guarantor has given a credit provider a hardship notice or a postponement request there may be extra requirements that the credit provider must com