The 1st of July 2010 is an important date for credit lenders and borrowers as the National Credit Code (NCC) came into operation on that date. The NCC is included in Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth) (NCCP) and it replaces the Uniform Consumer Credit Code (UCCC).
Before the national credit law regime was introduced, the Uniform Consumer Credit Code (UCCC) regulated credit and consumer issues in the States and Territories, with additional codes implemented by individual states for issues that lacked the UCCC’s coverage. The NCC and NCCP provide a uniform set of consumer credit laws, in favor of consumer protection, applying to all State and Territories.
What is the National Credit Code?
In short, the NCC introduces new aspects to:
- Licensing of credit service providers; and
- Obligations regarding credit lending conduct
The code and the act are regulated by the Australian Securities and Investments Commission (ASIC).
Who does it apply to?
The ASIC’s guide outlines that NCC is applicable to credit contracts that were commenced on or after 1 July 2010 under the following circumstances:
- the debtor is a natural person or strata corporation;
- the credit is provided for personal, domestic or household purposes, or to purchase, renovate or improve residential property for investment purposes, or to refinance credit previously provided for this purpose.
a charge is made for providing the credit; and
- the lender is involved in the business of providing credit.
There are exceptions to the code’s application in certain circumstances involving short-term credit, insurance premiums paid by instalments, some debit and bill facilities, and some loans including employee loans and margin loans. For a detailed list view Legal Services Commission’s guide.
Furthermore, NCCP (Transitional and Consequential Amendments) Act 2009 (Cth) outlines that the NCC is applicable to credit contracts “carried over instrument” that were entered into before 1 July 2010 (between 1 November 1996 and 30 June 2010).
Contact a LawPath consultant to seek professional legal advice on whether the NCC applies to your contracts.
How does it affect you?
The NCC regulates most consumer credit transactions taking place across Australia. It aims to provide consumers with a protective framework when dealing with credit lenders. It deals with:
- Licensing requirements – under the NCC, all credit providing organisations must be licensed. Furthermore, the licensee is also required to be a member of an external dispute resolution scheme to allow consumers a greater access to justice.
- Responsible lending – the lenders cannot engage in unfair or dishonest conduct or the consumer can seek remedies by applying to the Court. The credit lenders must disclose the rights and obligations of the consumer in the credit contract in easy to understand terms.
Furthermore, credit lenders must not make contracts with consumers who would find it difficult to meet their repayments. Credit providers are prohibited from entering into a loan contract without doing a credit assessment. If you owe your lender less than $500,000 you can access your lender’s financial hardship provisions. For example, if you lose your job or obtain a serious injury preventing you from earning an income, you may be eligible to discuss a change of credit contract with your lender so you can meet your repayments. A Court Order can also enforce changes to a credit contract if it’s considered unjust.
- Comparison rates – the NCC requires inclusion of a comparison rate by the credit providers when advertising fixed term credit so that the consumers are aware of the interest rate, fees and any commissions. It is aimed to make it easier for consumers to compare different credit products.
Contact a LawPath consultant, or visit the website, to seek professional legal advice on whether the NCC applies to your contracts.