The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, today released draft Regulations and explanatory material for the Rudd Government's National Consumer Credit Protection Package for further public consultation.
The purpose of further public consultation is to extend a final opportunity for comment on the full suite of regulations following two previous rounds of consultations. In response to public comment on those previous consultations, some important changes and enhancements have been necessary to the regulations.
The key elements include:
- regulations to accommodate different practices in the way interest may be calculated or charged by lenders in respect of the provision of credit for residential investment property;
- extending the period for which credit assessments can be relied on to 120 days where the credit is to be provided for the purchase of a residential property and is to be secured by a mortgage over the proposed property;
- the application of licensing and the responsible lending conduct obligations to pre‑existing contracts; and
- a new method of calculating licensing fees and charges that is intended to address industry concerns about the employee based method of calculating fees.
Further details of the new regulations and enhancements that have been made in the light of comments received from the last consultation are outlined in the Attachment.
These regulations will be available for public comment between 20 November 2009 and 11 December 2009.
The package of draft Regulations include the full suite of regulations that was previously released for consultation in August.
The package of regulations and related explanatory material can be found and downloaded at www.treasury.gov.au/consumercredit.
Comments on the draft regulations can be provided by email to consumercredit@treasury.gov.au by 11 December 2009.
20 November 2009
Attachment
Summary of Amendments to Draft Regulations
National Consumer Credit Protection Regulations 2010 (Credit Regulations) and National Consumer Credit Protection (Transitional and Consequential Provisions) Amendment Regulations 2010
Key changes to these regulations are:
- excluding lenders from the requirement to hold professional indemnity insurance;
- extending the streamlined licensing procedures to lenders mortgage insurers;
- requirements for people who audit trust accounts;
- arrangements for the Australian Securities and Investments Commission (ASIC) suspension or banning powers to encourage licensees to provide correct and timely annual compliance certificates;
- exempting securitisation vehicles from licensing requirements where the vehicle is a legal assignee;
- minor changes to various licensing and registration exemptions in response to comments received from the last round of public consultation;
- the treatment of interest charged on credit provided to purchase or improve residential property for investment purposes;
- exempting credit or leases provided to company directors from the Code and licensing requirements;
- arrangements for the commencement of the registration period;
- application of registration, licensing and responsible lending conduct obligations to persons in relation to pre-existing contracts;
- extending the period which an unsuitability assessment can be relied upon to 120 days for credit provided for the purchase of residential properties, and secured by a mortgage over the property to be purchased;
- replicating a Queensland transitional provision to maintain its commencement date;
- clarifying that payment of an infringement notice does not affect the ability of a consumer to seek compensation orders for conduct which is the subject of a paid infringement notice;
- exempting ASIC and consumers from the general rule that proceedings must be commenced in the jurisdiction in which the consumer currently resides; and
- changes to the streamlining of Western Australian Class A and B licensed brokers into a Australian credit licence.
National Consumer Credit Protection (Fees) Regulations 2010
Key changes to these regulations are:
- a new method for calculating fees for lodgement of licensing applications and annual compliance certificates based on the sum of a business:
- total amount of credit advanced in the preceding financial year;
- total value of credit in applications submitted to credit providers in the preceding financial year; and
- total amount of rent payable by consumers under consumer leases entered into in the preceding financial year;
- a single licensee, credit representative or person;
- removal of fees for inquiries relating to inspections of registers to avoid double charging when a person requests to inspect a register; and
- an exemption from fees to allow ASIC to provide information from its credit registers on its website free of charge.