The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP has welcomed the release of regulations and explanatory material, which make key amendments and enhancements to the existing National Consumer Credit Protection Regulations.
Since the release of the National Consumer Credit Protection Regulations in March, the Government has undertaken extensive consultations with industry and consumer groups on key arrangements under the National Consumer Credit Regime. These Amendment Regulations are the result of these further consultations.
"These amendment regulations underscore the Government's commitment to continue to work closely in consultation with industry and other stakeholders to achieve the best regulatory balance and outcomes for the community," Minister Bowen said.
"The Government appreciates the valuable input and contribution from stakeholders to refine and clarify the regulatory arrangements for the credit reform regulations."
These latest regulations, which were approved by the Executive Council on 15 June, comprise the National Consumer Credit Protection Regulations Amendment 2010 (No. 3) (Credit Amendment Regulations), the National Consumer Credit Protection (Transitional and Consequential Provisions) Amendment Regulations 2010 (No. 3) (Transitional Amendment Regulations), and the National Consumer Credit Protection (Fees) Amendment Regulations 2010 (No. 2) (Fees Amendment Regulations).
A summary of the key changes to the consumer credit regulation package is attached. Updates and further information on the new consumer credit regime is available at www.treasury.gov.au/consumercredit or www.asic.gov.au/credit.
18 June 2010
Attachment
Summary of Key Changes to the Consumer Credit Protection Regulation Package
Credit and Transitional Amendment Regulations include changes to the following:
Exemption for special purpose funding entities
- Special purpose funding entities (SPFEs) that are credit providers or lessors in the securitisation industry and other parts of the non-bank lending sector will not be required to hold an Australian credit licence.
- This exemption is consistent with the Government's commitment to remove unnecessary barriers in credit markets to facilitate competition and innovation while ensuring that there are adequate safeguards for consumers who enter into credit contracts.
- The exemption is necessary in light of the special nature of SPFEs. Typically, these entities (either a company or a trust) do not have any employees as they are not intended to perform the practical obligations of a credit provider and therefore engage third parties to act on their behalf.
- To ensure comparable levels of consumer protection under the new laws, the SPFE will be required to engage a third party who is licensed (or, during the transitional period, registered) and who will act on its behalf in complying with the Credit Act.
- The SPFE will also be required to be a member of an ASIC approved external dispute resolution (or EDR) scheme to ensure that consumers can bring a complaint to the scheme against the SPFE.
- The regulations will also modify the application of the Credit Act. For example, some obligations that currently only apply to licensees will also apply to SPFEs to ensure there are no regulatory gaps in the safeguards for consumers.
Arrangements for unlicensed lenders and lessors with carried over instruments
Amendments have been made to:
- reflect a number of minor technical corrections to earlier regulations made for the purpose of regulating unlicensed lenders and lessors with carried over instruments;
- insert additional requirements for unlicensed lenders and lessors who fail certain probity requirements; and
- exempt unlicensed lenders and lessors who are not members of an ASIC approved EDR scheme from having to make certain disclosures.
Other Minor amendments
Amendments have been made to:
- Forms 9, 10, and 12 in the Credit Regulations to make minor corrections and enhancements;
- Credit Regulation 19, which sets out the eligibility requirements for an auditor who is preparing a report in relation to the conduct of a licensee; and
- the exemptions for suppliers of goods and services in Credit Regulations 23 and 23A, to improve the practical application and effect of these exemptions.
Fees Amendment Regulations
Amendments have been made to:
- introduce indexation for fees, consistent with the other fees administered by the Australian Securities and Investments Commission under the Corporations Act 2001.
- specify that there will be no fees for the lodgement or provision of information that relate to carried over instruments as required by the Regulations.
Further Regulations
Further regulations are proposed to be issued in June and July to cover the following matters:
- an additional exemption for referrers where they pass on a consumer's contact details directly to a licensee or registered person;
- clarification of the treatment of locums and temporary employees;
- transitional arrangements for residential investment property loans; and
- minor technical amendments.